More than a decade ago, the biggest headache for Taiwan's economic and trade officials used to be about how to diversify the market and balance Taiwan-US trade. Now, the most pressing issue for Taiwan's officials is about how to resist China's magnetic pull and lead China toward internationalization. The question has always been how to diversify trade and investment, whether it is with the US or China. In handling its economic dependency on China, Taiwan should follow its experience of handling the trade deficit with the US more than a decade ago and diversify the market.
According to statistics from the Ministry of Economic Affairs, cross-strait trade increased nearly 20-fold between 1987 and 2001. Trade with China accounted for 1.71 percent of Taiwan's overall foreign trade in 1987, rising to 13 percent in 2001. Exports to China accounted for 19.6 percent of Taiwan's exports in 2001, but Chinese goods accounted for only 5.5 percent of Taiwan's imports because Taiwan continues to restrict them. Cross-strait trade totaled more than US$40 billion last year, of which Taiwanese exports to China accounted for US$32.8 billion, or 25 percent of all of Taiwan's exports. Chinese imports to Taiwan totaled US$7.95 billion, with China replacing South Korea as the third largest source of Taiwan's imports. Taiwan's economic dependency on China has increased dramatically.
On the investment side, Taiwan's government had approved investments in China worth US$25.5 billion by the end of last year. Investments in China account for 48.32 percent of all Taiwanese investments abroad, making Taiwan the fourth largest source of foreign investments in China. Now that the Executive Yuan has agreed in principle to allow Taiwan Semiconductor Manufacturing Corp (
In the past, Taiwan's financial authorities used three strategies to handle overconcentration on the US market: market diversification, investment diversification and improving the domestic investment environment. In terms of market diversification, the government should now strengthen global sales expansion plans, set up government procurement Web sites, collect information on foreign government procurement plans and help local businesses bid for overseas projects.
The government should now actively push for free-trade agreements, with priority given to the US, Japan, Singapore, Panama and other South American nations. When it comes to diversifying investments, the "Go South" policy should be rekindled. Of all Southeast Asian nations, Vietnam has the best conditions for Taiwanese investments. Taiwan should first seek a free-trade agreement with Vietnam, and then attract other countries to follow suit.
Besides, the government should plan to attract overseas Taiwanese businesses back to Taiwan. It should also help them set up global strategies and diversify risk. When it comes to creating a favorable investment environment, the government should help local investors acquire industrial land, propose low-price land-lease strategies, help businesses raise funds and use tax breaks to encourage industrial upgrades and innovation. Taiwan should take advantage of a global economic recovery to improve its economic structure and push for internationalization as an alternative to Sinicization. If Taiwan cannot break free from dependence on China, Kenichi Ohmae's prediction of a United States of Chunghwa in 2005 could unfortunately come true.
With escalating US-China competition and mutual distrust, the trend of supply chain “friend shoring” in the wake of the COVID-19 pandemic and the fragmentation of the world into rival geopolitical blocs, many analysts and policymakers worry the world is retreating into a new cold war — a world of trade bifurcation, protectionism and deglobalization. The world is in a new cold war, said Robin Niblett, former director of the London-based think tank Chatham House. Niblett said he sees the US and China slowly reaching a modus vivendi, but it might take time. The two great powers appear to be “reversing carefully
As China steps up a campaign to diplomatically isolate and squeeze Taiwan, it has become more imperative than ever that Taipei play a greater role internationally with the support of the democratic world. To help safeguard its autonomous status, Taiwan needs to go beyond bolstering its defenses with weapons like anti-ship and anti-aircraft missiles. With the help of its international backers, it must also expand its diplomatic footprint globally. But are Taiwan’s foreign friends willing to translate their rhetoric into action by helping Taipei carve out more international space for itself? Beating back China’s effort to turn Taiwan into an international pariah
Typhoon Krathon made landfall in southwestern Taiwan last week, bringing strong winds, heavy rain and flooding, cutting power to more than 170,000 homes and water supply to more than 400,000 homes, and leading to more than 600 injuries and four deaths. Due to the typhoon, schools and offices across the nation were ordered to close for two to four days, stirring up familiar controversies over whether local governments’ decisions to call typhoon days were appropriate. The typhoon’s center made landfall in Kaohsiung’s Siaogang District (小港) at noon on Thursday, but it weakened into a tropical depression early on Friday, and its structure
Since the end of the Cold War, the US-China espionage battle has arguably become the largest on Earth. Spying on China is vital for the US, as China’s growing military and technological capabilities pose direct challenges to its interests, especially in defending Taiwan and maintaining security in the Indo-Pacific. Intelligence gathering helps the US counter Chinese aggression, stay ahead of threats and safeguard not only its own security, but also the stability of global trade routes. Unchecked Chinese expansion could destabilize the region and have far-reaching global consequences. In recent years, spying on China has become increasingly difficult for the US
RSS