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China revokes Taiwan tariff concessions, piles on pressure ahead of elections in the island

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Taiwanese flags during the National Day celebration in Keelung, Taiwan, on Monday, Oct. 9, 2022.

I-Hwa Cheng | Bloomberg | Getty Images

China suspended tax concessions on 12 chemical compound imports from Taiwan in retaliation for what Beijing deems to be a violation of a trade agreement, just weeks ahead of key elections in the democratically-run island.

“Taiwan has unilaterally adopted discriminatory bans, restrictions and other measures on the export of mainland products, violating the provisions of the Cross-Strait Economic Cooperation Framework Agreement,” China’s Finance Ministry said in a statement Thursday.

The Chinese Commerce Ministry last Friday accused Taiwan of violating World Trade Organization rules and the terms of a 2010 trade accord between both parties, extending its probe into Taiwan’s alleged restrictions on trade with the mainland to Jan. 12, just a day before the island’s presidential and parliamentary elections.

Taiwan’s Democratic Progressive Party-led government has often accused Beijing of vote interference either by military intimidation or by co-opting Taiwan’s business elite due to their economic reliance on China.

China has never relinquished its claim over Taiwan — which has been self-governing since the Chinese nationalist party, or Kuomintang, fled to the island following its defeat in the Chinese civil war in 1949.

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In fact, Beijing has escalated military activity in the Taiwan Strait and nearby waters this year.

The timing of China’s probe is intentional and suggests its aims are more political than economic, said Lin Tze-luen, a spokesperson for Taiwan’s legislative Executive Yuan, at a press conference in Taipei after a regular cabinet meeting. He also said China’s investigation process was opaque.

China’s Thursday announcement means chemical compounds, including vinyl chloride, dodecylbenzene and primary forms of the ethylene propylene copolymer, will now be subjected to tariffs from Jan. 1.

More broadly, the flare up is happening at a time when Taiwanese companies, including its mega semiconductor manufacturers, are diversifying their foot print in the mainland and reducing their economic reliance on China, in part due to Washington’s chip war against Beijing.

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