LIMITED EFFECT?
The policy shows Taipei’s ban on sensitive components being sourced from ‘red’ supply chains is on the right track, the defense ministry said
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By Shelley Shan / Staff reporter, with CNA
China yesterday placed the Chungshan Institute of Science and Technology and seven Taiwanese companies on its export control list to “safeguard national security interests,” although some of the firms said that the change would have a limited effect on their business.
The seven Taiwanese firms were Aerospace Industrial Development Corp (AIDC, 漢翔航空工業), GEOSAT Aerospace & Technology Inc (經緯航太科技), JC Technology Inc (仲碩科技), CSBC Corp, Taiwan (台灣國際造船), Jong Shyn Shipbuilding Group (中信造船), Lung Teh Shipbuilding Co (龍德造船) and Gong Wei Co (攻衛公司).
Chinese firms are banned from exporting to the seven companies materials that can be used in both civilian and military applications, including ongoing transactions, the Chinese Ministry of Commerce said.
Photo courtesy of Aerospace Industrial Development Corp
Suppliers must file a special circumstances application and secure permission to gain an exemption, the ministry said, adding that the policy took effect immediately.
However, CSBC Corp said that its suppliers of components for building submarines and coast guard vessels are mainly in Europe and North America, while its contracts with the military exclude the possibility of sourcing from “red” suppliers.
Suppliers for the commercial vessels it makes are mainly in Japan and South Korea, with Chinese suppliers only accounting for a small percentage, the company said, adding that it would not be able to accurately gauge the policy’s effects until it examines its details.
Lung Teh Shipbuilding said that its preliminary assessment is that this policy would not prevent it from fulfilling contractual obligations with Taiwan’s military.
Components that it imports from China for civilian contracts could be replaced with items produced in other countries, it said, adding that the new policy would have little effect on its business.
AIDC said that it was still evaluating potential repercussions of the new policy.
It does not use Chinese components in the work it does for Taiwan’s military, but it does source from Chinese suppliers for its civilian contracts, it said.
Many certified aviation industry suppliers are based in China, the company said.
The Ministry of National Defense told the Liberty Times (the Taipei Times’ sister newspaper) that the Chungshan Institute is banned from using Chinese components to research and develop weapons for the military.
The defense ministry said it aims to completely eliminate reliance on the China-centered supply chain by encouraging suppliers to manufacture their products in Taiwan.
The Chinese policy change shows that the government’s policy banning the institute from sourcing from “red” supply chains is on the right track, the defense ministry said.
The Mainland Affairs Council said that China was once again weaponizing economic measures to threaten Taiwan.
Its multidimensional coercive tactics against Taiwan would not be tolerated by Taiwanese, and would do nothing to ensure peaceful and stable development, the council said.
Wu Se-chih (吳瑟致), director of Taiwan Thinktank’s China Studies Research Center, said that Beijing timed the policy change announcement to respond to policies of the Democratic Progressive Party (DPP) government, including President William Lai’s (賴清德) “Ten Lectures on National Unity.”
The export bans were also likely a response to the recall campaigns against Chinese Nationalist Party (KMT) legislators, which China’s Taiwan Affairs Office recently commented on, Wu said.
“The symbolic significance of the bans would outweigh their actual impact, because there are few links between Taiwanese military contractors and Chinese military suppliers,” he said.
Chang Wu-ueh (張五岳), an associate professor in Tamkang University’s Graduate Institute of China Studies, said that there are three possible explanations for China’s timing of the policy announcement.
First, Taiwan recently imposed export controls on Chinese chipmakers Semiconductor Manufacturing International Corp (中芯) and Huawei Technologies Co (華為), Chang said.
Second, Beijing views the Han Kuang military exercises, which began yesterday, as a means for “separatists” to seek Taiwanese independence, he said.
“Third, China needs to once again reassure its public that it is strongly against any attempt” at Taiwanese independence, “and to threaten Taiwan if it dares to do so,” he added.
