Taiwan is facing multiple economic challenges due to internal and external pressures. Internal challenges include energy transition, upgrading industries, a declining birthrate and an aging population. External challenges are technology competition between the US and China, international supply chain restructuring and global economic uncertainty. All of these issues complicate Taiwan’s economic situation.
Taiwan’s reliance on fossil fuel imports not only threatens the stability of energy supply, but also goes against the global trend of carbon reduction.
The government should continue to promote renewable energy sources such as wind and solar power, as well as energy storage technology, to diversify energy supply. It is also important that it promotes smart power grid technology to ensure the stability of energy supply.
The technology and manufacturing industries are the two major economic pillars of Taiwan, which face competition in the global market and in technological innovation. Businesses must focus on research and development, especially on artificial intelligence, automation and green technology. A green transition and digital transformation are keys to enhancing international competitiveness.
The declining birthrate is shrinking the working population, which is unfavorable to the long-term development of all industries, while the aging population burdens society with caring for medical care and social welfare.
The government should offer demand-oriented vocational training to young jobseekers. It should also promote a “silver economy” to improve the quality of life of older people and reduce social pressures through medical technology, healthcare and industry innovation. Extending the retirement age and promoting a flexible employment policy could also expand the workforce and vitalize the economy.
Low salaries and high housing prices are another source of pressure for young Taiwanese. To raise salaries and avoid a brain drain, the government should encourage industries to upgrade through innovation, the knowledge economy and high-value-added industries. To lower housing prices, it should increase public housing and take further measures against real-estate speculation, which would ease young people’s burden of buying a home and increase consumption.
Technology competition between the US and China imposes one of the biggest external economic challenges. The nation’s semiconductor industry is an integral part of the global supply chain. Uncertainty stemming from US export controls and China’s countermeasures must be considered.
Taiwan should step up its cooperation on technology development with the EU and countries such as the US and Japan. To reduce its reliance on a single market and open up a diversified market, Taiwan should fight for accession to international trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
Amid global supply chain restructuring, Taiwan, as a small open economy, should choose its strategy carefully. It should consider the properties of different industries instead of choosing sides.
Taiwanese enterprises should expedite their green transitions to meet the carbon neutrality demands of the global market. The government should help these businesses meet those targets with policy support and financial assistance.
The economic challenges facing Taiwan stem from internal structural problems and external uncertainty. The government should address these issues with concrete solutions and strategies.
Liao Ming-hui is an assistant researcher at the Chung-Hua Institution for Economic Research.
Translated by Fion Khan
The EU’s biggest banks have spent years quietly creating a new way to pay that could finally allow customers to ditch their Visa Inc and Mastercard Inc cards — the latest sign that the region is looking to dislodge two of the most valuable financial firms on the planet. Wero, as the project is known, is now rolling out across much of western Europe. Backed by 16 major banks and payment processors including BNP Paribas SA, Deutsche Bank AG and Worldline SA, the platform would eventually allow a German customer to instantly settle up with, say, a hotel in France
On August 6, Ukraine crossed its northeastern border and invaded the Russian region of Kursk. After spending more than two years seeking to oust Russian forces from its own territory, Kiev turned the tables on Moscow. Vladimir Putin seemed thrown off guard. In a televised meeting about the incursion, Putin came across as patently not in control of events. The reasons for the Ukrainian offensive remain unclear. It could be an attempt to wear away at the morale of both Russia’s military and its populace, and to boost morale in Ukraine; to undermine popular and elite confidence in Putin’s rule; to
A traffic accident in Taichung — a city bus on Sept. 22 hit two Tunghai University students on a pedestrian crossing, killing one and injuring the other — has once again brought up the issue of Taiwan being a “living hell for pedestrians” and large vehicle safety to public attention. A deadly traffic accident in Taichung on Dec. 27, 2022, when a city bus hit a foreign national, his Taiwanese wife and their one-year-old son in a stroller on a pedestrian crossing, killing the wife and son, had shocked the public, leading to discussions and traffic law amendments. However, just after the
The international community was shocked when Israel was accused of launching an attack on Lebanon by rigging pagers to explode. Most media reports in Taiwan focused on whether the pagers were produced locally, arousing public concern. However, Taiwanese should also look at the matter from a security and national defense perspective. Lebanon has eschewed technology, partly because of concerns that countries would penetrate its telecommunications networks to steal confidential information or launch cyberattacks. It has largely abandoned smartphones and modern telecommunications systems, replacing them with older and relatively basic communications equipment. However, the incident shows that using older technology alone cannot