Taiwan keen to avoid currency manipulator label by reducing US trade surplus
- Taiwan’s trade surplus with the US is expected to pass US$20 billion this year, meeting one of the criteria Washington uses to qualify for monitoring
- Taiwan was last labelled a currency manipulator by the United States in December 1992, and was on the US Treasury monitoring list in 2016 and 2017
Taiwan’s central bank and Ministry of Economic Affairs have set up a group to coordinate increased purchases of goods from the United States, two sources said, as its seeks to reduce its trade surplus and head off being labelled a currency manipulator.
In the first nine months of 2019, the US recorded a US$17.4 billion trade deficit with Taiwan.
Taiwan is eyeing increased purchases of oil and natural gas, soybeans, corn and military hardware, the sources, who are familiar with the matter, told Reuters, speaking on condition of anonymity.
Taiwan will “step up imports, including aircraft, agricultural goods and so on”, one of the sources said, referring to imports from the US.
Taiwan’s central bank declined to comment and the Ministry of Economic Affairs did not respond to requests for comment.
Exports to the United States from trade-reliant Taiwan rose 18 per cent in the first nine months of 2019 from a year earlier, partly boosted by orders shifting to the island from China as manufacturers have sought to avoid higher tariffs resulting from the US-China trade war.
Crude oil and natural gas purchases from the US are expected to be among the big ticket items, another source said.
An official at Taiwanese refiner CPC Corporation, who asked not to be identified by name, said that as a state-run company, they would fully cooperate with government policy.
CPC Corporation announced a deal last year valued at US$25 billion to purchase liquefied natural gas from the US over the next 25 years.
The deal was aimed at boosting trade relations with the US by reducing its trade surplus, and was also a sign of goodwill ahead of a visit to the US by Taiwan President Tsai Ing-wen, a person familiar with the government’s thinking, told Reuters at the time.
The US State Department has approved a possible US$8 billion sale of F-16 fighter jets to Taiwan, the Defense Security Cooperation Agency said in August.
Taiwan was the largest beneficiary of “trade diversion” with US$4.2 billion in additional exports to the US in the first half of 2019, according to a United Nations study.
Investment from manufacturers who moved part of their factories to Taiwan from China had reached more than T$690 billion (US$22.6 billion) in 2019, the government said this month.
