OPINION
Market Rating Before FOMC MeetingJan 31
Taiwan Tension Grows on US-China Line
Tensions between China and Taiwan have been going on for more than 70 years. The civil war in China after the second world war, it has caused many conflicts and military tensions between the governments of mainland China and the island due to the conflict of sovereignty.
In previous discussions about Taiwan, the Chinese government, known for its "one China" policy, did not completely rule out the possibility of joining the island to the mainland and using force to create a "single land," but Taiwan's Defense Minister Chiu Kuo-cheng claimed that relations between the two countries were at their most tense in the previous 40 years. He predicted that China will try to conquer the island by 2025 and that it was in their time.
One Step Behind Taiwan Tension between the USA and China broke out after the USA approved the arms sale of 1.8 billion dollars to Taiwan. In the statement made by the USA, it was stated that Taiwan should "reinforce its strength" for the future.
The Chinese side sends a strong warning over a potential visit from Nancy Pelosi, Speaker of the US House of Representatives. The week we left behind; the Chinese army intimidated the United States by launching a large-scale military exercise in the Taiwan Strait. The US side responded by sending an aircraft carrier to the region. Subsequently, a statement from a Chinese political figure regarding the shooting down of Pelosi's plane did not escape attention.
While Chinese Foreign Minister Wang Yi warned that Pelosi's visit to Taiwan would mean "crossing the red line" defined by the "one China" principle, the Chinese Ministry of Defense underlined that in such a case, the Chinese army would not sit and wait and would protect the country's territorial integrity and sovereignty.
In addition, after the phone call between US President Joe Biden and Chinese President Xi Jinping last week, the Chinese government has clearly stated that its position on the Taiwan issue is clear and says, "He who plays with fire burns himself. The United States must respect the one-China principle.” Earlier, US President Joe Biden had stated that if China attacked Taiwan, they would respond militarily.
Sources close to the subject state that the possible visit of US House of Representatives Speaker Pelosi to Taiwan will increase the risk of military conflict between the two countries. If the visit happens, Pelosi will make history as the island's first US House of Representatives Speaker in 25 years.
Market speculation suggests that recent developments and rising political friction between the two largest economies in the world may have an impact on efforts to eliminate trade barriers between Washington and Beijing. However, the markets are putting more pressure on investor confidence, which is already brittle due to the escalating tension between the two countries. This situation will inevitably increase the demand for safe harbors. Ounce gold has erased the losses of approximately 1 month at the current 1780 levels.
