The US-China trade dispute that began last year has hurt the economies of both nations, but helped others by diverting production to their markets, with Taiwan the biggest beneficiary, a UN report released on Tuesday says.
The UN Conference on Trade and Development (UNCTAD) paper said the increase in tariffs imposed on Chinese goods led to a 25 percent decline, from US$130 billion to US$95 billion, of US imports of tariffed products in the first half of this year.
Several export-oriented economies, including Taiwan, Mexico, the EU and Vietnam, have benefited from trade diversion effects, and Taiwan has been the biggest winner, said UNCTAD economist Alessandro Nicita, the author of Trade and Trade Diversion Effects of United States Tariffs on China.
The paper puts the trade diversion effects — increased imports from nations not directly involved in the dispute — for the first half of this year at about US$21 billion, implying that the amount of net trade losses corresponds to about US$14 billion.
The report says that the diversion to Taiwan — which it labels a province of China — of the production of goods for export to the US from China resulted in additional exports from Taiwan to the US of about US$4.2 billion in the first half of the year.
That was more than the additional US$3.5 billion, US$2.7 billion and US$2.6 billion in exports to the US by Mexico, the EU and Vietnam respectively during the same period, it says.
Most of the costs resulting from the increase in tariffs on Chinese goods was passed down to US consumers and companies, Nicita said.
“US consumers are paying for the tariffs ... in terms of higher prices,” Nicita wrote. “Not only final consumers like us, but importers of intermediate products — firms which import parts and components from China.”
“The longer the trade war goes on, the more likely these losses and gains will be permanent,” he wrote.
The biggest increase in exports from Taiwan came primarily in the office machinery and communications equipment sectors, while office machinery has been the hardest hit sector in terms of Chinese exports to the US market, with Washington’s imports falling by almost US$10 billion.
By sector, the dispute has led to increases of US$2.83 billion in office machinery exports, US$491 million in communications equipment exports and US$287 million in electrical machinery exports by Taiwan to the US in the first half, the report says.
Taiwan’s trade data echoed the trend of exports being diverted from China to Taiwan.
In the first nine months, the nation’s overall exports fell 2.5 percent from a year earlier to US$242.3 billion, but its exports to the US were up 17.7 percent at US$34.06 billion, Ministry of Finance data showed.
The UNCTAD report was the subject of discussion yesterday at the Legislative Yuan in Taipei, as lawmakers on two committees raised questions about its findings.
Minister of Finance Su Jain-rong (蘇建榮) told the Finance Committee that he was upbeat about the industrial restructuring seen in Taiwan as a result of the trade dispute.
Taiwanese investors have been building a “non-red supply chain” by moving some of their production capacity from China, which was a positive step for Taiwan’s economy in the long term, he said.
At a Foreign Affairs and National Defense Committee meeting, Vice Minister of Economic Affairs Wang Mei-hua (王美花) said that many orders had been diverted to Taiwan and many Taiwanese businesspeople were returning home, which helped drive production of some sensitive technologies, such as servers and routers, back to Taiwan.
Questioning Wang, Chinese Nationalist Party (KMT) Legislator Johnny Chiang (江啟臣) said that some sectors of the nation’s economy are being hurt by the trade dispute and the number of furloughed workers in the nation has continued to increase.
Wang told Chiang that the machine tools and machinery sectors have been affected by a decline in orders from China, and the government would help manufacturers upgrade and transform their businesses.
As of last week, 151 Taiwanese businesses had pledged to return home and invest NT$623.6 billion (US$20.51 billion), Ministry of Economic Affairs data showed.
CREDIT-GRABBER: China said its coast guard rescued the crew of a fishing vessel that caught fire, who were actually rescued by a nearby Taiwanese boat and the CGA Maritime search and rescue operations do not have borders, and China should not use a shipwreck to infringe upon Taiwanese sovereignty, the Coast Guard Administration (CGA) said yesterday. The coast guard made the statement in response to the China Coast Guard (CCG) saying it saved a Taiwanese fishing boat. The Chuan Yu No. 6 (全漁6號), a fishing vessel registered in Keelung, on Thursday caught fire and sank in waters northeast of Diaoyutai Islands (釣魚台). The vessel left Keelung’s Badouzih Fishing Harbor (八斗子漁港) at 3:35pm on Sunday last week, with seven people on board — a 62-year-old Taiwanese captain surnamed Chang (張) and six
RISKY BUSINESS: The ‘incentives’ include initiatives that get suspended for no reason, creating uncertainty and resulting in considerable losses for Taiwanese, the MAC said China’s “incentives” failed to sway sentiment in Taiwan, as willingness to work in China hit a record low of 1.6 percent, a Ministry of Labor survey showed. The Directorate-General of Budget, Accounting and Statistics (DGBAS) also reported that the number of Taiwanese workers in China has nearly halved from a peak of 430,000 in 2012 to an estimated 231,000 in 2024. That marked a new low in the proportion of Taiwanese going abroad to work. The ministry’s annual survey on “Labor Life and Employment Status” includes questions respondents’ willingness to seek employment overseas. Willingness to work in China has steadily declined from
The Legislative Yuan’s Finance Committee yesterday approved proposed amendments to the Amusement Tax Act (娛樂稅法) that would abolish taxes on films, cultural activities and competitive sporting events, retaining the fee only for dance halls and golf courses. The proposed changes would set the maximum tax rate for dance halls and golf courses at 50 and 20 percent respectively, with local governments authorized to suspend the levies. Article 2 of the act says that “amusement tax shall be levied on tickets sold or fees charged by amusement places, facilities or activities” in six categories: “Cinema; professional singing, story-telling, dancing, circus, magic show, acrobatics
INFLATION UP? The IMF said CPI would increase to 1.5 percent this year, while the DGBAS projected it would rise to 1.68 percent, with GDP per capita of US$44,181 The IMF projected Taiwan’s real GDP would grow 5.2 percent this year, up from its 2.1 percent outlook in January, despite fears of global economic disruptions sparked by the US-Iran conflict. Taiwan’s consumer price index (CPI) is projected to increase to 1.5 percent, while unemployment would be 3.4 percent, roughly in line with estimates for Asia as a whole, the international body wrote in its Global Economic Outlook Report published in the US on Monday. The figures are comparatively better than the IMF outlook for the rest of the world, which pegged real GDP growth at 3.1 percent, down from 3.3 percent
RSS