Taiwan speeds up investment diversification away from mainland China amid cross-strait tensions
- Taiwanese investment in mainland China dropped by 14.5 per cent from a year earlier in the January-November period, with investment from mainland China down by 62.9 per cent
- Taiwan investment in Association of Southeast Asian Nations countries, Australia and New Zealand increased by 115.6 per cent in the first 11 months of the year
Taiwan has accelerated investment diversification away from mainland China, placing an emphasis on managing exposure to its largest export and investment destination amid ongoing cross-strait tensions and changes to the global supply chain.
Investment in mainland China dropped by 14.5 per cent from a year earlier to US$4.79 billion in the first 11 months of 2021, according to data from Taiwan’s Ministry of Economic Affairs.
Investment from mainland China dropped by 62.9 per cent year-on-year to US$46 million, taking the accumulated total since 2009 to US$2.46 billion, with the funds mainly focused on wholesale and retail, electronics and banking.
“It shows growing caution because of the mainland’s business environment changes, China-US trade tensions and technological war,” the economic affairs ministry said on Monday.
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China has long viewed Taiwan as a breakaway province and has vowed to take control of the island, by force if necessary.
Taipei has tried to form an economic and security alliance with the United States and Japan, while seeking more business opportunities via its New Southbound Policy which aims to enhance cooperation and exchange between Taiwan and 18 countries in Southeast Asia, South Asia and Australasia.
Taiwan and mainland China signed the Cross-Straits Economic Cooperation Framework Agreement in June 2010, with Taiwanese investment reaching a record high of US$14.6 billion in 2010.
We plan to work with the US, Japan, and other like-minded partners with shared strategic interests to revamp supply chains and produce hi-tech products to help regional and global economic recovery
Tensions have also flared since 2019 when Beijing froze a travel programme that had brought around 2.7 million visitors and hundreds of millions of dollars in revenue a year to the island.
“Authoritarian regimes’ intrusion to our way of life and institutions has intensified. But this trend has also served as an important wake-up call for democracies,” Taiwanese President Tsai Ing-wen said at a Taiwan-US-Japan Trilateral Indo-Pacific Security Dialogue last week.
“We plan to work with the US, Japan, and other like-minded partners with shared strategic interests to revamp supply chains and produce hi-tech products to help regional and global economic recovery.”
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Taiwanese investment in other regions rose by 22.7 per cent year-on-year to US$9.72 billion in the first 11 months of the year, its data showed.
Total investment in Association of Southeast Asian Nations countries, Australia and New Zealand increased by 115.6 per cent from a year earlier to US$5.6 billion in the January-November period.
The significant increase was driven by large projects including MediaTek’s US$1 billion investment in its Singaporean subsidiary and Cathay Life Insurance’s US$400 million investment in its Vietnamese unit.
Last week, Ma Xiaoguang, spokesman for mainland China’s Taiwan Affairs Office, encouraged more Taiwanese firms to invest in mainland China, but warned against corporate sponsors for pro-independence politicians.
“Taiwan independence is a dead end. It brings nothing but disasters to Taiwan, and hurts the interests of Taiwan compatriots, including the business community. We won’t let it happen,” Ma said.
“We won’t let Taiwanese companies make money in the mainland but support Taiwan independence.”
Additional reporting by Mia Nulimaimaiti
