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Taiwanese trade and investment with mainland China have cooled this year amid political tensions and an economic slowdown. Photo: Shutterstock Images

Taiwan’s exports fall at fastest pace in 7 years, as growth forecasts weaken for 2023

  • Taiwanese exporters shipped US$36.13 billion worth of goods last month, down 13.1 per cent on November last year
  • Exports have not fallen so dramatically since January 2016, reflecting a slowdown in global demand that will extend into 2023

Exports from global hi-tech manufacturing hub Taiwan fell in November at their steepest rate in almost seven years, largely because of declining shipments to major markets including mainland China, signalling trouble ahead for the island economy.

Taiwanese exporters shipped US$36.13 billion worth of goods last month, the Ministry of Finance said in a statement on Wednesday, down 13.1 per cent on November last year. Exports have not fallen so dramatically since a 13.2 per cent year on year slide in January 2016.

Late last month, government officials lowered Taiwan’s 2023 gross domestic product forecast to 2.75 per cent from 3.05 per cent due to the highly unstable outlook for the global economy.

“Taiwan’s external sector is being hit hard by the slowdown in global demand,” said Gareth Leather, senior emerging Asia economist with Capital Economics in London.

“With the global economy set to fall into recession next year and the pandemic-driven boom in consumer electronic demand reversing, exports will weaken further.”

The island’s exports to mainland China and Hong Kong fell 20.9 per cent year on year last month to US$36.56 billion, the steepest decline in shipments to major trading partners, data showed. Exports to the mainland declined 0.1 per cent from January through November over the same period a year ago.

Mainland China-based factories that ship finished goods overseas are taking fewer parts and materials from Taiwan, analysts say, while consumers beleaguered by Covid-19 lockdowns, inflation and employment barriers are buying fewer finished products.

The mainland’s own exports fell 8.7 per cent year on year in November because of coronavirus controls at home and weak global demand, according to China Customs data released on Wednesday. Imports to the mainland slumped by 10.6 per cent.

Mainland China was Taiwan’s top export destination in the first 11 months of the year, buying 38.7 per cent of total shipments.

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Taiwanese trade and investment with mainland China have cooled this year amid political tensions and an economic slowdown. Beijing sees self-ruled Taiwan as a breakaway province destined to be reunited with the mainland.

The Taiwan Affairs Office in Beijing issued a statement on Friday linking resolution of the “Taiwan issue” to mainland China’s own development. The office said that positive trends in the mainland would add “appeal to Taiwan”.

Taiwan’s biggest exports are tech hardware components such as semiconductor chips, along with machinery and petrochemicals. Taiwanese chip shipments make up about 60 per cent of the world’s total.

South Korea, another Asian economy that depends on tech exports, reported a 25.5 per cent drop in shipments to China on December 1.

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Consumers in Europe and the US, as well as mainland China are buying fewer Taiwanese electronics post-pandemic, said Woods Chen, the head of macroeconomics at Taipei-based Yuanta Securities. Demand shot up in 2020-21 as people needed new devices for telework and study at home at the height of social distancing.

Exports to the European Union fell 19 per cent in November, year on year, to US$2.99 billion. US-bound shipments from Taiwan eased 11 per cent over the same period to US$5.88 billion.

Taiwan’s economic growth will slow in 2023 from this year on lower demand for exports, Chen said. “This is a cyclical decline and a global matter,” he said.

Exports of Taiwanese electronic components fell by 4.9 per cent year on year in November to US$15.15 billion. Shipments of integrated circuits dropped by 3.4 per cent to US$13.93 billion. Electronic components commanded nearly 42 per cent of all exports last month.

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Shipments of basic metals lost 28.3 per cent last month versus November 2021, while petrochemical goods fell by 33.4 per cent.

“Given early signs of a cooler labour market across the globe, high-interest rates to persist throughout 2023 and evidence that the semiconductor demand will stay soft in 2023, we expect a cooler outlook for Taiwan trade for the next 12 months,” said Heron Lim, an economist with Moody’s Analytics.

This week cabinet officials in Taipei began considering new measures to increase people’s income, according to domestic media reports.

In the trade space, the government hopes to sign a bilateral trade agreement with the US by the end of 2023, although one without tariff cuts, Taiwan’s deputy trade representative Yang Jen-ni told a legislative hearing on Monday.

The trade office had said in October it aimed to reach an early-harvest deal with Washington before the end of this month.

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