Taiwan’s Exports Down for Three Consecutive Months Amid Weakening Chinese Economy

Experts: Declining trend will likely continue into the first half of 2023

A cargo ship (bottom) being loaded with containers at the harbour in Keelung, Taiwan, on Dec. 8, 2020. Sam Yeh/AFP via Getty Images

Impacted by China’s weakening economy and falling demand from end-users, Taiwan’s Department of Statistics said that the country’s export orders plunged by 23.4 percent in November compared to the same month last year.

The drop marked the third consecutive monthly year-on-year decline and the sharpest fall since March 2009.

Experts said it is almost a foregone conclusion that the annual performance of Taiwan’s exports constitutes a recession and that the first half of next year is not looking optimistic.

Data released by the Ministry of Economic Affairs (MOEA) on Dec. 20 showed Taiwan’s export orders in November totaled $50.1 billion, down 23.4 percent from a year earlier, a much greater drop than the ministry’s forecast of a 14.5 to 17.6 percent.

Huang Yu-ling, head of the MOEA’s Department of Statistics, forecast that the export orders for December will range from $47 billion to $49 billion, down 27.8 to 30.8 percent from a year earlier, marking the fourth straight monthly year-on-year decline.

As for the 2022 fourth quarter (Q4), Huang expects exports to range from $152.5 billion to $154.5 billion, down 9.0 to 10.2 percent from the third quarter and down 19.7 to 20.8 percent from a year earlier.

Huang added that “next year will be a very uncertain era” as export orders are closely related to the global economy. She pointed out factors such as hikes in the global inflation rate, the ongoing Russia-Ukraine war, the U.S.-China tech war, as well as the high uncertainty of China’s economy.

Amid the major COVID-19 outbreak in China, the performance of Taiwan’s export orders next year remains to be seen.

Chiou Jiunn-Rong, a professor of economics at Taiwan’s National Central University, told The Epoch Times on Dec. 23 that inflation causes a decline in real income.

He said that a discrepancy occurs when the price of goods and services increases but consumers’ wages remain the same, as this leads to a decrease in purchasing power.

“As the inflation becomes more and more severe through the second half of last year to this entire year, the purchasing power of the world declined, resulting in a decline in terminal demand,” Chiou said.

“Another reason [for the decline in demand] is that manufacturers had accumulated a large amount of inventory, including semiconductor chips, due to the broken supply chain in the past two years.”

Chiou said the excess inventory problem likely would not be solved before the second quarter of 2023 and that predicted export numbers in the first half of next year are not optimistic. He then urged people to be mentally prepared for the worsening economic trend.

On the topic of the U.S. Federal Reserve’s continuous interest rate hikes, Chiou expects that all major economies will be raising interest rates in the next six months to a year due to rising global inflation.

Lowest Business Confidence in China in Nearly A Decade

Business confidence in China hit its lowest level since January 2013, according to a survey released by World Economics on Dec. 19, reflecting the impact of surging COVID-19 cases on economic activity.

The Chinese Communist Party’s (CCP) sudden move to abandon its zero-COVID policy without a plan forward left the country’s medical system with little time to prepare.

As many as 37 million people are contracting COVID in a single day in China, according to leaked minutes from a meeting of the country’s top health body and confirmed by multiple news outlets.

“The survey suggests strongly that the growth rate of the Chinese economy has slowed quite dramatically, and may be heading for [a] recession in 2023,” the World Economics reported.

China’s GDP is expected to grow only 3 percent this year, its worst performance in nearly half a century, according to Reuters.

Chiou said the CCP’s unchecked reopening is the biggest variable in the short term, as the rapid spread of COVID in China has seriously affected the country’s manufacturing industry.

“Because the world relies heavily on China’s supply chain, if a link in the supply chain is broken, the global supply chain will be affected. In addition, China’s demand market also accounts for a relatively large proportion of the global market, and China’s demand has shrunk severely, which is another negative news for the global market,” he said.