Taiwan Needs Business Help to Harden Its Economy Against China

China is making no secret of its desire to harm Taiwan by putting the screws to its economy. Beijing could cause enormous harm for relatively little direct cost and without dispatching a single soldier to the island: Companies always worry about disruption and reduce their operations or leave altogether if chaos seems likely. But that doesn’t mean the Taiwanese economy is doomed. Western companies can partner with Taiwanese ones and agree take on key parts of their operations in case of a crisis. Even just striking such deals would signal to Beijing that Taiwan is resilient—and that it has many friends.

When Taiwanese President Tsai Ing-wen met with U.S. House Speaker Kevin McCarthy in California in April, Beijing responded with a military exercise featuring a simulated attack on the island—and, for good measure, dispatched an “inspection flotilla” to the Taiwan Strait, where its inspections would have wreaked havoc on the crucial but narrow shipping lane, through which 240 cargo ships sail on an average day. The message to global shipping companies was clear: Sailing near Taiwan is risky, and Beijing can cause chaos in the strait whenever it chooses.

A little saber-rattling is enough to unsettle many companies. Britain’s iconic Brompton Bicycle firm is, for example, reducing its use of Taiwanese suppliers out of fear of a Chinese invasion. Other companies with operations in Taiwan are adding conflict clauses to contracts. “Companies are increasingly concerned that in the event of a takeover of the island by force, the U.S. government could sanction assets in Taiwan if Washington deems them to be under China’s control,” Nikkei Asia reports.

Read the full article on Foreign Policy.