Thu, Sep 23, 2021 page8

• EDITORIAL: Time to diversify away from China

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  China on Sunday announced the suspension of imports of wax apples and custard apples from Taiwan. It was to take effect the very next day.

  This caused consternation in Taiwan because of how quickly the ban was to take effect and because many fruit farmers in southern Taiwan rely on the Chinese market, which previously took a 90 percent share of the nation’s wax apple and custard apple exports.

  President Tsai Ing-wen (蔡英文) condemned Beijing’s move, Council of Agriculture Minister Chen Chi-chung (陳吉仲) called it unacceptable and the government informed China that it would take the matter to the WTO if it is not resolved by Thursday next week.

  It was only in February that exports of Taiwanese pineapples were banned under similar circumstances, with neither prior warning nor adequate reasons given, and the move seemingly timed to make a political point.

  Neither the government nor growers should be surprised by these import bans. Nor should they regard Beijing’s moves as being some kind of hissy fit or arbitrary in any way. This is simply the manner in which China under the Chinese Communist Party conducts international trade.

  However, Beijing must be aware that its attempts to strong-arm other nations will discourage them from working with China and prompt a cost-benefit analysis of relying on a trade partner that weaponizes its trade policy to reward allies or punish perceived “enemies.” Nations might conclude that the only option is to look for trade partners other than China.

  On an international scale and on the level of bilateral trade, the pitfalls of relying on China to be a part of important supply chains are being exposed.

  Last year, apparently to punish Canberra for calling for an investigation into the origins of COVID-19, Beijing announced huge tariff hikes, outright bans and other impediments to imports of many Australian products, including barley, beef, coal, copper, cotton, rock lobsters, sugar, timber, wine, wheat and wool.

  Commentators at the time said that the Australian economy would be devastated by this massive drop in exports to its main trading partner.

  However, it was not.

  Australian producers sought out alternative markets. This was not always easy, entailing initial losses and lower prices as they had to compete with products in smaller markets, but coal export values recovered in six months. It was more difficult to secure new markets for lobster and timber, and wine typically requires more time to cultivate alternative markets, but the hit to the Australian economy was nowhere near as bad as some had feared.

  For Taiwan, diversification and finding other markets is paramount. Moving away from the Chinese market, irrespective of the lure of proximity, size and a shared language, would protect Taiwan’s producers and exporters from similar shocks.

  The government dealt with Beijing’s pineapple ban by investing NT$1 billion (US$35.99 million) to promote sales of the fruit in Taiwan and elsewhere overseas.

  However, this was reacting to a perfectly predictable shock.

  It makes sense to lay the foundations for more diversified, reliable markets in advance.

  The Chinese market has the advantage of proximity, but so do many of the New Southbound Policy nations that the government is cultivating improved relations and exchanges with.

  At this stage, the government griping about China’s inherent unreliability sounds more like a lack of good judgement by Taipei.
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