Taiwan cancels flights as military exercises begin

Agencies | Taipei

The Daily Tribune – www.newsofbahrain.com

Taiwan cancelled airline flights on Thursday as China fired missiles and deployed fighter jets and warships during military exercises near the self-ruled island, adding to the risk of disruptions in the flow of Taiwanese-made processor chips needed by global telecom and auto industries.

The Hong Kong newspaper The South China Morning Post called the drills an “effective Taiwan blockade.” Beijing announced “live-fire exercises” after Speaker Nancy Pelosi of the House of Representatives arrived Tuesday for a one-day visit, defying warnings from Beijing. It earlier banned imports of hundreds of Taiwanese food items including fish, fruit and cookies.

Taiwanese companies are preparing possible trade disruptions beyond the four days Beijing says its drills will last, said economist Alicia Garcia Herrero of Natixis CIB, who was meeting businesspeople in the island’s capital, Taipei.

“They are starting to think of solutions, re-routing, delaying orders until they have more clarity,” said Garcia Herrero. “I think people are realizing this is not just a four-day thing.”

On Thursday, at least 40 flights to and from Taiwan were cancelled, according to the China Times newspaper. It cited Taoyuan Airport in the capital, Taipei, as saying cancellations were “not necessarily” related to the military drills.

There was no immediate indication of the possible impact on shipping, which has the potential to jolt the global economy. Taiwan produces more than half the processor chips used in smartphones, autos, tablet computers and other electronics. Chip sales to Chinese factories that assemble most of the world’s consumer electronics rose 24.4% last year to $104.3 billion.

Any significant disruption would “create shockwaves to global industries,” said Rajiv Biswas of S&P Global Market Intelligence in an email.

That could push up already high inflation in the United States and Europe the same way prices spiked after the coronavirus disrupted shipping in 2020-21, said Garcia Herrero.

“If ports can’t operate normally, we can see the consequences,” she said. Taiwan’s Defence Ministry said it tracked the firing of missiles at waters northeast and southwest of the island.

China’s foreign ministry rejected suggestions the drills were dangerous. “China’s practice is in line with international law,” said a ministry spokeswoman, Hua Chunying.

Some flights to the mainland would detour through Hong Kong. Taiwan’s transport minister, Wang Kwo-tsai, said Wednesday at a news conference.

Business between the two sides has grown even as Xi’s government stepped up pressure, sending growing numbers of fighter planes and bombers to fly around Taiwan to intimidate its government.