Economy up despite trade woes with China
By Paul Lin 林保華
Taipei Times 2023.7.1
Taiwan has moved up to sixth place among 64 economies in the Switzerland-based International Institute for Management Development’s World Competitiveness Yearbook after improving steadily over the past five years. It surpassed Hong Kong on the list for the first time.
In 2018 and 2019, Hong Kong was second after Singapore and the US. However, after protests against a Beijing-backed extradition bill, Hong Kong gradually slipped in the rankings. The passage of the National Security Law reinforced this trend. In 2018 and 2019, Taiwan was ranked behind China, but since 2020, Taiwan has been ahead.
Taiwan was sixth and fourth in the “government efficiency” and “business efficiency” indicators respectively, and it was in the top five for “management” and “technology infrastructure.”
In two other smaller indicators, Taiwan topped the rankings for “4G and 5G penetration of the mobile market” and “research and development personnel per 1,000 people.”
For five years, Taiwan has improved considerably thanks to President Tsai Ing-wen’s (蔡英文) administration gradually moving away from dependence on China, which former president Ma Ying-jeou’s (馬英九) administration backed.
The Tsai administration implemented the New Southbound Policy, consolidated export ties with the US, Japan and Europe, and carried out pension reforms to improve Taiwan’s finances.
Before taking office in 2008, Ma said that the TAIEX would reach 10,000 points and soon afterward revised the prediction to 20,000 points.
However, the TAIEX did not even reach 10,000 points.
When Tsai took office in 2016, the stock market thrived. In 2017, it surpassed 10,000 points and peaked at 18,000.
During Ma’s presidency, Chinese corporations tried to acquire Taiwan Semiconductor Manufacturing Co (TSMC), MediaTek Inc and other Taiwanese technology companies, which have continued to shine.
TSMC became Taiwan’s “silicon shield.” After the US-China trade war began, Taiwanese companies that used to invest in China’s market have moved to Vietnam, India and elsewhere.
Last year, China, including Hong Kong, was the top export market for Taiwan, accounting for 38.8 percent of the total.
However, export value fell by 1.6 percent from 2021, the lowest in about 10 years.
Chinese General Administration of Customs data in April showed that Taiwan’s trade with China in the first three months of this year decreased 26.5 percent from a year earlier, with a trade surplus of US$28.525 billion.
Exports to China totaled US$44.429 billion in the first three months, down 28 percent from the same period last year, the data showed.
While a global economic recession is one of the reasons for decline, the US-China trade war is also a factor.
Taiwan is an export-oriented country. Although export orders have been fluctuating, the situation is expected to improve in the second half of this year. Taiwan’s economy would boom again, guided by the development of the artificial intelligence industry.
Vice President William Lai (賴清德), the Democratic Progressive Party’s presidential candidate, has proposed making the biotechnology industry Taiwan’s second “shield” alongside the “silicon shield.”
Last year, Taiwan’s GDP per capita was US$32,811, surpassing South Korea’s US$32,237, but it appears that Taiwanese are not seeing the benefits firsthand.
The government must put more effort into making sure that people taste the fruits of economic growth.
Paul Lin is a political commentator.
Translated by Emma Liu