China began conducting military exercises around Taiwan in recent weeks, but 77 percent of respondents said they had not experienced a “noticeable disruption” to their activities, said Andrew Wylegala, president of AmCham Taiwan. China began military exercises after US House Speaker Nancy Pelosi visited Taiwan, despite weeks of warnings from China not to visit the island. Taiwan is a self-governing republic, but Beijing considers the island part of its territory and a breakaway province. But while there has been no “panic” or “exit” of operations in Taiwan, nearly half of its members foresee “some kind of dislocation and disruption” as China continues its military exercises, Wylegala said. There was “no panic in the short term, but a fair amount of concern about the future,” Wylegala said on CNBC’s “Capital Connection” on Friday. AmCham Taiwan conducted the survey of 529 member organizations from August 8 to 17, a few days after Pelosi’s visit to Taipei. According to the survey, 17% of respondents said they had already experienced disruption to their business, with a third of them reporting 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 will affect their operations. The remaining respondents do not expect to be affected or are unsure whether they will be affected.
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According to the business association, respondents indicated 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 in 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 start talks on a trade and economic initiative, as the US continues to boost 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 Taiwan is 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 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 had no channel of economic talks going on. And now we have four separate deals and more waiting in the wings,” he added.
