Taiwanese companies have been scaling back their investments in China so far this year to just 11 percent of the nation’s total outbound direct investment, the lowest share in decades and well below their heavy spending in the US and Germany, the Nikkei Asia reported yesterday.
During the first 11 months of this year, Taiwan’s approved outbound investment soared 87 percent annually to US$25.7 billion, while investment in China plummeted 34 percent year-on-year to US$2.96 billion, about 11 percent of the total, statistics released by the Ministry of Economic Affairs on Wednesday last week showed.
China had been the biggest investment destination for Taiwanese companies, but things changed at the beginning of this year, the ministry said.
Photo: Ann Wang, Reuters
With China-bound investment in decline, China for the first time was replaced by France and dropped to the second-largest outbound investment destination in February.
The decline in China-bound investment extended to the first 11 months of this year.
The Nikkei Asia attributed the drop-off to China’s economic doldrums, as well as the influence of the long-standing and mounting tensions between the two sides.
Taiwanese companies are also finding it harder to conduct business in China amid trade friction between Washington and Beijing that has led to US duties on Chinese goods, the report said.
Taiwanese spending in China has plummeted from a peak of 84 percent in 2010, when Taiwan and China signed the Economic Cooperation Framework Agreement, but even from last year, when China still accounted for 34 percent of outbound investment, the report said.
This year’s total is expected to clock in at less than half of the 30-year low of 28 percent in 1999, it said.
Meanwhile, investment in Europe and the US has skyrocketed.
Taiwanese foreign direct investment in the US surged ninefold in the first 11 months of this year to US$9.64 billion, making up 37 percent of the total, the report said, citing the ministry’s statistics.
Spending in Germany alone soared past the China figure, ballooning 25-fold to US$3.9 billion, driven by Taiwan Semiconductor Manufacturing Co’s (台積電) investment in a new fab in Dresden, it said.
With China’s economy still stagnating and the Washington-Beijing technology dispute unresolved, Taiwan’s spending in China looks unlikely to bounce back any time soon, the report said.
“Taiwanese investment in China continuing to decline will be the main scenario as long as US-China tensions continue,” Sun Ming-te (孫明德) of the Taiwan Institute of Economic Research (台經院) said.
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