Taiwan is making significant shifts in its economic and trade relationships, moving closer to the United States and distancing itself from China. This move comes amidst escalating tensions between Taiwan and China, with Taiwan aiming to reduce its reliance on Beijing and strengthen ties with the U.S., its strongest ally.
Recent data shows that the U.S. has become the top destination for Taiwan's exports, surpassing mainland China for the first time since 2016. Taiwan exported $24.6 billion worth of goods to the U.S. in the first quarter of the year, compared to $22.4 billion to mainland China.
Investments from Taiwan in mainland China have decreased significantly, reaching the lowest level in over 20 years, while investments in the U.S. have surged ninefold to $9.6 billion in 2023. The U.S. and Taiwan have signed a trade agreement, with discussions underway for the next phase, and U.S. lawmakers are working to eliminate double taxes for Taiwanese businesses and workers in the U.S.
Key Taiwanese companies are expanding their investments in the U.S. and other countries. TSMC, the world's largest computer chip maker, announced plans to invest $65 billion in the U.S. to boost chip production. Other Taiwanese companies like Foxconn and Pegatron are also diversifying their manufacturing capacities in countries like India and Vietnam.
The shift away from mainland China is driven by geopolitical factors, including the U.S. export ban on advanced chips to China and Beijing's push for self-sufficiency in technology. Taiwan's exports to the U.S. have seen significant growth, particularly in semiconductors, electronic components, and computer equipment.
Overall, the reorientation of trade reflects a strategy to reduce risks associated with China and strengthen economic ties with other countries. The share of Taiwan's exports to mainland China and Hong Kong has decreased, signaling a broader trend of reducing economic dependence on China.
Beijing's efforts to exert economic pressure on Taiwan have backfired, pushing the island to seek closer ties with other nations in the region. The policy of distancing from China is expected to continue under Taiwan's new president, Lai Ching-te.
