Beijing Sends a Strong Signal: Military Drills Near Taiwan Leave Investors Unfazed

The recent Chinese military maneuvers near Taiwan are once again causing tensions between the two nations. After Taiwan’s President announced determination in dealing with Beijing, China conducted exercises involving army, navy, air force, and missile forces. According to Chinese military spokespeople, the drills served as a "stern warning" to pro-independence forces in Taiwan. The Chinese forces announced the conclusion of the maneuvers in the evening. Taiwan’s Ministry of Defense condemned China’s actions and stated that countermeasures had been taken, though no specific details were provided. President Lai Ching-te consulted with security officials regarding appropriate responses to the events. The maneuvers, titled "Joint Sword-2024B," underscore Beijing's ongoing pressure on President Lai's government, which is seen as an opponent of reunification. Interestingly, Taiwanese investors reacted calmly to the sabre-rattling. Taiwan's Taiex index closed 0.3% higher, in line with regional markets. The national currency remained virtually unchanged at a rate of 32.17 to the US dollar. The United States also expressed concern over China’s activities and urged Beijing to de-escalate. Washington, which supports Taiwan militarily and politically, warned of the risks of escalation and emphasized that international partners are observing the developments. Among China's unusual tactics was the deployment of the Liaoning, a refurbished Soviet aircraft carrier, as well as coast guard patrols around Taiwan’s main island. This occurred against the backdrop of China also suspending tariffs on certain Taiwanese agricultural products and barring Robert Tsao, the founder of United Microelectronics Corp., from entering the country. Ultimately, financial markets appeared unimpressed by the geopolitical tensions. While Taiwan’s President strives to strengthen ties with other democracies, there is a growing international call for a cautious rapprochement between the two states.