Wed, Sep 19, 2012 - Page 14 News List

Islands spat may hit supply chain

Staff writer

Taiwan is likely to face supply chain disruptions amid the heightened territorial dispute in the East China Sea between Japan and China, local media said.

The territorial dispute over the Diaoyutai Islands (釣魚台) has spurred anti-Japanese protests across China, prompting well-known Japanese companies to suspend their operations at various Chinese plants.

The close three-way partnership between Taiwan, Japan and China makes Taiwan prone to exposure to supply chain disruptions in the event of a trade war between the world’s second and third-biggest economies, the Chinese-language Liberty Times (the Taipei Times’ sister paper) quoted Bureau of Foreign Trade Deputy Director-General Chen Ming-shy (陳銘師) as saying.

For example, Japanese firms ship critical auto parts to Taiwan which Taiwanese workers assemble, adding value before they are shipped onward to assembly plants in China, Chen said, adding that any trade war between Japan and China could seriously disrupt this supply chain.

China is Japan’s top exporting and importing country, while Japan is Taiwan’s top importing country and its fourth-largest exporting country, official data indicate.

Eberhard Sandschneider, director of the Research Institute of the German Society for Foreign Policy in Berlin, said in an interview with the German magazine Der Spiegel that the dispute has a greater potential of triggering a trade war than it does an armed clash.

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