The government’s latest foreign trade data show that the trade surplus continued to rise last month — reaching US$3.17 billion from US$2.14 billion in April. The figures were also up US$950 million, or 42.6 percent, from April last year.
In the first five months of this year, the cumulative trade surplus amounted to US$13.77 billion, according to Ministry of Finance figures released last week. That figure was more than twice the US$6.53 billion surplus registered a year earlier.
A trade surplus is the difference between a country’s exports and imports when the value of exports is greater. Ordinarily, a large trade surplus is a blessing and helps to maintain confidence in the economy. In terms of the value of GDP, an expanding trade surplus also bodes well.
But not this time.
A closer check at the latest trade data reveals that the sizable trade surplus Taiwan registered came about because the decline in the nation’s imports was much larger than that for exports amid the global slowdown.
Last month, for example, exports fell 31.4 percent year-on-year to US$16.17 billion, while imports posted a 39.1 percent decline to US$13.01 billion. Between January and last month, exports and imports were still much lower than a year ago in the wake of the recession, with exports falling 35.1 percent to US$71.54 billion and imports crashing by 44.3 percent to US$57.77 billion.
No wonder, then, that citing the surplus has become a convenient ruse among government officials hoping to avoid accountability for subdued export activity. The economy may have bottomed out, but a recovery could be a long time coming because recent indicators of employment, domestic consumption and corporate investment remain dull.
The latest trade data offer insights into the dimming prospects for corporate investment. According to the ministry’s figures, imports of capital equipment contracted by 44.2 percent year-on-year to US$8.4 billion in the first five months, while imports of agricultural and industrial raw materials shrank by 46.8 percent to US$43.5 billion over the same period.
This indicates that local firms are still troubled by the sharp downturn in business fundamentals. Most importantly, these firms’ reluctance to invest at this time poses a serious challenge to the nation’s exports in later months if the companies can’t expand capacity rapidly enough to keep up with demand.
That is to say, Taiwan’s economy will not proceed at full steam as long as corporate investment is so heavily restrained. Other economic data released recently also contain mixed signals, and the public should be cautious about pinning hopes too heavily on other improving economic fundamentals.
The same applies to the recent euphoria on the local stock market. The government has interpreted this as a signal of improving sentiment among investors, though the market has been driven by rapidly increasing liquidity because investors have been buying up China-related shares rather than sticking to business fundamentals.
The current task for Taiwan’s economy — to climb back to where it was one or two years ago — promises to be long and onerous. It requires a collective effort to ensure that the recovery is sustainable.
What this task does not need is political fudging of the meaning behind the numbers.
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
In an article published on this page on Tuesday, Kaohsiung-based journalist Julien Oeuillet wrote that “legions of people worldwide would care if a disaster occurred in South Korea or Japan, but the same people would not bat an eyelid if Taiwan disappeared.” That is quite a statement. We are constantly reading about the importance of Taiwan Semiconductor Manufacturing Co (TSMC), hailed in Taiwan as the nation’s “silicon shield” protecting it from hostile foreign forces such as the Chinese Communist Party (CCP), and so crucial to the global supply chain for semiconductors that its loss would cost the global economy US$1
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
Sasha B. Chhabra’s column (“Michelle Yeoh should no longer be welcome,” March 26, page 8) lamented an Instagram post by renowned actress Michelle Yeoh (楊紫瓊) about her recent visit to “Taipei, China.” It is Chhabra’s opinion that, in response to parroting Beijing’s propaganda about the status of Taiwan, Yeoh should be banned from entering this nation and her films cut off from funding by government-backed agencies, as well as disqualified from competing in the Golden Horse Awards. She and other celebrities, he wrote, must be made to understand “that there are consequences for their actions if they become political pawns of