China flexes its military muscles, then targets Taiwanese citrus fruits

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Madou Township, Taiwan
CNN

For the past 18 years, Li Meng-han and his family have been growing pomelos in a rural town near the Taiwanese city of Tainan.

Taiwanese pomelos, known for their juiciness and sweetness, are popular across both sides of the Taiwan Strait, especially during the Mid-Autumn Festival, an important festival in Chinese culture that falls on September 10 this year.

August and September are usually the busiest months for Li and other grapefruit growers in Madou Township as they prepare for harvest, but this year they face an unexpected challenge: import bans. Chinese.

On August 3, amid growing tensions between Beijing and Washington over US House Speaker Nancy Pelosi’s controversial trip to Taiwan, Chinese customs officials announced an import ban on all citrus fruits. Taiwanese – including pomelos – as well as two types of fish, citing “excessive pesticides”. and “Covid-19 prevention” measures. Taiwan condemned the move as violating international trade standards.

The announcement also came as Beijing conducted extensive drills around Taiwan in response to Pelosi’s visit – drills that Taiwan authorities said simulated a possible attack on the island. China’s ruling Communist Party says Taiwan is part of its territory, although it has never ruled it, and has refused to rule out the use of force to control it.

Li, who typically sends around 60% of his grapefruit harvest to mainland China, said he was “very surprised” when he first learned of the export ban, describing the situation as “the most difficult”. since the start of the family business in the early 2000s. .

“I didn’t see the ban coming that far, we were caught off guard,” Li said. we just want to grow good fruit and sell it for a good price.”

During the annual grapefruit harvest, Li is usually busy on the phone finalizing deals with buyers in China and other parts of Asia, while his 40 subcontractors select the best fruit to pack into boxes and sell. send abroad.

But this year, news of China’s sudden import ban upended his plans.

“When I heard about the ban, I immediately called my business partner in China to check if that was really the case,” he said. “I was taken by surprise, as we had already signed contracts and fixed the price, and even the shipping dates were already confirmed.”

“But now everything is in vain, so we have to try to find ways to sell them in the domestic market,” he added.

Li Meng-han's pomelo orchard in Madou, Taiwan.

Li is not the only Taiwanese affected by China’s economic retaliation. According to statistics from the Taiwan Council of Agriculture, Taiwan produced more than 82,000 tons of pomelo fruit last year, of which about 7% – or about 5,000 tons – was exported to mainland China.

With China’s import bans on other pomelo fruits and two fish products, the council estimated that Taiwanese exports worth 620 million Taiwan dollars ($20 million) would be affected.

Sun Tzu-min, general manager of the Madou Farmers’ Association, said there are about 2,000 to 3,000 pomelo farmers in the township, adding that although most of the pomelos are sold domestically , the ban would likely affect the market price and reduce farmers’ income.

“It has been difficult for the farmers,” she said. “A sudden ban can put everything on hold. Pomelos can live for decades and their fruit gets sweeter as the trees age, so it’s impossible for farmers to abandon them.

“When all the fruit stays on the island, the market price will definitely go down…farmers lose money when their fruit cannot be exported,” she said.

Since last year, China has targeted a number of Taiwanese agricultural products as it steps up its military, diplomatic and economic pressure on Taiwan – a democratic and self-governing island of 24 million people off the southern coast. -East China.

Prior to the latest ban, China had already suspended imports of all Taiwanese pineapples, sugar apples, wax apples and groupers, each time citing the presence of harmful pesticides or chemicals.

Experts have argued that Beijing’s moves are a politically motivated attempt to pressure Taiwan to toe the line.

“U.S. Speaker of the House of Representatives Nancy Pelosi’s visit to Taiwan has given China another chance to constrain Taiwan economically,” said Chiao Chun, a former Taiwanese trade negotiator and author of “Fruits and Politics”. “This is a politically motivated economic sanction against Taiwan.”

“Mainland China is trying to influence the opinions of farmers and low-income Taiwanese towards the ruling party, as it is forbidden to sell their products in China,” he added.

After the ban on pineapples last year, Taiwanese Foreign Minister Joseph Wu called the products “the pineapple of freedom”, while shoppers across Asia – including the late former Japanese leader Shinzo Abe – rushed to buy them as a sign of political solidarity.

Chiao said while the latest ban will have a short-term impact on Taiwanese farmers, it is unlikely to have a significant economic impact because agricultural exports represent only a tiny percentage of Taiwan’s overall trade.

The island’s most valuable export is its advanced semiconductor chips, which are needed to power everything from computers and smartphones to robots. One Taiwanese company in particular – Taiwan Semiconductor Manufacturing Company (TSMC) – is the world’s largest chip contract manufacturer and accounts for 90% of the world’s super advanced chips, according to industry estimates.

More than half of Taiwan’s exports to China are semiconductors, while agricultural products account for less than 1% of the total value, according to Roy Lee, deputy executive director of Taiwan’s Chung-hua Institute of Economic Research. .

“I think weaponizing sanctions on agricultural and food products has a greater symbolic effect than the actual economic impact,” Lee said.

Chiao agreed that “the psychology is a bigger factor” behind the import bans. However, he said economic coercion would likely create greater anti-China sentiment among the Taiwanese public.

“This time, China announced these economic sanctions against the backdrop of large-scale military exercises,” he said. “If you consider military exercises as the main protagonist, there must be other supporting roles. Therefore, the Ministry of Commerce also decreed economic sanctions to support (China’s) bullying.”

Lee, the economist, said that although China is Taiwan’s biggest trading partner, Beijing has so far not targeted Taiwan’s most valuable industries because it could end up disrupting its own economy.

“Extending economic sanctions to include semiconductors would have a greater negative impact on China’s economic growth than (on) the countries against which China is trying to achieve a political or diplomatic objective,” he said. -he adds.

However, he warned that as cross-Strait tensions escalate, Beijing may intensify its retaliation by targeting Taiwanese companies operating in mainland China.

Last year, Taiwanese conglomerate Far Eastern Group, which also operates in mainland China, was fined millions of US dollars by Chinese regulators for a series of violations. Chinese state media has openly criticized the company for financially supporting Taiwan’s ruling Democratic Progressive Party, prompting the group’s chairman, Douglas Hsu, to say he opposes the independence of Taiwan. Taiwan.

“I think we’re going to see an increasing number of Taiwanese investments in China being investigated or pressured into making remarks or statements in support of China’s stance toward Taiwan,” Lee added.

August and September are usually the busiest months of the year for pomelo growers in Taiwan.

But for farmers in Madou Township, the impact of China’s economic coercion has already been felt.

To mitigate the financial impact, the Council of Agriculture of Taiwan announced plans to boost citrus sales across the island through advertising and distribution campaigns, as well as the provision of subsidies. to farmers.

Sun, who heads the farmers’ association, said they are also processing pomelos into other products – such as gasoline oil, jam and face masks – to attract new customers in Taiwan.

But Farmer Li is not optimistic. As grapefruits begin to pile up in his depot, he fears he will have to lay off 30% of his contractors next year if the ban is not lifted.

“To be honest, it doesn’t matter who visits Taiwan,” he said. “The US-China tension must be resolved between the two nations. I don’t think Taiwanese farmers should be the only ones to suffer.

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