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Changing economic trends in Taiwan

Taiwan’s economic growth has long been based on exporting intermediate goods to mainland China for final assembly, but this is now showing signs of change. Taiwan’s monthly exports to China and Hong Kong have registered negative growth since November 2018, according to Taiwan’s official statistics.

In January–June 2019, Taiwan’s exports to China and Hong Kong shrank by 8.8 per cent compared to the same period in 2018. In comparison, Taiwan’s exports to the US grew by 17.4 per cent. Overall exports declined by 3.4 per cent during the same period. As a result, China’s share in Taiwan’s total exports declined from 41 per cent in 2017 to less than 39 per cent in the first half of 2019. China’s falling significance was balanced by the growth of exports to the US from 12 per cent to 14 per cent during the same period.

Taiwan’s decreasing investment in China explains the shrinking exports to the country. Although China remains Taiwan’s largest outward investment destination, its importance has dropped to 37 per cent in the first half of 2019 from its peak of 84 per cent in 2010.

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