Ahead of Taiwan’s 2020 Elections, China anticipates that the island will call for independence, partly ‘externally’ driven (pointing to an unwelcomed push from the US). To add insult to injury, Taiwan supports Hong Kong’s stance on anti-extradition protests. Beijing has expressed serious worry about the country’s overall sovereignty status. As a first step in demonstrating discontent, China has suspended issuance of individual travel visas for citizens of 47 regions. Taiwan saw 1.7m Chinese tourists last year, a 30% increase from the previous period. The restrictions might reduce the number of visitors by 700,000 between August and February.
Why does this matter? China restricting citizen access has happened before in 2015 without any significant impact, but now there is evidence of a more serious, underlying conflict at play. For now, China has proposed that Taiwan be governed under a ‘one country, two systems’ structure similar to Hong Kong. China’s control appears to be weakening – both in a geopolitical sense with the number of states seeking independence and in an economic sense with Baoshang Bank’s sudden failure pointing to wider liquidity issues.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
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