Chinese economic trends – Update up to 20/06/2024

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  • Taiwanese presidential investiture and Chinese economic sanctions on US weaponry companies

On 20 May 2024 Lai Ching-te, Taiwan’s newly elected president, was sworn in at the Presidential Palace in Taipei. His speech mentioned China and called on it to “stop its political and military intimidation” in order to favour “dialogue at the expense of confrontation“.  Lai Ching-te also promised that the Taiwanese government would maintain the status quo vis-à-vis China.

In response, Chinese Foreign Ministry spokesman Wang Wenbin denounced these words, describing the Taiwan new president’s thawing attempt as an “impasse“.  Foreign Minister Wang Yi declared that Taiwanese separatistswill be pilloried with shame in history” and that “Lai Ching-te’s betrayal of his nation and ancestors is shameful“.

For its part, the US government congratulated Taiwan. US Secretary of State Antony Blinken saw the inauguration as a symbol of a “resilient democratic system“. He also expressed the hope that their two countries could ensure “peace and stability” in the region through strengthened diplomatic, military and economic relations. In April 2024, Washington approved an $8 billion aid plan to deal with China. The plan provided for assistance in the development of submarines, while strengthening economic ties to compete with Chinese projects.

In response, on the very day of the Taiwanese President’s inauguration, China imposed sanctions on three US companies that sell weapons to the island of Formosa: General Atomics Aeronautical Systems, General Dynamics Land Systems and Boeing Defense, Space & Security. The latter have been placed on the Chinese government’s list of “unreliable entities“. “They will be banned from all import-export activities related to China and prohibited from any new investment in China“, reports a Chinese state media. These global sanctions have been coupled with individual ones stating that “senior executives of these companies are banned from entering China” and that “their work permits will be revoked“.

Since Wednesday, twelve new American companies have been targeted by China as a response to the White House’s “economic coercion“. This time, Beijing is justifying its sanctions with those taken by the United States in retaliation for China’s support for Russia. The Chinese Foreign Ministry is therefore planning “countermeasures“. Moreover, given China’s claim to sovereignty over Taiwan, the sale of arms by the United States to the island in the Strait is seen as a violation of that sovereignty, and as support for internal dissent that Beijing cannot tolerate. Following this logic, the Chinese Foreign Ministry declared that the US sales “seriously violate the one-China principle […] and constitute serious interference in China’s internal affairs, strongly affecting its sovereignty and territorial integrity“.

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