No appreciable business disruptions over China tensions

Most member companies of the American Chambers of Commerce in Taiwan said there has been no significant disruption to business despite escalating tensions between China and Taiwan in recent weeks, according to a survey. 

China started conducting military exercises around Taiwan in recent weeks, but 77% of respondents said they have not faced “appreciable disruption” to their business, said Andrew Wylegala, the president of AmCham Taiwan.

China launched military drills after U.S. House Speaker Nancy Pelosi’s visit to Taiwan despite warnings from China for weeks not to visit the island. 

Taiwan is a self-ruled democracy, but Beijing considers the island part of its territory and a breakaway province.

Nevertheless, though there hasn’t been “panic” or an “exodus” of business in Taiwan, almost half of its members are predicting “some kind of dislocation and disruption” as China continues its military drills, said Wylegala. 

There has been “no panic in the short term, but an appropriate degree of concern going forward,”  Wylegala said on CNBC’s “Capital Connection” on Friday. 

AmCham Taiwan conducted the survey of 529 member organizations from Aug. 8 to 17, just days after Pelosi’s visit to Taipei. 

According to the survey, 17% of respondents said they had already experienced disruption to their business, a third of which reported facing higher shipping or insurance costs and supply chain delays. 

AmCham Taiwan also said 46% of companies surveyed expect to see increased Chinese military activity from 2022 to 2023 that would affect their operations. The remaining respondents do not anticipate being affected, or are uncertain if they would be.

Read more about China from CNBC Pro

According to the business association, respondents raised the following when asked about the specific “spectrum of threats” they were worried about: concerns about disinformation and psychological campaigns targeting Taiwan; constraints or barriers on the island’s periphery; and “sanctions, travel bans, boycotts, and embargoes against Taiwan products and people.”

U.S.-Taiwan trade talks

The U.S. and Taiwan on Wednesday agreed to start talks on a trade and economic initiative as the U.S. continues to bolster its support for the island in light of rising tensions with China. 

However, the likelihood of a free trade deal — which is broader in nature and something that Taiwan has been pushing for — remains unknown. 

Wylegala said that Taiwan “has done a wonderful job as a partner of the U.S.” and recent tensions have made a stronger case for a bilateral trade agreement.

The U.S.-Taiwan Initiative on 21st-Century Trade that was announced in June is “not a free trade agreement per se,” Wylegala said, but it is nevertheless a “stepping stone,” he added.

“Four years ago, we had no channels of economic discussions underway. And now we have four separate agreements and others waiting in the wings,” he added.

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