Amid increased trade tensions between the US and China, Taiwan must upgrade its industries and diversify its trade partners, while consolidating its relations with conventional partners such as the US, European nations and Japan, an Executive Yuan economic analysis published yesterday said.
The Directorate-General of Budget, Accounting and Statistics last month forecast that the nation’s economy would grow 2.11 percent this year, and there has been an apparent increase in exports and domestic investment and consumption, the National Development Council said in its analysis of Taiwan’s economic outlook in relation to the economic policies of the administration of US President Donald Trump.
However, US economic policies, international currency policies and unstable geopolitics have posed challenges to the nation’s economic revival, the council said.
Photo: Lee Hsin-fang, Taipei Times
Trump’s “America first” approach could affect Taiwanese industries and exports, but Taiwan still needs to deepen its connection with the US, as it is the global leader in trade and technology, National Development Council Deputy Minister Chiou Jiunn-rong (邱俊榮) said.
The US’ withdrawal from the Trans-Pacific Partnership (TPP) and China’s “One Belt, One Road” initiative have boosted Beijing’s influence in the Asia-Pacific region, so Taiwan must reinforce its connection with the US and other stakeholders in the region, Chiou said, adding that the New Southbound Policy’s objectives are a starting point toward bilateral trade pacts with other nations.
Taiwan must be ready to negotiate with the US about whether Washington plans to rejoin the TPP or return to bilateral trade talks, he said.
Washington has stepped up its fair trade policy initiatives against China to remove trade barriers, which could also harm Taiwan’s exports to the US, the council said.
The US is highly concerned with its trade deficit with Taiwan, which, coupled with increasing trade tension between the US and China, as well as the North Korea issue, could affect Taiwan’s economy, it added.
Taiwan must diversify its trade partners by improving ties with nations targeted by the New Southbound Policy, while also consolidating relations with traditional trade partners such as European nations, the US and Japan, the council said.
Washington has placed Taiwan on its currency watch list due to a rapid increase in foreign-exchange reserves and relatively obvious intervention in the currency market, but Taiwan’s removal from the list is expected next month, Chiou said.
Meanwhile, the US dollar has been forecast to appreciate against the New Taiwan dollar after the US Federal Reserve announced a balance sheet reduction, Premier William Lai (賴清德) said, adding that while a weaker NT dollar could boost the nation’s exports, Taiwan needs to boost its domestic demand.
The Forward-looking Infrastructure Development Program and a 3 percent salary increase for public-sector employees were aimed at stimulating the domestic market, Lai said.
The “five plus two” initiative — development of an “Asian Silicon Valley,” “intelligent” machinery, “green” energy technology, biomedicine and national defense, as well as the establishment of a new agricultural business model and a circular economy — aims to help industries transition and encourage private-sector investment, he added.
Upgrading and transitioning industries are necessary to steer Taiwan away from competition with China in terms of technology products that involve less technical ability to produce or have lower price points, Chiou said.
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