Government officials have blamed global macroeconomic uncertainty and geopolitical tensions for Taiwan’s weakening exports and lackluster economic outlook. People should ignore such general comments. Identifying the hidden factors that led to Taiwan’s poorer performance than its those of Asian rivals is essential if the country intends to enhance its competitiveness and play a bigger role on the global trading scene.
Taiwan’s exports dipped last month at an annual rate of 23.4 percent to US$32.2 billion, the steepest in 14 years, since the 2008-2009 global financial crisis, according to data released by the Ministry of Finance on Friday. The performance was disappointing, as the ministry had estimated an annual contraction of between 14 percent and 16.5 percent in last month’s exports.
That brought the nation’s first-half export slump to 18 percent year-on-year to US$202.11 billion. The decline was twice the pace registered by Taiwan’s major Asian rivals, compared with South Korea’s contraction of 12.3 percent, Singapore’s 8.9 percent and Japan’s 7.1 percent during the same period.
High inflation and elevated key interest rates are not the primary key factors that hobbled Taiwan’s exports and economic growth, as South Korea, Singapore and Japan also faced those headwinds. Why exactly do those economies fare better than Taiwan?
The ministry finally provided its explanation last week, pointing to a combination of reasons. One of the most important factors was Taiwan’s significant exposure to the Chinese market, the ministry said. As a result, Taiwan is vulnerable to and easily swayed by the ups and downs of China’s economy.
Multiple foreign banks including Nomura have revised downward their forecast for China’s GDP this year to about 5 percent from as high as 5.7 percent, as China struggles to recover during the post-COVID-19-pandemic era.
China, including Hong Kong, is the biggest export destination of Taiwan, making up 37.1 percent of Taiwan’s exports last month, even though that percentage has been sliding from higher than 40 percent. Taiwan’s Chinese market exposure is much higher than South Korea’s 22 percent.
South Korea and Japan also saw exports to China contract, but Taiwan suffered the biggest hit due to the high concentration of goods shipped across the Taiwan Strait. The value of China-bound goods plunged 22.2 percent year-on-year to US$11.99 billion last month. That sent the total exports to China plummeting by 26 percent annually to US$71.8 billion during the first six months, the deepest slump among Taiwan’s major export destinations, the ministry’s data showed.
On top of that, semiconductors were the biggest category exported to China, making up about 36 percent of China-bound goods, the ministry’s data showed. Sluggish demand for chips used in smartphones coupled with other electronic components caused a 15.3 percent yearly decline in electronic components shipped to China during the January-to-June period, the ministry’s data showed.
The weak revenue performance of smartphone chip designer MediaTek Inc set an example. It counts Chinese phone brands among its major clients, which include Oppo Mobile Telecommunications Corp, Vivo Communication Technology Co and Xiaomi Inc. With consumers in China unwilling to spend on nonessential items such as mobile phones, MediaTek saw its revenue sink by 35 percent year-over-year to NT$193.79 billion (US$6.17 billion) during the first six months of this year.
It is challenging to diversify export destinations beyond China, or any other markets, but it is crucial for the government to help local businesses and investors gain a better picture about the nation’s economy and its industrial development, which would enable them to find solutions to address the questions.
To The Honorable Legislative Speaker Han Kuo-yu (韓國瑜): We would like to extend our sincerest regards to you for representing Taiwan at the inauguration of US President Donald Trump on Monday. The Taiwanese-American community was delighted to see that Taiwan’s Legislative Yuan speaker not only received an invitation to attend the event, but successfully made the trip to the US. We sincerely hope that you took this rare opportunity to share Taiwan’s achievements in freedom, democracy and economic development with delegations from other countries. In recent years, Taiwan’s economic growth and world-leading technology industry have been a source of pride for Taiwanese-Americans.
Next week, the nation is to celebrate the Lunar New Year break. Unfortunately, cold winds are a-blowing, literally and figuratively. The Central Weather Administration has warned of an approaching cold air mass, while obstinate winds of chaos eddy around the Legislative Yuan. English theologian Thomas Fuller optimistically pointed out in 1650 that “it’s always darkest before the dawn.” We could paraphrase by saying the coldest days are just before the renewed hope of spring. However, one must temper any optimism about the damage being done in the legislature by the opposition Chinese Nationalist Party (KMT) and Taiwan People’s Party (TPP), under
To our readers: Due to the Lunar New Year holiday, from Sunday, Jan. 26, through Sunday, Feb. 2, the Taipei Times will have a reduced format without our regular editorials and opinion pieces. From Tuesday to Saturday the paper will not be delivered to subscribers, but will be available for purchase at convenience stores. Subscribers will receive the editions they missed once normal distribution resumes on Sunday, Feb. 2. The paper returns to its usual format on Monday, Feb. 3, when our regular editorials and opinion pieces will also be resumed.
This year would mark the 30th anniversary of the establishment of the India Taipei Association (ITA) in Taipei and the Taipei Economic and Cultural Center (TECC) in New Delhi. From the vision of “Look East” in the 1990s, India’s policy has evolved into a resolute “Act East,” which complements Taiwan’s “New Southbound Policy.” In these three decades, India and Taiwan have forged a rare partnership — one rooted in shared democratic values, a commitment to openness and pluralism, and clear complementarities in trade and technology. The government of India has rolled out the red carpet for Taiwanese investors with attractive financial incentives
RSS