Taiwan trade moving away from China may bring ‘untapped opportunities’, say analysts
ING is monitoring whether Taiwan trade is moving away from China, as exports to the mainland have fallen slightly so far this year.
“With political tension between mainland China and Taiwan escalating, there are signs that Taiwan exports are gradually moving away from mainland China,” chief economist for Greater China at ING, Iris Pang said today, explaining that exports to the US have increased in the period.
Exports and imports in Taiwan rose 34.8 per cent and 35.3 per cent year-on-year, respectively, in February, according to Pang’s research, a trade surplus which has been valued at $5.8bn (£4.4bn).
“The most immediate cause is likely to be the huge global demand for Taiwanese semiconductors among a global shortage,” head of public policy at the Institute of Economic Affairs, Matthew Lesh told City PM
As the world’s biggest contract chipmaker, Taiwan is expected to control the exports of cutting-edge technology around the world and be a globally desirable trading nation to the West.
“Nevertheless, movement of exports away from China could represent the beginning of a Taiwanese diversification of trade. China’s ongoing human rights violations in Hong Kong and Xinjiang, as well as increasingly centrally controlled economy and weakening relations with the West, has led many major companies to reduce operations or leave the country,” added Lesh, citing Nike, Apple, and Samsung as businesses who have slimmed operations in the region.
“China’s threatening behaviour against Taiwan is likely to encourage further decoupling.”
It mirrors that of Russia’s business environment currently, amid its invasion of neighbouring Ukraine, which has seen a growing list of companies such as Next, Shell and Airbus exit the country.
Chief investment strategist at the Edison Group, Alastair George told City A.M.: “The increasing assertiveness of Russia and China’s foreign policies have many nations reconsidering what resources are strategic versus those which can be provided by global markets.
“De-globalisation has become an unwelcome trend for investors as supply chains are reconfigured to ensure security of supply, rather than offering the most economic cost.”
George explained that while export distribution are largely dependent on the location of customers, an over-reliance on China as tensions rise could be risky for the island nation.
Economic research analyst at GlobalData, Gargi Rao added that support from the US and other Western countries to defend Taiwan against China might bring in “untapped trade opportunities for Taiwan”.
“The possibility of new trade deals with the US might shift Taiwan exporters away from China… With the ongoing conflict, the global semiconductor chips shortage may be an opportunity for Taiwan manufactures,” she told City PM