○January N 13T.H. William Lai Ching-toku was elected president of Taiwan. He thus secured his third term as a member of the pro-independence Democratic Progressive Party (dpp). The vote will shape relations between self-governing Taiwan and China, which wants to rule the island from Beijing. This will also affect trade relations between the two countries. It will also affect commercial relations between Taiwan and the rest of the world, as Taiwanese manufacturers are at the center of important global supply chains.
For Taiwan’s large companies, cross-strait tensions are not welcome. Taiwanese entrepreneurs have been building factories on the mainland since the 1980s. These were once used to make textiles and other cheap products. Today, many companies manufacture advanced electronics, including chips. According to Chinese data, as of 2022, Taiwanese companies held assets worth $43 billion in the People’s Republic. In comparison, American companies in Taiwan, whose economy is 35 times the size of hers, had her $86 billion. The actual amount is almost certainly higher, as Taiwanese companies often route investments through Hong Kong and other jurisdictions to avoid scrutiny from China-wary governments.
The Chinese Communist Party is likely to express its displeasure over the matter. dpp They won by squeezing Taiwan business. It has a shape.1st supporting company DPP According to the Taiwan Mainland Affairs Committee, Chen Shui-bian, who served as president from 2000 to 2008, faced regulatory scrutiny and investment restrictions from China. An institution that deals with cross-strait relations. In 2005, Shi Wenlong, a petrochemical magnate and one of Mr. Chen’s biggest supporters, was forced into humiliating public support for China’s anti-secession law, which formalized military threats against the island.
Since then, dpp China returned to power in 2016 under the Tsai Ing-wen administration, but China’s trade pressure has increased. Taiwanese conglomerate Far East Group was fined in 2021 after a Chinese publication linked it to the political views of its chairman, Douglas Su. Shortly after, Mr. Hsu issued a statement denying Taiwan’s independence. Businessmen friendly to China have also not been spared. In October, Chinese state media reported a tax investigation into Foxconn, a Taiwanese contract manufacturing giant with vast operations in China. Taiwan’s National Security Commission said the tax investigation was a targeted effort by China to prevent Foxconn founder Terry Gou from running for president and splitting unification supporters. It is claimed that it was. In January, China imposed tariffs on a wide range of Taiwan’s chemical exports, a move widely seen as another warning shot ahead of the election.
In the past, such bullying led companies to support the KMT, which was wary of independence (national party), support closer economic ties with the mainland, or support complete disengagement from politics (approaches such as TSMC, the world’s largest chip maker and Taiwan’s most valuable company). This time, even high-ranking people at companies with ties to the mainland don’t seem to be too scared. Some have even gone so far as to partner with . dpp. Early last year, Dong Zixian, chairman of major contract manufacturing company Pegatron, was appointed vice chairman of the New Frontier Foundation. dpp-Related think tanks. In the run-up to the election, Powerchip Semiconductor Manufacturing Corporation Chairman Frank Hwang publicly supported Mr. Li.
There are several reasons for Taiwanese companies’ growing resistance to China’s coercive tactics. Chun Yi-li, of the University of Nottingham, said U.S. tariffs on Chinese goods have made export manufacturing on the mainland less attractive. Harsh policies such as “zero-corona” pandemic lockdowns and arbitrary crackdowns on sectors such as consumer technology have further undermined China’s attractiveness. China’s recent economic downturn has raised concerns that Taiwan’s economic future may not be so closely tied to the mainland.
We are already seeing changes in Taiwan’s trade and investment trends. The share of the island’s exports to the mainland fell to 23% in the 12 months to November, down from a record high of 30% in 2021 and the lowest in nearly 20 years (see chart). In 2010, more than 80% of Taiwan’s annual foreign investment flows went to mainland China. In 2023, that percentage was just 11%. Companies such as Pegatron and Foxconn are investing in regions such as India and Vietnam, which offer cheap labor and a chance to avoid U.S. tariffs. A recent poll found that more Taiwanese business owners are more likely to participate in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a trade agreement between 12 countries including Australia and Japan, than in the Framework Agreement for Economic Cooperation. He says he is concerned that this will happen. national party The government signed it with China in 2010.
China’s ability to inflict pain on Taiwanese business is diminishing for another reason. More than 60% of the island’s exports to the mainland and Hong Kong are electromechanical equipment, including computer chips. Suspending such products could hurt Chinese buyers more than Taiwanese sellers. ■