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Taipei, Taiwan – Taiwan has largely shrugged off Chinese military encirclement and unprecedented live-fire drills over the past two weeks.
In the year On Aug. 6, at the height of the exercise, revelers danced the night away on Taiwan-controlled Dongyin Island, 50 kilometers (30 miles) from China’s Fujian province.
Li Wen, head of Taiwan’s ruling Democratic Progressive Party (DPP) chapter in Matsu, said the “EDM bubble-bath party is raging” in the “fourth Taiwan Strait crisis.”
For the many international companies so vital to the health of Taiwan’s economy, the heightened tension can be hard to ignore.
Although China’s increased military activity is expected to negatively affect Taiwan’s foreign investment, some foreign companies operating on the island have begun to explore the possibility of relocating.
Foreign business executives who spoke to Al Jazeera on condition of anonymity said tensions on the democratically-ruled island, which Beijing claims as its territory, had prompted them to relocate recently.
One executive, who has been with a global consumer goods company in Taiwan for more than a decade, said the scale of China’s live-fire drills served as a “wake-up call.”
“In the past, when China threatened Taiwan, I was rejected because the threats were all verbal. This time, it seems more realistic,” he told Al Jazeera.
Key investors in the company feel the same way, the executive said, and have asked him to explore the possibility of establishing new company operations – a manufacturing facility and office – in Thailand that would become the company’s headquarters. The executive said he is considering moving there with his family next year.
“They don’t want to wait for the situation to get worse,” the investors said.
A Fortune 500 company executive based in Taiwan for several years says he is considering a move to Singapore because he doesn’t believe Taiwan can adequately deal with the growing military threat from China.
“The biggest concern for me is the security issue, and that has to do with the unresponsive business-as-usual, sclerotic government and military theme,” he told Al Jazeera. “If what happened last week doesn’t wake them up, I don’t know what will.”
The executive added: “It’s the proverbial frog in the boiling pot. They don’t realize how hot the water is.
Their concern appears to be widely shared by the island’s foreign trade community.
In a survey conducted by the American Chamber of Commerce in Taiwan on Friday, 43 percent of respondents said they were considering or planning to improve emergency plans to deal with the severe crisis on the island.
In the August 8-17 survey of 126 participants, 77 percent said their businesses had not been significantly affected by the recent Taiwan Strait military activity, while 17 percent said they had experienced disruption.
Overall, on a scale of 1-5, survey respondents’ average level of concern about severe action against Taiwan in the next 24 months was 2.8.
“China’s recent military exercises are a reminder to multinationals that plant and equipment investments in Taiwan, holding shares in listed Taiwanese companies or local workers are not immune to the risks of sanctions or war,” Taipei-based Ross Darrell Feingold, a lawyer and political risk analyst, told Al Jazeera.
Regular Chinese military exercises near Taiwan could have serious implications for commercial air and sea traffic, given the island’s location on the world’s busiest shipping lane. According to Bloomberg, roughly 50 percent of the world’s container ships and 88 percent of the largest such ships passed through the Taiwan Strait in the first seven months of the year.
US House of Representatives Speaker Nancy Pelosi After cutting short an Aug. 2-3 visit to Taiwan, Beijing resumed exercises this week following a surprise trip to the island by a new delegation of US lawmakers.
“Indications are that exercises that disrupt shipping or civil air travel may become a regular occurrence,” Feingold said. This would not only disrupt goods shipped out of Taiwan, but could also disrupt imports of raw materials, food, and energy.
Border restrictions
Compounding Taiwan’s heightened threat from a Chinese invasion is the Taiwanese government’s willingness to relax some of the world’s strictest pandemic-related border restrictions on its own initiative. Taiwan has a mandatory four-day detention for all arrivals and has yet to start issuing regular business and tourism visas.
Critics say the border controls, which have no parallel outside China, have dubious benefits for public health. As of Jan. 1, 99.5 percent of COVID-19 cases are mild or asymptomatic, according to Taiwan health officials. Of the island’s 23.5 million residents, 86.2 percent have received two doses of the vaccine, and 71.8 percent have gone up.
However, Taiwan has struggled to transition from its previous zero-covid strategy, which was very popular with voters, to a new normal. Although the government officially rescinded the policy in April, officials are widely seen as fearing a political fallout over overseas travel.
“Unfortunately, Taiwan’s government has boxed itself in by keeping these controls in place longer than most countries in Asia, and the window to lift these controls before local elections on November 26 is closing fast,” Feingold said.
Taiwan continues to host political dignitaries A US congressional delegation led by Senator Ed Markey landed less than two weeks after Pelosi’s visit and this week announced the start of negotiations for a bilateral trade and investment agreement with the US.
But business leaders argue that occasional high-profile travel can’t make up for two-and-a-half years of lost regular business.
“Trade relations are very weak,” Frédéric Rocafort, a lawyer at Seattle-based law firm Harris Bricken who works with Taiwanese manufacturing clients, told Al Jazeera.
“If you don’t have the ability to connect and retain your existing customers, it only takes a year or two and you’re likely to find someone else.”
Andrew Wailegala, president of the American Chamber of Commerce in Taiwan, said the island should be open to foreign trade and investment with a long-term strategic goal of reducing its economic dependence on China.
China accounted for more than 40 percent of Taiwan’s exports last year, including Hong Kong.
Wailegala told Al Jazeera that if there was a place and time to reverse the old adage, “keep your friends close and your enemies close,” it would be Taiwan in August 2022. “Spreading goods, talent and money with friendly allies is the best way to strengthen Taiwan, and it still requires people to move.”
Netherlands-based PJ Brodbacher, vice president of sales and marketing for Dutch company Haiku Tech, said his multilayer ceramic equipment manufacturer is considering increasing the number of Taiwanese suppliers. However, he has not visited Taiwan in over three years, citing mandatory isolation as the main reason.
Although the current quarantine is only four days, “it’s still not very effective, especially if the trip involves a few group members,” Brodbacher told Al Jazeera.
“For us, we’re always looking to collaborate with Asian suppliers for technical projects, and Taiwan seems like the most logical place to go. Unfortunately, with the current constraints and lack of solution visibility, we find ourselves looking elsewhere more and more.”
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