While total outbound foreign investment — excluding China — approved by the Ministry of Economic Affairs’ Investment Commission has been increasing, Taiwan’s growing export dependence on China might affect economic growth, the Legislative Yuan’s Budget Center said in a report.
Outbound foreign investment has been growing, from US$7.294 billion in 2014 to more than US$10 billion annually in the past few years, and reached US$14.295 billion last year, marking a record high, commission statistics showed.
The report suggested that some Taiwanese companies, due to favorable geographic factors or a lack of incentive for investing domestically, are increasingly willing to invest in other nations, including those in Latin America and Asia.
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As for Taiwanese investment in China, the report said that “the trend is gradually fading,” due mainly to rapid changes in China that include land use regulations, increasing rent, labor costs and tighter environmental protection requirements.
These changes have resulted in harsh competition and Taiwanese businesses losing their advantages, it said.
There has been negative growth in total Taiwanese investment in China from 2016 to last year, the report said.
Direct investment in China dropped from US$10.277 billion in 2014 to US$8.498 billion last year — a decrease of US$1.779 billion over four years — mainly in the finance, insurance, computer, electronics and optics industries, it added.
However, Taiwanese businesses are still showing interest in investing in China in electronic parts and components manufacturing, wholesaling and retailing, the report said.
Exports to China and Hong Kong last year totaled US$138.35 billion, accounting for 41.19 percent of total exports and demonstrating continuous growth in export dependence on China, raising concerns over the risks involved in being overly dependent on a single market, it said.
The commission recommended that Taiwan try to diversify its export trade market to avoid overdependence on China.
It also advised stabilizing existing exports to the US, enhancing trade exchanges with nations targeted by the government’s New Southbound Policy and expanding into new markets for export products, as well as seeking admission to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
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