The Mainland Affairs Council (MAC) on Saturday warned Taiwanese businesspeople operating in China to reassess mounting economic and political risks.
In China, politics and economics are inseparable. Political risk is compounded by deepening structural challenges: a sharp decline in foreign investment, persistently high youth unemployment, weak consumer demand and a prolonged property slump. Against this backdrop, Beijing’s policy responses — including heavy state subsidies and industrial planning — are reshaping the competitive landscape in ways that could disadvantage foreign firms.
Industrial overcapacity, fueled by government support, and the continuing tariff and technology conflict with the US have further clouded the outlook. At the same time, European nations and Japan have accelerated “de-risking” strategies aimed at reducing reliance on the Chinese market and diversifying supply chains. Taiwanese firms cannot assume they are insulated from these global shifts.
Taiwanese companies originally concentrated in China as export-oriented manufacturers. That model still exists, but cross-strait economic ties have since broadened. Many Taiwanese businesses produce components embedded in China’s industrial ecosystem or sell directly to Chinese consumers.
The lure is the size of the Chinese market. Although China’s per capita GDP — about US$13,700 in 2024, World Bank data showed — is far below that of the US at about US$79,000, the sheer scale of China’s population offers substantial revenue potential, even for lower-priced goods and services.
Yet, potential does not guarantee profitability. Numerous foreign brands have been reporting declining earnings in China, including automakers such as Volkswagen Group, BMW and Mercedes-Benz; smartphone makers Apple Inc and Samsung Electronics; and consumer chains such as Starbucks and Burger King.
Several factors help explain this trend. Beijing’s industrial policies favor domestic champions. Foreign firms often face regulatory asymmetries, while local competitors benefit from state-backed financing, preferential land access, tax incentives and advantages in public procurement — all aligned with a strategic push for “self-reliance.”
Longstanding concerns also persist over intellectual property leakage, pressure for technology transfers through joint ventures and the replication of foreign business models by local rivals.
Foreign companies might still earn profits in China, but they operate in a market where conditions are structurally tilted. Rising ultranationalism has further bolstered consumer preference for domestic brands. Moreover, access to the Chinese market could hinge on political sensitivities: a marketing decision or a diplomatic dispute involving a firm’s home country could swiftly trigger boycotts or regulatory action.
For Taiwanese businesspeople, the risks are sharper still. Statements interpreted as supporting Taiwanese independence — or even association with those who do — could expose people to sedition charges, potentially leading to lengthy imprisonment, asset seizure and restricted access to legal counsel or family from Taiwan. Conversely, expressions of support for Beijing’s annexation agenda, even if made to safeguard commercial interests, could carry legal consequences upon returning to Taiwan. It is a precarious balancing act with no easy escape.
Some said that business could remain separate from politics. In China, that assumption is untenable. As the MAC has said, commercial activity in China does not exist in a political vacuum. From Beijing’s perspective, every cross-strait exchange carries political meaning.
Hung Pu-chao (洪浦釗), deputy executive director of Tunghai University’s Cross-Strait Research Center, said that Beijing intends to pursue more “institutionalized united front work” over the next five years.
China’s direction is clear: consolidate control over manufacturing, technology and supply chains; localize production wherever possible; and reduce vulnerability to external pressure, he said. Beijing’s blueprint calls for advancing cross-strait “integrated development demonstration zones,” bolstering industrial cooperation and deepening economic integration.
“Integration is not just about economic and trade exchanges; it is about gradually incorporating people, capital and industries into China’s development and governance framework through institutional arrangements,” Hung said, cautioning the government to prevent employment, residency rights, social security systems and industrial resources in Taiwan from becoming structurally tied to the Chinese system.
For many Taiwanese, repeated warnings about infiltration have become background noise. Yet, “united front” efforts are rarely dramatic. More often, they advance incrementally — salami-slicing “gray zone” tactics that draw Taiwan ever closer into China’s orbit, step by step. The public should not grow indifferent to such risks, and businesspeople should recognize that while the rewards of the Chinese market might be tempting, the structural and political risks increasingly outweigh them.
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