China hits Taiwan with economic sanctions as Pelosi visits

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China on Wednesday suspended imports of fruit and fish from Taiwan and halted exports of natural sand to the self-ruled island as it hosted US House Speaker Nancy Pelosi.

Customs officials had flagged retaliatory measures earlier Pelosi’s visit suspending since Monday the imports of 35 Taiwanese exporters of biscuits and pasta.

China’s commerce ministry said exports of natural sand, widely used in construction and concrete, to Taiwan were suspended as of Wednesday. The move was based on laws and regulations, the ministry said, without elaborating.

China also halted imports of citrus, chilled white-striped hairtail and frozen mackerel from Taiwan from Wednesday, which it said was due to pesticide residues found in the citrus, while traces of the new coronavirus in the packaging of some frozen fish. products in June.

China’s major food and agricultural imports from Taiwan include seafood, coffee, dairy products, beverages, and vinegar.

From January to June, China’s top agricultural and food imports from Taiwan were fish and other aquatic invertebrates, which reached 399 million yuan ($59 million).

Earlier this year, China suspended imports of grouper fish from Taiwan, saying it had detected banned chemicals. Last year, Beijing also suspended imports of pineapple, sugar apple and wax apple from the island, citing pest problems.

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Foundations, companies also addressed

China also pledged to take “disciplinary action” against two Taiwanese foundations that it claimed had aggressively engaged in pro-independence activities.

The two foundations, the Taiwan Foundation for Democracy and the International Cooperation and Development Fund of Taiwan’s Ministry of Foreign Affairs, will not be allowed to cooperate with any organizations, companies and individuals on the mainland, the news agency said on Wednesday China’s state-run Xinhua, citing Ma Xiaoguang, China’s spokesman. Taiwan Affairs Office.

China would punish organizations, companies and individuals on the mainland that provide financial support or serve the two foundations, Xinhua reported, adding that other measures would be taken if necessary.

In addition, no agreement or cooperation between four specific Taiwanese companies and mainland companies is allowed because of their donations to the two foundations.

Executives from the four Taiwanese companies – solar producer Speedtech Energy Co, Hyweb Technology Co, medical equipment producer Skyla and cold chain vehicle fleet management company SkyEyes – will not be allowed to enter mainland China.

Live fire drills

Pelosi’s arrival on the island late Tuesday, which China considers a breakaway province, prompted a furious response from Beijing at a time when international tensions are already high over Russia’s invasion of Ukraine.

china announced drills at six sites surrounding Taiwan shortly after House Speaker Pelosi, a veteran china critic and the third-highest-ranking American politician, landed in Taipei on Tuesday night.

Chinese military, naval and air units are staging six days of unprecedented military exercises around Taiwan, a move security analysts say could escalate even if Beijing wants to avoid sparking a full-blown conflict.

Taiwanese officials said the live-fire drills violate United Nations rules, invade Taiwan’s territorial space and are a direct challenge to free air and sea navigation.

On Wednesday, a multi-force exercise involving the Navy, Air Force, Rocket Force, Strategic Support Force and Joint Logistics Support Force took place in the North, Southwest and South -east of Taiwan.

Weaker yuan

Meanwhile, the Chinese yuan weakened on Wednesday amid tensions over Pelosi’s visit.

The People’s Bank of China set the average rate at 6.7813 per dollar before the market open, weaker than the previous setting of 6.7462.

In the spot market, the yuan opened at 6.7585 per dollar and changed hands at 6.7515 at midday, 15 pips weaker than the previous session’s close.

“Asian markets are likely to trade sideways watching developments in the US and China,” OCBC Bank said in a note.

China’s foreign ministry said it lodged a strong protest with the United States, saying Pelosi’s visit seriously harms peace and stability in the Taiwan Strait, while China’s defense ministry China said its military has been put on high alert and will launch “targeted military operations” in response. .

The risk of escalation once Pelosi leaves the region would be the immediate focus of markets, said Stephen Innes, managing partner at SPI Asset Management.

“Beyond the military theater, the issue to watch once Pelosi returns to the United States will be whether the White House talks tough with China.”

Capital outflow pressure as Fed announces rate hikes

The U.S. dollar index edged lower on Wednesday after a jump overnight, with Federal Reserve officials talking about the potential for further aggressive interest rate hikes.

On Tuesday, San Francisco Fed President Mary Daly and Chicago Fed President Charles Evans signaled that they and their colleagues remain determined and “fully united” to get rates to at a level that slows down economic activity more significantly.

“After all, the Fed’s recent speeches suggested that the tightening cycle was far from over before price stability was restored,” said Ken Cheung, chief Asian currency strategist at Mizuho Bank.

“Given that the monetary policy divergence between China and the US could continue, China will still face relatively large capital outflow pressure, which will weigh on the yuan,” wrote Zhang Ming, senior economist from the Chinese Academy of Social Sciences, in a note.

Zhang expected the currency to remain between 6.6 and 7.0 against the greenback through the second half of 2022.

The global dollar index fell to 106,063 from the previous close of 106,241. The offshore yuan was trading at 6.7605 to the dollar.

Reuters with additional editing by Jim Pollard


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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd newspapers in Sydney, Perth, London and Melbourne before traveling around Southeast Asia in the late 1990s. He was senior editor of The Nation for over 17 years and has a family in Bangkok.


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About the Author: Chaz Cutler

My name is Chasity. I love to follow the stock market and financial news!