China hits Taiwan with fresh trade curbs amid Nancy Pelosi’s visit

China halted some trade with Taiwan in retaliation for US House Speaker Nancy Pelosi’s high-profile visit to the island.

China’s General Administration of Customs said in a statement on Wednesday that some fish and fruit imports have been suspended due to excessive pesticide residue found “several times” on the products since last year, as well as some frozen fish packages that tested positive for the coronavirus in June.

Exports of natural sand are banned based on the provisions of the relevant law, the commerce ministry said in a separate statement but did not give further details.

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Beijing punishes Taiwan’s agricultural industry on political grounds. Southern Taiwan’s many fruit-growing regions are often bastions of political support for President Tsai Ing-wen’s Democratic Progressive Party, which advocates for Taiwan’s formal independence.

China caught Taiwan last year when it suddenly banned pineapple imports from Taiwan. Beijing then halted imports of wax and sugar apples last September. Most of the fruit produced in Taiwan is consumed domestically, with most exports going to China.

The trade measures followed a Taiwanese media report that China had banned food imports from more than 100 suppliers on the island on Monday.

China is Taiwan’s largest trading partner, with bilateral trade rising 26% year-on-year to $328.3 billion last year. Taiwan runs a substantial surplus against China, with exports from the island exceeding imports by $172 billion, according to Chinese customs data. Although Beijing can take advantage of that by approving exporters, China is dependent on Taiwan for semiconductor supplies.

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Two-way trade totaled $165 billion in the first half of this year, with Taiwan’s surplus at $79.8 billion with China.

Pei, an analyst at Trivium China consultancy in Beijing, also said that more trade barriers can be expected as tensions between China and Taiwan rise. Citing the example of Canadian canola after the arrest of Meng Wanzhou, the chief financial officer of Huawei Technologies Co., he said it is “common practice” for Beijing to identify minor compliance issues and enforce rules very strictly with business partners.

“It looks like the military exercises announced on Tuesday night could disrupt shipping in the region at least through Sunday, especially to the ports of Taiwan and Fujian, but also for any cargo that normally passes through the area around Taiwan,” Pe said.

A sand export ban cuts off the island’s main source of construction materials. With grains about 5 millimeters or less in width, natural sand is commonly used to produce materials such as concrete and asphalt.

China previously stopped exporting natural sand to Taiwan in March 2007, citing environmental concerns, and lifted the ban about a year later. Taiwan activated a contingency plan at the time, including importing materials from the Philippines and using local river sand to plug the gap.

According to a report by Taiwan’s Ministry of Economic Affairs, Taiwan imported 5.67 million metric tons of sand and gravel in 2020, with natural sand accounting for 8% of the total. More than 90% of Taiwan’s imported sand and gravel come from China, due to high transportation costs from other countries such as Vietnam, the report said.

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