WASHINGTON–Fallout from the U.S.–China trade war will not seriously affect Taiwan, which has spent a few years diversifying its economy away from the politically hostile mainland and investing in Southeast Asia, according to a Taiwanese trade official. The comment comes amidst concern from many that President Donald Trump’s escalating trade confrontation with Beijing could be economically damaging to U.S. allies in East Asia.
Taiwan’s approach in dealing with any fallout from U.S.–China trade war is “don’t panic, but get ready,” according to Liu Shih-chung, vice chairman of the Taiwan External Trade Development Council (TAITRA), a trade promotion organization sponsored by the Taiwanese government.
According to Liu, Taiwanese businesses in China have already started shifting production to other countries in Southeast Asia, such as Vietnam and Indonesia, in recent years, and there is no immediate sense of panic among the ones that are still operating in the mainland.
“We send out surveys to more than 200 Taiwanese companies in all major cities in China, asking them if they sense the shock [from U.S.–China trade war]. The responses we got mostly indicate they don’t sense it,” Liu said.
Smartphone devices and mechanical equipment are the two major items that Taiwanese businesses manufacture in China, and both have not yet been placed among the 6,000 items that the Trump administration intends to impose additional tariffs on, Liu said.
Liu said the Taiwanese move to Southeast Asia also reflects a broader trend encouraged by the Tsai Ing-wen administration’s ambitious program called the “New Southbound Policy” (NSP), which it started to implement when it came into power in 2016 to promote Taiwan’s investment, trade, and other economic engagements with its southern neighbors.
The comment echoes prior analysis by many that Taiwan’s NSP was aimed at reducing the country’s reliance on China, although the Tsai administration did not explicitly state it as the program’s goal.
In addition, Liu said that India’s Modi government has been working very closely with Taiwan to develop trade and investment opportunities. TAITRA has matched two joint ventures between Taiwanese and Indian partners in the past six months, one of which involved electric vehicles, according to Liu.
Taiwanese businesses overseas are only part of how NSP has helped the country reduce reliance on China.
Just as Beijing has used the numerous Taiwanese businesses operating in the mainland as potential political hostages, it has also attempted to coerce Taipei by reducing the number of Chinese tourists visiting Taiwan.
Such attempts will not win over the hearts and minds of the Taiwanese people, as the younger generation of Taiwanese are used to seeing themselves as having a national identity separate from China, and many of them go to China for a few years “only to make money,” according to Liu.