The BGA Taiwan Team led by Managing Director Rupert Hammond-Chambers, wrote an update to clients on the implications of escalating cross-strait tensions following Pelosi’s visit to Taiwan.

Context

  • S. House Speaker Nancy Pelosi embarked on an unofficial visit to Taiwan from August 2-3 in a show of support for the thriving democracy. It is an outgrowth of congressional efforts to educate constituents on the importance of U.S.-Taiwan relations and pass laws to codify America’s unofficial relationship with Taiwan.
  • China failed to intimidate the delegation and has retaliated by punishing Taiwan psychologically and economically.China has ramped up military maneuvers around the island, issued a ban on Taiwan’s agricultural products and redoubled efforts to assert branding nomenclature over “made in Taiwan” products.

Significance

  • China will not significantly alter its strategy toward Taiwan. China escalated its political and military coercion to pressure Taiwan into accepting unification, and Beijing has demanded that the United States cease supporting the island in exchange for peace in the Taiwan Strait.
  • There is a very low probability that China will take punitive measures against multinational companies over events in Taiwan. Punishing multinationals could threaten China’s long-term economic prospects and political legitimacy. If China pursues economic penalties, it will likely focus on Taiwanese companies and sectors that have a domestic political impact on Taiwan.

Implications

  • Companies can expect Taiwan to remain a safe destination for investment despite China’s recent behavior. China does not want to jeopardize its own investment prospects through an invasion of Taiwan. Businesses should continue to engage all levels of Taiwan’s government when promoting their interests actively and directly on the island.
  • Corporate engagement with the government in Taiwan raises no political issues for China. Beijing would view this as engagement with a local authority on economic development.

BGA will continue to keep you updated on developments in Taiwan as they occur. If you have any comments or questions, please contact BGA Taiwan Managing Director Rupert Hammond-Chambers at rupertjhc@bowergroupasia.com.  

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Senior Advisor

Rupert is an expert on Taiwanese political and economic issues and additionally brings a special focus on defense and security within BGA. Rupert concurrently leads the U.S.-Taiwan Business Council, where he was elected vice president in 1998 and president in 2000. Prior to 1994, he served as an associate for development at the Center for Security Policy, a defense and foreign policy think tank in Washington, D.C. Rupert is a member of the board of The Project 2049 Institute. He is also a trustee of Fettes College and is a member of the National Committee on United States-China Relations. Rupert ... Read More