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Exports to China show signs of slowing

Taiwan's sales to China and Hong Kong have shown signs of slowing, indicating a change in local companies' favorite investment destinations to other fast-growing regions such as Southeast Asia, a report released by the Chung-Hua Institute of Economic Research (CIER, 中經院) said.

In the latest issue of the CIER's report published on the Ministry of Economic Affairs' Web site, deputy researcher Lien Wen-jung (連文榮) analyzed the variations in the nation's trade exports with other countries.

He said the nation's exports have been concentrated in China and Hong Kong over the past 15 years.

In 1990, sales to China and Hong Kong accounted for only 12.7 percent, in US dollar terms, of total exports. The ratio rose to 24.4 percent in 2000 and jumped to 39.8 percent last year, an annual growth rate of 1.7 percent, he said.

This growing reliance was caused by companies' heavy investments across the Taiwan Strait, driving exports of raw materials or semi-finished products from Taiwan to China for processing.

But between 2003 and last year, the export ratio stabilized at at 35.7 percent, 38 percent, 39.1 percent and 39.8 percent, respectively. The figure even edged down to 38.9 percent in the first quarter of this year.

"It seems to be a tipping point for the export structure to change," Lien said.

At the same time that the nation's economic dependence on China and Hong Kong grew, exports to both the US and Japan dwindled.

Between 1990 and last year, the export ratio to the US fell from 32.4 percent to 14.4 percent, while the figure to Japan decreased from 12.4 percent to 7.3 percent. The gaps were complemented by the increases in exports to China and Hong Kong.

But in China's imports figures, Taiwan's ratio fluctuated at around 11 percent between 1995 and last year.

China recorded an economic growth rate of 11.1 percent in the first quarter this year, with imports rising by 18.2 percent. But imports from Taiwan only rose by 7.6 percent, based on China's customs figures.

Lien expressed concern that the nation's products would face increasingly fierce competition in China and Hong Kong as new free-trade pacts in East Asia get underway.

"Taiwan's export [figures] might have a gloomy future once they lack the support from high exports to China and Hong Kong," he said.

Judging from the figures over the past 15 years, Lien said the ratio of the nation's trade with China and Hong Kong might have peaked, with exports to other countries expected to grow to compensate.

The next favorite export destination would likely be Southeast Asia, which is enjoying energetic economic development and rosy performances, he said.

Decreases in the export ratios to the US and Japan are likely as well, he added.
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