Moody’s Investors Service last week affirmed Taiwan’s sovereign credit rating of “Aa3” and changed its credit outlook for the nation to “positive” from “stable,” which is not only a first since the ratings agency began covering Taiwan in 1994, but also a vote of confidence in the nation’s resilient economy and its good governance model, despite US-China trade tensions and the COVID-19 pandemic.
The government welcomed the move. The Ministry of Finance said that Moody’s affirmation reflects Taiwan’s strong fiscal discipline and effectiveness of restoring economic normalcy amid the pandemic, while the outlook upgrade indicates that the nation’s sovereign rating might be upgraded within a year.
The central bank said that the agency’s assessment suggests the nation’s ample foreign-exchange reserve and its flexible exchange rate regime strengthen the economy’s shock-absorption capacity and have enhanced its monetary and macroeconomic policy effectiveness. The assessment also points to the bank’s deployment of macroprudential measures last year to ease financial risks from elevated household debt and rising property prices in some areas, it said.
The Moody’s report is just the latest assessment from global institutions giving high marks to Taiwan. The International Institute for Management Development’s annual world competitiveness report, released in June last year, gave the nation its best rating since 2016, while the institute’s global digital competitiveness survey and the corporate governance rankings by the Asian Corporate Governance Association last year also gave Taiwan its best marks in the past few years, the Executive Yuan said last week.
Despite daunting challenges at home and abroad, Taiwan has managed to keep COVID-19 at bay, and the latest data show that the economy and stock markets are stronger than those of its regional peers. However, closer scrutiny reveals that economic development has been concentrated among a few high-tech industries, especially electronics, communications and semiconductors, while the nation’s overseas shipments are still centered on China.
CRIF China Credit Information Service Ltd last week said that the Taiwanese economy faces major risks in the long term, as its exports concentrate too much on intermediate goods, the electronics and communications industry, and the Chinese market.
According to CRIF, intermediate goods accounted for 77.1 percent of Taiwan’s exports last year, while outbound shipments of capital goods and consumer goods continued to fall to 13.4 percent and 8.9 percent respectively. Exports of electronics, communication and audiovisual products accounted for 53.51 percent of last year’s total exports, compared with the machinery industry’s 6.34 percent and the optical industry’s 3.41 percent.
China remained Taiwan’s largest export market, making up 43.9 percent of the total last year, higher than the US’ 14.6 percent, as many of the goods destined for the US were still from China, it said.
CRIF warned of an unbalanced development of local industries and urges the nation to transform its export structure. Although Taiwan’s industries would still face difficulty decoupling from China, it emphasized the importance for the nation to diversify its trading partners. If things remain unchanged, Taiwan would be vulnerable to changes in the global economic climate and political situation.
The US-China trade dispute and new trends driven by the pandemic have provided an opportunity for Taiwan’s electronics and communication industries, as well as its non-tech sectors, ranging from machinery and textiles to petrochemicals and others. To capitalize on it, the government needs to help weaker industries upgrade equipment and secure more resources, including access to funds. Otherwise, despite positive assessments by global institutions and pretty economic data, not all will feel satisfied with the nation’s economic and industrial development.
The gutting of Voice of America (VOA) and Radio Free Asia (RFA) by US President Donald Trump’s administration poses a serious threat to the global voice of freedom, particularly for those living under authoritarian regimes such as China. The US — hailed as the model of liberal democracy — has the moral responsibility to uphold the values it champions. In undermining these institutions, the US risks diminishing its “soft power,” a pivotal pillar of its global influence. VOA Tibetan and RFA Tibetan played an enormous role in promoting the strong image of the US in and outside Tibet. On VOA Tibetan,
Sung Chien-liang (宋建樑), the leader of the Chinese Nationalist Party’s (KMT) efforts to recall Democratic Progressive Party (DPP) Legislator Lee Kun-cheng (李坤城), caused a national outrage and drew diplomatic condemnation on Tuesday after he arrived at the New Taipei City District Prosecutors’ Office dressed in a Nazi uniform. Sung performed a Nazi salute and carried a copy of Adolf Hitler’s Mein Kampf as he arrived to be questioned over allegations of signature forgery in the recall petition. The KMT’s response to the incident has shown a striking lack of contrition and decency. Rather than apologizing and distancing itself from Sung’s actions,
US President Trump weighed into the state of America’s semiconductor manufacturing when he declared, “They [Taiwan] stole it from us. They took it from us, and I don’t blame them. I give them credit.” At a prior White House event President Trump hosted TSMC chairman C.C. Wei (魏哲家), head of the world’s largest and most advanced chip manufacturer, to announce a commitment to invest US$100 billion in America. The president then shifted his previously critical rhetoric on Taiwan and put off tariffs on its chips. Now we learn that the Trump Administration is conducting a “trade investigation” on semiconductors which
By now, most of Taiwan has heard Taipei Mayor Chiang Wan-an’s (蔣萬安) threats to initiate a vote of no confidence against the Cabinet. His rationale is that the Democratic Progressive Party (DPP)-led government’s investigation into alleged signature forgery in the Chinese Nationalist Party’s (KMT) recall campaign constitutes “political persecution.” I sincerely hope he goes through with it. The opposition currently holds a majority in the Legislative Yuan, so the initiation of a no-confidence motion and its passage should be entirely within reach. If Chiang truly believes that the government is overreaching, abusing its power and targeting political opponents — then
RSS