Taiwan crisis another blow to the supply chain

It’s been a good news-bad news-slightly better news kind of week.

The good news is the world just avoided a superpower conflict over Taiwan.

The bad news is China is right now in the middle of a live-fire military exercise on all sides of the island that is impacting commercial flights, shipping and the global supply chain.

The slightly better news is the military drill is due to end Sunday and the incentives for China to dial down the tension might be stronger than the reasons to ramp it up.

In any event it is yet another blow to the already-fraught electronics supply chain.

The 180-kilometer wide Taiwan Strait is one of the world’s busiest shipping lanes – nearly half of the world’s container traffic transited through it in the first six months of the year, Bloomberg estimates. That includes of course the bulk of the world’s chips, electronic components and completed products.

The military exercise, which began Thursday, involves more than 100 aircraft and ten warships, including a number of ships that crossed the median line, the de facto maritime boundary with Taiwan.

Already 11 missiles have been fired, with five of them landing in Japan’s exclusive economic zone. The PLA declared multiple no-go danger zones around the island, AFP reported, disrupting commercial flights and shipping movements in the region.

China state media said one of the goals of the exercise was to show how the PLA could blockade Taiwan.

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