According to a survey, 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.
China began conducting military exercises around Taiwan in recent weeks, but 77% of respondents said they have not faced “significant disruption” to their business, said Andrew Wylegala, president of the Taiwan American Chamber.
China began military drills following US House Speaker Nancy Pelosi’s visit to Taiwan, despite warnings from China for weeks not to visit the island.
Taiwan is a self-governing democracy, but Beijing considers the island part of its territory and a breakaway province.
However, while there has been no “panic” or “exodus” of business in Taiwan, almost half of its members are anticipating “some kind of displacement and disruption” as China continues its military exercises, Wylegala said.
There has been “no near-term panic, but an appropriate degree of concern going forward,” Wylegala said on CNBC’s “Capital Connection” on Friday.
The Taiwan American Chamber conducted the survey of 529 member organizations from August 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, with one-third reporting that they face 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 unsure if they will be affected.
According to the business association, respondents raised the following when asked about the “specific spectrum of threats” they were concerned about: concerns about disinformation and psychological campaigns targeting Taiwan; restrictions or barriers on the periphery of the island; and “sanctions, travel bans, boycotts, and embargoes against Taiwanese products and people.”
US-Taiwan trade talks
The US and Taiwan agreed on Wednesday to begin talks on a trade and economic initiative, as the US continues to bolster its support for the island in light of rising tensions with China.
However, the likelihood of a free trade agreement – which is broader in nature and something Taiwan has been pushing for – remains unknown.
Wylegala said Taiwan “has done a wonderful job as a partner of the US” and recent tensions have made a stronger case for a bilateral trade deal.
The US-Taiwan 21st Century Trade Initiative that was announced in June “is not a free trade agreement per se,” Wylegala said, but it is a “stepping stone” nonetheless, he added.
“Four years ago, we didn’t have a single channel of economic discussions going on. And now we have four separate deals and more waiting in the wings,” he added.