China Suspends Trade with Taiwan Amid Escalating Tension

China has announced that it is suspending some trade with Taiwan in what appears to be retaliation for a visit by the US House Speaker Nancy Pelosi to the island. Chinese media reported Wednesday that the country's General Administration of Customs had suspended imports of refrigerated large head hairtail and frozen Japanese horse mackerel from Taiwan due to repeated discovery of the COVID-19 virus on packaging materials. The agency previously imposed one-week bans in June on imports of the two fish varieties from Taiwan, citing the same reason. The customs bureau also said it suspended the import of citrus fruit from Taiwan due to the presence of citrus mealybug and excess residues of two types of pesticides, according to the reports.

Beijing's announcements seem to coincide with Pelosi's trip to Taiwan, the first visit by a sitting speaker in 25 years, and after Beijing issued stern warnings that it would take countermeasures in retaliation. The country's military said after Pelosi's visit that it was launching a series of "targeted military operations to counteract the situation."

At a press briefing on Wednesday, a spokesperson for China's Ministry of Foreign Affairs said that "the US and Taiwan separatist forces must take the responsibility and pay the price for the mistakes they made." 

China is Taiwan's largest trading partner, with bilateral trade worth $273 billion last year, accounting for 33% of the island's total trade with the rest of the world, according to the Taiwanese government. Some experts are concerned about the impact escalating tensions between Taipei and Beijing may have on Taiwan's semiconductor industry. 

Taiwan is a global leader in the supply of semiconductor chips, which are a vital component for virtually all modern electronics, from cars to refrigerators to mobile phones. China's commerce ministry, meanwhile, suspended exports of natural sand to Taiwan, a key component to produce semiconductor chips. In a statement, Chinese customs officials also said the import suspension of citrus fruit is a result of "pest control" and "excessive pesticide residues," and cited "Covid prevention" for the suspension of seafood imports. 

Taiwan officials stated China's sand export suspension would have a "limited" effect in response and that Chinese sand accounts for "less than one percent" of its total demand.

China has previously banned imports of some Taiwanese products amid escalating tensions. Last year, China banned imports of pineapples from the island followed by some types of apples later in the year also citing "pest control." Earlier this year, it also banned Taiwanese grouper fish, a high-value seafood product from Taiwan, citing detection of some banned drugs.

Pelosi's visit comes at a tense moment for China. The Communist Party will undergo a leadership reshuffle at its 20th party congress this fall. President Xi Jinping is expected to seek a historic third term in power at the meeting. Domestic tensions are high as the country's economy has slipped to the lowest growth in more than two years amid rigid Covid lockdowns and a slumping property market. Youth unemployment has soared to the highest on record. Social protests are rising because of a nationwide mortgage crisis and a series of rural bank scandals.