KAOHSIUNG, Taiwan, May 24 (Reuters) - As China staged a

second day of "punishment" drills on Friday in response to

Taiwan's new President Lai Ching-te, some residents of the

democratically governed island told Reuters they would carry on

with their normal lives despite Beijing's pressure.

China staged mock missile strikes in waters east of Taiwan

and dispatched fighter jets carrying live missiles, state media

reported, as Beijing tested its ability to "seize power" and

control key areas of Taiwan.

But on the island of 23 million people, life has continued

as normal, with no overt sign of worry, the Taiwanese having

gotten used to decades of living with Chinese threats.

China's military exercises "don't really affect our daily

lives. We still have to work to make money," said Chen Sian-en,

a tyre repair shop owner in the southern city of Kaohsiung, home

to a major Taiwanese navy base.

"From childhood to adulthood, it means that we've gotten

used to (China's) threats," said Chen, 66, adding that the

drills were "some kind of intimidation tactic" and a "show of

force" from Beijing to Taiwan's new leader.

"They've talked about it so many times, but there hasn't

been any real action. If they wanted to take over Taiwan, they

would have done it already."

While Taiwanese media has covered the drills, a lot of their

focus has actually been on continuing protests against efforts

by the opposition to push legislative reforms, and occasional

fighting by lawmakers on the floor of the chamber.

"I feel no reason to be scared," said Taipei taxi driver

Chuang Jun-sung. "If China really attacks Taiwan, there's

nothing Taiwan can do but deal with it. But we should still have

the guts to fire our missiles back at them."

The drills are being conducted all around Taiwan, as well as

areas close to the Taiwan-controlled islands of Kinmen, Matsu,

Wuqiu and Dongyin next to the Chinese coast.

China has been infuriated by Lai's inauguration speech on

Monday in which he said the two sides of the Taiwan Strait are

"not subordinate to each other", which Beijing has viewed as

implying China and Taiwan are two separate countries.

Kinmen resident Tim Chang, 52, said that Beijing has been

threatening war for decades.

"If war is bound to happen, if they planned to attack, they

would have struck 20, 30 years ago," he said.

Taiwan's benchmark index is at a historic high,

scarcely impacted by China's drills. The market closed down 0.2%

on Friday; on Thursday, the day the drills began, it closed up

0.3%.

The stock of Taiwan's TSMC, the world's largest

contract chip maker and a major Nvidia ( NVDA ) supplier, is

also at a historic peak.

"The drills will have a short-term psychological impact, but

won't reverse the long-term upward trend of Taiwan stocks," said

Alex Huang, vice president of Mega International Investment

Services.

Vasu Menon, managing director of investment strategy at OCBC

in Singapore, said that investors were not expecting any

dramatic escalation in tensions.

"China's military has over the past few years carried out

regular activities near Taiwan, making investors less sensitive

to such drills," he added.

Still, Kaohsiung resident Angeline Liao said that she was

personally "very worried" about the drills.

"If, hypothetically, there were some military (war)

activities today, I think I would be the first one to wave the

white flag," said the 36-year-old insurance agent.