The Taiwan Strait, an essential axis of world trade

“Under the guise of democracy, the United States is violating China’s sovereignty. Angered by Democratic Rep. Nancy Pelosi’s visit to Taiwan, Beijing on Tuesday announced several days of “targeted military action” around the island, including “long-range live ammunition firing” in the Taiwan Strait. in order to issue a “serious warning once morest the separatists”. A resurgence of tensions closely scrutinized by global economic players. Because the Taiwan Strait has become a major crossing point for global logistics.

From Chinese factories to European and American ports, the strait with a width of 130 to 180 kilometers has almost become a necessary passage for maritime transport. So much so that, according to Bloomberg’s calculations, “regarding 48% of the 5,400 container ships in operation in the world” sailed there in 2022. “The waterway represents 88% of the traffic” of the largest cargo ships, even assures the economic agency.

Suffering since the Covid-19 pandemic and the war in Ukraine, the global maritime transport sector (which represents the vast majority of international freight), might do without further logistical disruptions. Bypassing the island of Taiwan, and thus avoiding the strait, would be possible but very risky. Commercial vessels would be forced to navigate Philippine waters, where typhoons are regular.

Semiconductor risk

The Taiwan Strait is also crucial for Taipei. The country is very dependent on China, which is its main trading partner. According to the Taiwanese government, trade between the two neighbors amounted to more than $166 billion in 2020.

The spearhead of the Taiwanese economy, semiconductor factories are also located near the coasts bordering the strait. The sector dominates the global market, and any disruption would have significant repercussions all around the globe. Because these small chips are essential in the production of electronic components, which are found everywhere, from smartphones to cars. The shortage of semiconductors caused by the Covid-19 pandemic, which might last another two years, has revealed the importance of this sector.

Theater of three major crises since the Second World War, can the Taiwan Strait be blocked by China, as Beijing threatens it? The disruption of global maritime trade would have a significant economic cost for the country, which derives most of its income from its exports. This might also hamper the Chinese electronics industry, whose demand for semiconductors, especially the thinnest, is greater than national production.

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