How China’s military drills around Taiwan will disrupt global shipping
Nearly half of the world’s container ships cross the narrow Taiwan Strait, whose routes are a key artery for natural gas. Shipments to Taiwan and Japan have already been affected, with experts warning that even a small disruption to global supply chains could prove ‘expensive’
Chinese military exercises around Taiwan are expected to disrupt one of the world’s busiest shipping areas, causing detours and delaying energy supplies.
The drills, China’s largest ever around Taiwan, are a show of force majeure after US House Speaker Nancy Pelosi infuriated Beijing by visiting the island.
Analysts say the development highlights the island’s critical position in already strained global supply chains.
Let’s take a closer look:
Where does it take place ?
The maneuvers began on Thursday and will take place along some of the world’s busiest shipping lanes used to supply world markets with vital semiconductors and electronic equipment produced in East Asian factory hubs. .
According the wall street journalthe exercises take place in six areas marked out by the Chinese army.
Several face the island’s largest commercial ports and encroach on what Taiwan claims to be its territorial waters, according to the report.
The exercise areas encircle Taiwan and the Taiwan Strait, a major ocean route for ships sailing to or from China, Taiwan, Japan and South Korea.
According Bloomberg, local branches of China’s Maritime Safety Administration have already issued several warnings for ships to avoid certain territories. The Fujian regulator warned that ships were prohibited from sailing in areas where drills will be carried out from Thursday to Sunday.
Taiwan’s Maritime and Port Bureau has warned ships to find alternative routes to and from seven major ports on the island during the Chinese drills, according to the Apple Daily.
What are the fallouts?
According news from heaven, Taiwan says the drills could disrupt 18 international routes.
Even a small disruption to global supply chains, already strained by the COVID-19 pandemic and Russia’s invasion of Ukraine, could prove costly.
According to data compiled by Bloomberg.
Roads are also a key artery for natural gas.
Suppliers are rerouting or reducing the speed of some liquefied natural gas ships currently en route to North Asia, people familiar with the matter said. Bloomberg. They added that shipments to Taiwan and Japan this weekend would be affected.
Those in the shipping industry said Bloomberg a delay of up to three days could be created as ships may have to be re-routed around the eastern side of the island, rather than through the busy waterway between mainland China and Taiwan.
“Taiwan’s ports are open,” said Soren Skou, managing director of Danish container ship company AP Moller-Maersk. the wall street journal. “We just have to move around the exercise areas.”
Some freighters and tankers are re-routing around the island to avoid confrontation with the Chinese military, adding about half a day to trips, analysts and ship owners said. Reuters.
“Shanghai, the world’s busiest port, is literally next door and any major disruption will also affect China’s merchant fleet,” said Peter Sand, chief analyst at maritime data provider Xeneta. The Wall Street Journal. “It is in no one’s interest to escalate the tension and it is expected to return to normal from next week.”
“Given that a large portion of the world’s container fleet passes through this waterway, there will inevitably be disruptions to global supply chains due to re-routing,” said James Char, associate researcher at the S. Rajaratnam Singapore School of International Studies.
“China’s planned live-fire exercises are taking place in an incredibly busy waterway,” Nick Marro, the Economist Intelligence Unit’s senior analyst for global trade, wrote in a note.
“The closure of these transport routes – even temporarily – has consequences not only for Taiwan, but also for trade flows linked to Japan and South Korea.”
Several freight companies are waiting to see the impacts of the exercise, while others claim it is continuing to operate as usual, Sky News reported.
The uncertainty dragged the Taiwan Taiex Shipping and Transportation Index, which tracks major shipping and air transportation stocks, down 1.05% on Thursday.
The index is down 4.6% since the start of the week.
The Taiwan Maritime and Port Bureau warned ships in the northern, eastern and southern regions to avoid areas used for drills.
Several shipping companies contacted by AFP said they were waiting to see the impact of the exercises before reorienting.
The ongoing typhoon season has made it riskier to divert ships around Taiwan’s east coast through the Philippine Sea, some added.
Others said they would stick to their schedules.
“We see no impact during (this) period and we have no plans to reroute our ships,” said Bonnie Huang, spokesperson for Maersk China.
The drills also hit air routes.
Over the past two days, more than 400 flights have been canceled at major airports in Fujian, the closest Chinese province to Taiwan, signaling that the airspace could be used by the military.
Taiwan’s cabinet meanwhile said the drills would disrupt 18 international routes passing through its flight information region (FIR).
During the previous Taiwan Strait Crisis in the 1990s, China conducted military exercises for months, including launching missiles into the waters off Taiwan and rehearsing amphibious assaults on the island.
“The Chinese undoubtedly wanted to show resolve in a way that went beyond what they had done in 1996,” said Bonnie Glaser, director of the Asia program at the American think tank German Marshall Fund.
China world times The newspaper said on Wednesday that the exercises were intended to show that the Chinese military is “capable of blockading the whole island”.
But China’s current economic challenges mean it is unlikely to risk major disruption and would limit itself to aggressive posturing, analysts said.
“Closing traffic across the strait for an extended period will also hurt China’s economy,” Char said.
“It is not in Beijing’s interest to cut off civilian travel and trade in the region,” said Natasha Kassam of the Lowy Institute, an Australian think tank.
The extent to which China will step up its response to Pelosi’s visit — flexing its military muscle, cyberattacks and economic sanctions — will be seen.
Given its military advances, “China most likely has the capability to impose an air and sea blockade against Taiwan,” said Thomas Shugart, an expert with the US think tank Center for a New American Security.
“Whether China chooses to attempt such a blockade … largely depends on the degree of political and economic risk the Chinese Communist Party leaders are prepared to incur.”
With contributions from agencies
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