Jan 09, 2015

Taiwan: President Announces Reduction in Economic Ties with China

President Ma Ying-jeou has said that Taiwan has been diversifying its exports in an effort to reduce its reliance on China’s market. However, he reiterated that some close trade relations across the Taiwan Strait are unavoidable due to geographic proximity.

Below is an article published by Focus Taiwan:

Over the past year, the ratio of Taiwan's exports to China has dropped to 39 percent as the government has been seeking markets wider afield, Ma told the latest recipients of the annual National Distinguished Accomplishment Award and the National Manager Excellence Award.

While receiving the awardees at the Presidential Office, Ma said that in 2000, China accounted for 24 percent of Taiwan's total exports and the ratio increased to 40 percent in 2008 when he took office as president.

Since then, however, Taiwan has increased its exports to Japan and the United States, and to countries in Europe and Southeast Asia, Ma said.

The government does not want to put all its eggs in one basket, but at the same time, it cannot avoid putting any eggs in the biggest basket, he said.

China is the biggest trading partner of 17 of its 23 neighboring countries, including Taiwan, according to Ma.

A close trade relationship between Taiwan and China is unavoidable, in light of their geographic proximity, but what Taiwan can do is try to reduce trade dependence on China, he said.

He said Taiwan must transform from an efficiency-driven economy into an innovation-driven one and lower its barriers to foreign trade so that its economy can improve.

Many countries are willing to conduct business with Taiwan but would hesitate to sign a bilateral free trade agreement because Taiwan does not have official diplomatic relations with its major trading partners, Ma said.

The government, nonetheless, has been making efforts to address these issues so that Taiwan can catch up with its main competitor -- South Korea, he said.

China and South Korea are likely to sign a free trade agreement in the first half of this year, which inevitably would affect Taiwan's exports, Ma said, noting that about 70 percent of Taiwan's exports overlap with South Korea's.

Taiwan must be prepared to work harder and push for greater trade liberalization, he stressed.