Taiwan and China’s Economies Are Inextricably Linked
Tensions between the U.S. and China remain high following last week’s visit by U.S. Speaker of the House Nancy Pelosi to Taiwan, the first in 25 years by a top U.S. official. Despite Taiwan’s fraught diplomatic relationship with China, the two countries’ economies are inextricably linked, reports Investment Monitor.
China is Taiwan’s biggest export partner, with a value of more than $515 billion of goods between 2017-2022, more than double that of the United States. Taiwan’s main export to China is semiconductors — in 2020, China spent more on chips than on oil.
Taiwan’s electronic exports dwarf any other industry and were valued at more than $844 billion between 2017-2022. Electronics also attract the most foreign direct investment, bringing in more than 16% of all greenfield FDI projects between 2019-2020. While strained trade relations between the U.S. and China have prompted some U.S. companies to relocate from mainland China to Taiwan, the recent rise in tensions may make Taiwan a riskier prospect for foreign investors.