Mainland China launches probe into Taiwan’s ‘trade barriers’ affecting 2,400 products
- China’s Ministry of Commerce said on Wednesday it had launched a ‘trade barrier investigation’ into Taiwan’s restrictive measures against 2,455 mainland products
- The People’s Liberation Army ended three days of drills near Taiwan on Monday after Taiwanese President Tsai Ing-wen met US House Speaker Kevin McCarthy
Mainland China will look into Taiwan’s restrictive measures against the import of over 2,400 mainland products after launching a “trade barrier investigation”, a rare move which will further complicate cross-strait relations ahead of a pivotal presidential election in Taipei.
The mainland’s Ministry of Commerce said in a statement on Wednesday that it would review complaints by three mainland Chinese trade groups spanning agricultural goods, textiles and mineral-chemical products as “the Taiwan region is working on and implementing measures to ban imports of mainland products”.
“The probe should be concluded by October 12, 2023. Under special circumstances, it can be extended to January 12, 2024,” the ministry added.
Taiwan will hold its next presidential election on January 13, the Central Election Commission confirmed last month.
I don’t think anybody should be surprised following the military exercises around the island and in the [Taiwan] Strait
“I don’t think anybody should be surprised following the military exercises around the island and in the [Taiwan] Strait,” said Raymond Wu, president and CEO of the Taipei-based e-telligence Research and Consulting Group.
“You’re bound to get more pressure coming out of Beijing on Taiwan.”
Zhu Fenglian, a spokeswoman for the Taiwan Affairs Office in Beijing, said the island “has for a long time imposed unilateral restrictive measures on over 2,400 products from the mainland, which has caused to damage to related mainland industries and companies’ interests.
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“The investigation result will be made public at an appropriate time,” she added.
Incumbent Tsai will conclude her second and final term as president in May next year, and her independence-leaning party is expected to field a candidate against a rival from the opposition party Kuomintang who advocates a more conciliatory stance towards mainland relations during January’s election.
Taiwan’s Ministry of Economic Affairs said mainland officials had not formally notified Taiwan of the probe and urged them to start a dialogue.
The ministry said it follows “norms” in allowing imports from the mainland and can “announce it’s open to any imports” as long as those goods do not cause harm or violate national security.
Maybe they want ammunition before they launch a bunch of antitrade sanctions against Taiwan
“Trade across the Taiwan Strait is mutually beneficial and interactive,” it said in a statement. “It’s even a key part of regional and world supply chains and important to stable world prosperity. The Chinese side should not complicate trade, use it as a tool or disrupt global economic development.”
Mainland Chinese officials have previously conducted anti-dumping probes involving individual Taiwanese goods, but nothing before on the magnitude of 2,455 items, analysts said.
“Maybe they want ammunition before they launch a bunch of antitrade sanctions against Taiwan,” said Andrew Collier, China economist with Global Source Partners in Hong Kong.
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Trading partners commonly investigate trade barriers, but Beijing may take “retaliatory measures” after the conclusion of the investigation and affect the three industries being investigated, said Darson Chiu, a research fellow with the Taiwan Institute of Economic Research in Taipei.
If Beijing decides to take action at the end of the investigation, it could either strike back on its own against Taiwanese shipments or file a complaint with the World Trade Organization, said Chen Zhiwu, chair professor of finance at the University of Hong Kong.
“Taiwan’s economy has a high dependency on mainland China, and the other way round, Taiwan’s hi-tech exports to China also support China’s technology advancement strategy and high-end manufacturing development,” said Dong Jinyue, a senior China economist at Banco Bilbao Vizcaya Argentaria (BBVA).
“Thus, imposing trade barriers by either side is not an economic decision, which could be only a political decision.”
We do not think a trade barrier investigation will naturally lead to retaliation measures
Last year, mainland China shipped US$84 billion worth of goods to Taiwan, which in turn exported US$121 billion, according to Taiwan’s Bureau of Foreign Trade.
“We do not think a trade barrier investigation will naturally lead to retaliation measures. Whether China will impose retaliation measures depends on the investigation result that will take a long time to get,” added Dong from BBVA.
“By contrast, a trade barrier investigation, which is rarely imposed, is the midway point to gain some time to bring everything back to the negotiation table, in my opinion.
“I still remain positive about the bilateral trade relationships in the future, given such a tight bilateral economic linkage and the current political relationship which might remain intact in the medium to longer term.”
