Taiwanese businesses were reducing their dependence on China before the COVID-19 pandemic, in light of trade frictions and growing uncertainty about the future of globalization, economists have said.
“What used to be called globalization was actually establishing a presence in China,” said Chang Chien-yi (張建一), president of the Taiwan Institute of Economic Research (台灣經濟研究院).
The lack of a language barrier and geographical proximity made it easy for Taiwanese businesses to build up operations in China, especially when they were offered tax incentives, Chang said.
Chang cited government statistics showing a decline in Taiwanese investments in and exports to China last year, saying that the trend was only accelerated by the COVID-19 outbreak.
Investments by Taiwanese firms in China last year fell 51 percent to NT$4.17 billion (US$139.47 million) for the fourth consecutive year of decline, government data showed.
Exports to China, including Hong Kong, dropped 4.1 percent over the period, the data showed.
Pulling away from China does not amount to exiting the country, but merely adjusting the focus from minimizing costs to better management of risks, Chang said.
“China is not the only market,” he said.
Supply Management Institute in Taiwan (中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) said that the benefits of operating in China have over the past few years faded due to stricter environmental protection laws and rising wages.
No one would give up the Chinese market, Lai said, adding that the moves are more about repositioning and diversifying risks.
Businesses had been too content to accept the way things were before trade frictions began between the US and China in 2018, said Roy Chun Lee (李淳), deputy director of the Taiwan World Trade Organization and Regional Trade Agreements Center of the Chung Hua Institution for Economic Research (中華經濟研究院).
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