每日跟讀#590: Can Taiwan benefit from the US-China trade war?


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每日跟讀#590: Can Taiwan benefit from the US-China trade war?

As the US-China trade negotiations enter their final stage, the noises are that China has already given ground on issues including enforced technology transfers, protecting intellectual property and relaxing restrictions on access to China’s market. It is rumored that an agreement could be reached as soon as next month. However, irrespective of the outcome of the negotiations, who wins and who loses is already a foregone conclusion. China has been forced to carry out structural reform to its economy, while foreign companies are one after the other pulling out of the country, and this continues to have a negative effect on its economy. The US’ counter-offensive against China’s economic challenge is already beginning to bear fruit.


Washington began placing import tariffs on Chinese goods on July 6, 2018, which means the US-China trade war has now been “hot” for nine months. Since then, tit-for-tat tariffs have produced economic losses on both sides. However, in contrast to the return of manufacturing to US shores, the “factory of the world” is facing a supply chain exodus and seems unable to stem the tide. This includes Taiwanese companies which, together with other foreign corporations, are one after another heading for the door, either choosing to relocate manufacturing back home or to alternative manufacturing hubs, such as in Southeast Asian countries.


According to data from the Ministry of Finance, during the first three months of this year, 30 manufacturers have already received approval from the government’s Welcome Overseas Taiwanese Companies to Invest in Taiwan Action Plan and pledged to invest a total of NT$120 billion, which is forecast to create more than 10,000 new job opportunities here. At present, a further 50 companies have also expressed an interest in returning to and investing in Taiwan. A comparable atypical wave of re-shoring to Taiwan hasn’t been seen for two decades.


In fact, if one takes a trip to any industrial area, it will immediately become obvious that a large number of manufacturers have already switched production back to these shores, while others are busy expanding existing facilities or constructing new ones. This shows that the return of Taiwanese companies is not based upon some abstruse analysis of cold statistics: the phenomenon is taking shape before our very eyes.


As the US-China trade standoff continues to rumble on, while Taiwan is not a main player, it is caught between the two major economies and, due to its over-reliance on China’s economy, contagion from the conflict has spread to Taiwan. Despite this, if the government is able to keep a steady hand on the tiller, capitalize on production orders and manufacturing operations returning to Taiwan, and guide the return of supply chains to these shores, Taiwan will be able to turn a crisis into an opportunity and become one of the trade war’s victor nations.


Source article: http://www.taipeitimes.com/News/lang/archives/2019/04/23/2003713849/2



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