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Taiwan reduced dependence on China long before pandemic: economists

ROC Central News Agency

05/03/2020 04:29 PM

Taipei, May 3 (CNA) Taiwanese businesses had already started to reduce their dependence on China before the ongoing COVID-19 conoravirus pandemic, because of trade friction and growing uncertainty about the future of globalization, economists said.

"What used to be called globalization was actually establishing a presence in China," said Chang Chien-yi (張建一), president of the Taiwan Institute of Economic Research.

He pointed out that the lack of a language barrier and close proximity made it easy for Taiwanese businesses to build up operations in China, especially when they were offered tax incentives.

Chang cited government statistics showing a drop in Taiwan's investment in and exports to China last year, saying that trend was only accelerated by the COVID-19 outbreak that started in the Chinese city of Wuhan late last year.

Taiwan saw a year-on-year drop in investment in China of 51 percent to NT$4.17 billion (US$139.47 million) last year, the fourth year in a row annual investment has fallen, while exports to China, including Hong Kong, dropped 4.1 percent over the same period, government data showed.

Pulling away from China is not exiting, but merely adjusting the focus from minimizing costs to better management of risks and re-examining one's position in the world, Chang said.

"China is not the only market," he said.

According to Steve Lai (賴樹鑫), executive director of the Supply Management Institute in Taiwan, the advantage of operating in China has faded because of stricter environment protection laws and rising wages in recent years.

No one will give up the Chinese market because of its strong domestic demand, Lai said, noting that it is more about repositioning and spreading risk for businesses.

Meanwhile, Roy Chun Lee (李淳), deputy director of the Taiwan World Trade Organization and Regional Trade Agreements Center of the Chung Hua Institution for Economic Research, said businesses had been too content to accept the way things were before trade frictions between the United States and China started in 2018.

The fact that China was the first place to report the COVID-19 outbreak, which disrupted the global supply chain, showed multinational companies' poor risk management, he added.

In March, Taiwan's exports were valued at US$28.27 billion, of which 41.5 percent went to China and Hong Kong, 16.5 percent to ASEAN countries and 13.4 percent to the U.S.

(By Pan Tzu-yu and Kay Liu) Eenditem/AW

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