Business risk: Limited risk for those firms using transport routes through East Asian seaways.
US made M60A3 TTS Tank in Taiwan (Credits: 玄史生)
Mutual irritation continues. Tensions between the US and China are increasing on non-economic issues too. US Secretary of State, Mike Pompeo, stated on the commemoration of the Tiananmen square crackdown that:
China’s one-party state tolerates no dissent and abuses human rights whenever it serves its interests […] Today, Chinese citizens have been subjected to a new wave of abuses, especially in Xinjiang, where the Communist Party leadership is methodically attempting to strangle Uighur culture and stamp out the Islamic faith.
Both the thirty years Tianman crackdown and the treatment of Muslims in Xinjiang are very sensitive to the Chinese leadership.
The US House of Representatives voted the “Taiwan Assurance Act of 2019”supporting Taiwan and urging the US to sell arms to the island nation. The legislation has to pass the Senate before it becomes law. China warned the US over its arms sales to Taiwan and demanded that the US would scrap a plan to sell $2 billion of arms to Taiwan (tanks, anti-tank missiles and air defence systems) to “avoid serious damage”.
The US continued its freedom of operation actions and sailed two Navy ships through the Taiwan Strait on May 22. Around the same time, Taiwan conducted its largest military exercises in five years to “test its ability to repel an invasion of the island.“
China is also framing the US-China conflict as bigger than only trade. In a meeting with scholars from a US thinktank, Chinese officials ranted about how this was a clash of civilizations.
Beware of accidents. Neither side seems to have the intention to launch a military conflict but with increasing military activity, the risk of an accidental collision that could lead to an escalation in an environment of jingoistic rhetoric on both sides increases.
Geotrends - Political risk advisory 