China has launched military drills near Taiwan in response to a visit to the self-ruled island by U.S. House Speaker Nancy Pelosi. Here: a large screen in Beijing shows a news broadcast about China’s military exercises.
Noel Celis/AFP/Getty Images
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All eyes have been on Taiwan as China launches live-fire military drills near the self-ruled island after a visit by U.S. House Speaker Nancy Pelosi set off an escalation in tensions. The fallout could be widespread, and investors looking for ripples in the U.S. market may want to hone in on the technology sector, especially companies that generate revenue from Taiwan.
A possible military conflict over the island democracy of Taiwan, which Beijing claims as its own and has said it would use force to reunify if needed, would be an “all bets off” type of scenario that would likely rattle global markets. At this point, geopolitical strategists see little appetite in China for a military invasion of Taiwan, with analysts noting that Beijing is worried more about preventing Taiwan’s independence rather than forcing unification.
However, its claim on Taiwan is a redline with deep historical and cultural roots. Beijing’s concern that U.S. actions and comments over the past six years suggests a possible erosion in U.S. commitment to the one China policy is fueling the latest tit-for-tat that included China canceling military and climate talks with the U.S. and the White House summoning the Chinese ambassador.
Beijing has said the military drills will last until Aug. 7, but if they are extended, JPMorgan strategists write that it would…
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