A growing dispute between Taiwan and China won't likely abate soon,
but it also won't hurt global technology supplies, experts said
Wednesday.
The most recent flare-up in the often troubled tensions between
Taiwan and China came after Taiwan President Chen Shui-bian Monday
abolished the island's National Unification Council, and guidelines
that had been put in place years ago to work for eventual
reunification with China. The two split in 1949 amid civil war and
China has long vowed to attack Taiwan if it declares
independence.
On the Chinese side, President Hu Jintao called the dissolution of
the council a "dangerous step" toward "Taiwan independence,"
according to Xinhua News Agency reports.
China's Taiwan Affairs Office, the main conduit through which China
conducts its Taiwan policies, called the move a serious provocation
sure to heighten tensions across the body of water that separates
the two, the Taiwan Strait.
"(Chen)'s plan clearly is to abolish the National Unification
Council and guidelines to speed up the push toward Taiwan
independence," the office said in a statement on its Web site. The
office called on the U.S. to reign in Chen and do its part to
maintain regional harmony.
Despite the strong response from China, observers don't expect the
conflict to escalate into a trade war or military confrontation.
Taiwan and China account for a huge amount of global technology
production, mainly from Taiwanese factories operating in China. In
some categories, such as PCs and related components, the majority
of the global supply comes from the two places.
The recent events between Taiwan and China have a "zero" chance of
hurting trade, said Peter Sutton, head of research at CLSA
Asia-Pacific Markets in Taipei. But he warned that tensions could
increase because Taiwan's president needs to prove he's not a
lame-duck after his party lost ground in important December
elections. One way for Chen to recapture the limelight is to
provoke China, which normally lashes out and threatens the island
in response, playing into Chen's hands.
"But China hasn't made any threats and their policy of unilaterally
opening (trade with Taiwan) will continue," Sutton said.
In fact, China has already overtaken the U.S. as the world's
leading exporter of IT and communications goods, according the
Paris-based think tank Organization for Economic Co-operation and
Development (OECD). China exported US$180 billion worth of IT and
communications products in 2004, compared to $149 billion for the
U.S. A large portion of China's technology exports come out of
Taiwanese factories operating on the mainland, from companies such
as Hon Hai Precision Industry Co. Ltd., the world's largest
contract electronics maker, and Quanta Computer Inc., the biggest
notebook PC maker.
Any disruption to the supply of components and goods from China and
Taiwan would wreak havoc on global technology markets. Nobody
seemed to realize the importance of the region until Sept. 21,
1999, when a massive earthquake hit Taiwan. The technology-heavy
Nasdaq fell 3.8 percent in the two days following the temblor,
mainly as people began to realize how much the IT industry depended
on the island for certain components, including motherboards and
graphics chips, of which Taiwan used to supply the majority of the
global demand.
The situation has changed a bit since then as some major companies
sought second or third locations for component suppliers. Taiwan is
still a vital link in the supply chain, mainly due to its
semiconductor factories, which still account for a huge amount of
graphics chips and, increasingly, DRAM (dynamic-RAM) as well as
other chips.
"I donb t think that there is going to be serious impact to trade
between Taiwan and China. Itb s not in Chinab s best interest to cut
off trade,b said Andrew Yang, an analyst at the Chinese Center for
Advanced Policy Studies in Taipei. China is more interested in
drawing Taiwan into its fold by making it economically dependent
through investment, which has already been substantial. Some
estimates place Taiwanese investment in China at around US$200
billion.
Yang added that he does not see any likelihood of increased
military tensions, either.
|
icon.
