The government late last month abruptly resumed a policy requiring domestic vehicle assemblers to increase their proportion of local auto parts, a policy mainly targeting Chinese imports that has raised concerns about how strictly the measure would be enforced. Since Taiwan’s entry into the WTO in 2002, it had entirely scrapped rules requiring local automakers to use a certain proportion of domestically made parts, as well as gradually slashing tariffs on imported vehicles from 30 percent to 17.5 percent.
To prevent Chinese auto parts from entering Taiwan in a piecemeal fashion, the Ministry of Economic Affairs on July 30 stipulated that local automakers must increase their share of locally made parts to 20 percent during the first year of the policy, rising to 25 percent in the second year and 35 percent in the third year. Those contravening the policy would be barred from importing critical auto parts, including engines, steering devices, axles and chassis. The new rules take effect this month.
While domestically made parts are relatively pricey given inflationary pressure, the ministry said the purpose of the policy is to protect local auto parts manufacturers and avoid the foundation of the nation’s auto industry being undermined by unfair competition from abroad, given that the domestic auto market is relatively small. The measures also came after some legislators voiced concerns that Taipei-based China Motor Corp took advantage of less expensive Chinese parts to assemble MG brand electric vehicles (EVs), hampering market competition. About 95 percent of MG vehicles built in Taiwan use Chinese components, the ministry said. MG, originally a British brand, was acquired by China’s state-owned SAIC Motor Corp in 2005.
As Chinese vehicles are prohibited from being imported into Taiwan, China Motor adopts the so-called complete knock-down approach, in which a vehicle is delivered in parts and assembled at the destination, to circumvent the ban. MG’s electric hatchback, the MG4, entered the market in the middle of June, with an attractive price of NT$990,000, attracting strong local interest. To comply with the government’s new car assembly rules, MG on Friday said it would halt delivery of the MG4 model at the end of this month. The company said it would strive to bolster cooperation with local auto supply chains to satisfy demand. The new rules would also spoil China Motor’s efforts to introduce the G50 Plus, from Maxus, another SAIC subsidiary.
Kuozui Motors Ltd, which assembles Toyota vehicles in Taiwan, said the ministry’s rules would not affect its production, given its long history of using local auto parts. Kuozui is a joint venture between Hotai Motor Co and Toyota Motor Corp.
The ministry defended its new rules to fend off rising competition from Chinese automakers, pointing to similar policies in the US and the EU. The US raised import tariffs on Chinese EVs to 100 percent, as China has subsidized its EV industry, leading to unfair competition, the ministry said. The concern is that a cap on foreign auto parts is considered an old-fashioned method to protect local suppliers and could face complaints that it contravenes free-trade rules. As a developed country, Taiwan should consider carefully its policies to defend local industries from foreign competition.
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
If you had a vision of the future where China did not dominate the global car industry, you can kiss those dreams goodbye. That is because US President Donald Trump’s promised 25 percent tariff on auto imports takes an ax to the only bits of the emerging electric vehicle (EV) supply chain that are not already dominated by Beijing. The biggest losers when the levies take effect this week would be Japan and South Korea. They account for one-third of the cars imported into the US, and as much as two-thirds of those imported from outside North America. (Mexico and Canada, while
The military is conducting its annual Han Kuang exercises in phases. The minister of national defense recently said that this year’s scenarios would simulate defending the nation against possible actions the Chinese People’s Liberation Army (PLA) might take in an invasion of Taiwan, making the threat of a speculated Chinese invasion in 2027 a heated agenda item again. That year, also referred to as the “Davidson window,” is named after then-US Indo-Pacific Command Admiral Philip Davidson, who in 2021 warned that Chinese President Xi Jinping (習近平) had instructed the PLA to be ready to invade Taiwan by 2027. Xi in 2017