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China is kicking out Taiwanese brand Terry’s Handmade Teas and cancelling its contracts with the Taiwanese tea company, Terry’s Fresh Inc., the latter company said Thursday, in a major blow to Taiwan’s booming tea business.
Terry’s Fresh will lose a third of its business in just one month, while Terry’s will lose 80 percent of its business, said the company in a statement posted on its Facebook page.
The move comes as China clamps down on Taiwan, cutting off trade and boosting pressure on the island to accept Beijing’s “one-China” policy.
Taiwan’s central bank on Wednesday said that for now it has no plans to suspend or freeze a business bank account to protect the country’s foreign exchange reserves from money laundering, fraud and other illegal transactions.
The bank said last year it was freezing a Taiwanese company’s account after the Bank of New York reportedly blocked it from withdrawing funds from the Bank of China — Taiwan’s central bank — because the transactions violated US law.
The bank said it decided to allow the transactions to go through only after consulting the law enforcement agencies.
The Taiwanese central bank — Taiwan’s de facto banking regulator and the legal guardian of the country’s foreign exchange reserves — said it was still monitoring the case.
China is a major buyer of teas, with consumption reaching as high as 1.2 million tons last year, according to the Tea Association of China.
The moves against Terry’s Handmade Teas in China and its contracts with Taiwanese tea companies appear to be part of an effort to exert economic pressure on Taiwan by China.
But the moves against Terry’s also have a geopolitical motivation.
Taiwan’s president, Tsai Ing-wen, has made it clear that she wants closer trade ties with countries in Southeast Asia and East Asia, seeking to mitigate China’s economic and political influence on the island.
China is Taiwan’s most important trading partner and gateway to the global market, accounting for almost 20 percent of Taiwan’s exports.
On Wednesday, Chinese Ambassador to Taipei Tang Guoqiang summoned a US envoy, who reportedly asked China to ease its crackdown on Taiwan.
Tang said the embassy was not conducting any official trade talks with the US government.
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