Taiwan call crisis will hit US, China trade

Taiwanese President Tsai Ing-wen’s telephone call to US president-elect lasted only for 10 minutes. But it has upended the decades-old One China policy. And this was the closest a Taiwanese president came to getting a formal recognition by United States.
Tsai telephone call stirred the hornets’ nest. And it led to a barrage of blunt criticism both from China and president-elect. Also, with this move Taiwan drew global attention to its increasing isolation.
Tsai move has made China furious. And it invites retribution from China. Beijing’s anger was directed more towards Taiwan rather than Trump given Taiwan’s deliberate breach of One China policy.
Undoubtedly, Taiwanese president scored a foreign-policy win with her phone call at present. But it can be detrimental in the long run.
“It might earn Tsai Ing-wen a round of applause now, but it will hamper Taiwan’s development,” said Jin Canrong, an associate dean of the Renmin University’s School of International Studies in Beijing and an adviser to China’s national legislature. “Taiwan’s destiny is much more intertwined with the mainland than the US, especially economically.”
Trump hit back at criticism over the call. He asked on Twitter whether China would ask permission before moving to devalue the yuan or build a massive military complex in the middle of the South China Sea. “I don’t think so!” he wrote, in a tweet that suggested the incoming administration viewed the various tension points as interlinked”.
Later White House categorically said that One China policy is not a bargaining chip. It should not be used as bait to extort concessions from Beijing.
But the billionaire businessman went a step further and suggested he could jettison Washington’s decades-old ‘One China policy’ —a compromise allowing the US to do business with both China and Taiwan while only recognising Beijing diplomatically. The US cut diplomatic ties with Taiwan and officially recognized the Communist government in Beijing in 1979. Washington has since then maintained a close relationship with the democratically run island and is legally required to provide military support and protection.
If Washington and China is going to lock horns over Taiwan for a long time, it will take its toll on businesses and bilateral trades. Exporters and businessmen are already worried. And they are watching the move from close quarters. There will be tit-for-tat approach.
The support across America’s ‘Rust Belt,’ and frustration at lost industrial jobs blamed on globalization, carried Trump to victory last month in key battleground states, including Michigan and Ohio.
But some companies in the region that benefit from global trade are worried about early signs the president-elect plans to take a hardline stance with China. “We export a lot of products to China,” said David Shogren, president of US International Foods. “My fear is whatever changes Trump makes … that China will retaliate in some ways.”
During his presidential campaign Trump threatened to impose 45 percent tariffs on China, saying the world’s second biggest economy has stiffed the US with currency manipulation and illegal subsidies.
Of course China will take counter measures. And it will be a setback for US industries. Among big manufacturers, Boeing is especially vulnerable. About one out of three Boeing 737 planes delivered in 2015 was destined for China. China is GM’s biggest market for cars, with 2.38 million vehicles sold in the first eight months of 2016, compared with 1.96 million in the US.
The facts on the ground do not permit for trade restrictions. It will massively hamper the economic growth of both countries.