Tue, Jun 25, 2019 - Page 8 News List

‘Tariffied’ China seeks resolution

By Manik Mehta

The Southbound policy is designed to reduce dependence on China. Taiwan’s strategists believe that dependency on China is replete with long-term political risks for Taiwan’s sovereignty. Indeed, some Chinese Communist Party experts believe that Taiwan’s reunification with China could be achieved “without firing a single shot” by making it so dependent on trade and business that it would have no other option but to join the mainland.

This is precisely why Taiwan wants to diversify its international trade and tap the huge economic and trade potential inherent in other markets.

Yeh said that in the short term, Taiwan’s companies might have to relocate their production operations, “but they could also benefit from new orders for electronics and machinery, for example, as a result of the shifting market.”

“Taiwan exported in 2018 some US$4.565 billion worth of machine tools and components, an 8.28 percent increase over the earlier year. As the world’s fourth-largest exporter of machine tools and components, Taiwan has averaged US$4 billion in exports for each of the last few years, drawing on a network of over 1,000 precision machinery manufacturers and 10,000-plus downstream suppliers,” he said.

TAITRA’s president pointed out that following the rapid restructuring of the global supply chain, South and Southeast Asia have recorded incredible growth. Taiwan has been building up close economic ties with the regions. ASEAN, for instance, is today Taiwan’s second-largest export and investment destination.

Representatives of Taiwanese companies, alarmed by the “asymmetrical dependency” on China’s market, are looking for alternatives. There is also a revived interest in forging closer ties with the US. The number of roadshows organized by Taiwanese companies in the US has increased.

Alex Ko (柯拔希), chairman of the Taiwan Association of Machinery Industry (TAMI), told me in an interview that the US-China trade war would have a “short-term negative impact on Taiwan’s machine-building industry, but long-term impact, in our view, is expected to be good.”

US tariffs have hurt many Taiwanese companies specializing in exporting their products from China to the US. Many of these companies are considering leaving — or have already left — China. Already facing slower economic growth, China is losing valuable capital and that is the chief reason China urgently wants a deal with the US.

Beijing can ill afford rising unemployment. This can lead to social unrest, which could easily spiral out of control and even challenge China’s leadership. That is a nightmare for any clique that controls the reins of power.

Manik Mehta is a New York-based journalist with extensive writing experience on foreign affairs, diplomacy, global economics and international trade.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top