Economy
Taiwan is considered to be one of the
original so-called tiger economies, that is, the Asian
states that, in the last century, quickly went from
being disadvantaged and poor to strong economies. Taiwan
is today a world-leading manufacturer of high-tech
goods. However, increased regional competition, growing
dependence on China and difficulties in opening up the
economy are increasingly threatening Taiwan's
competitiveness.
The economy is very export dependent. The service
sector has grown in recent years and accounts for around
70 percent of GDP.
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Countryaah.com:
Major imports by Taiwan, covering a full list of top products imported by the country and trade value for each product category.
During the first decades of industrialization, Taiwan
focused primarily on an export-oriented labor-intensive
manufacturing industry. From the 1980s, the focus has
been on more capital-intensive high-tech manufacturing,
not least of computer components and telecom equipment.
In the same vein, the industry began to move a large
part of its manufacturing abroad, first to Southeast
Asia and later increasingly to China.
The government has actively controlled the economic
development. Investments have been made in small
companies in front of large industrial conglomerates,
while inflation and tax pressure has been kept down. The
state has encouraged the industry by building large
business parks and assisting with guarantees in new
ventures. Some sectors were long protected by, among
other things, customs. Trade and investment in China in
particular was heavily regulated. But government
regulation of investment and trade has gradually
decreased. At the same time, many restrictions remain in
areas such as agriculture, telecommunications and the
financial sector, which discourages foreign investors.
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Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including TWN which represents the country of Taiwan.
President Ma (2008–2016) had the main economic
priorities that trade with the outside world would be
freer and that more foreign investors would apply to
Taiwan. But domestic resistance made such a development
difficult. Among Taiwan's many small businesses, there
was a fear that the deregulation and opening up of the
economy that the KMT board wanted to achieve would make
their own businesses out of competition. The approach to
China gave these moods an increased seed base.
The exchange with China has grown sharply: China is
Taiwan's largest export market and receives most of
Taiwan's foreign investment. An insight into the risks
of becoming overly dependent on China - especially as
growth on the other side began to slow down - has,
combined with higher labor costs for Chinese labor, led
Taiwanese companies in China to start controlling
investment and production to Southeast Asian neighbors.
After the 2016 power shift when Tsai Ing-wen from DPP
took over the presidential post, there was a concern
that political tensions would reflect on trade and other
economic cooperation between China and Taiwan. But in
2018, trade exchanges continued to be extensive,
although the number of Chinese tourists coming to Taiwan
had decreased.
The economic policy under President Tsai has been
focused on generating increased growth through
investments in research and new entrepreneurship. It is
an important objective to reduce the economic dependence
on China by strengthening Taiwan's economic cooperation
with other countries and participation in bilateral and
multilateral cooperation. Taiwan is not least striving
to expand its exchange with countries in South and
Southeast Asia.
Among leading Taiwanese experts and politicians,
there is concern that Taiwan will fall outside the
regional free trade associations that are being formed
in Asia (see Foreign Trade). There are also fears from
Taiwan's side that South Korea, a major competitor in
telecommunications and computer technology, will drive
Taiwan out of the Chinese market. China and South Korea
signed a free trade agreement in the mid-2010s.
Thanks to its solid economic fundamentals, especially
sound government finances, Taiwan has managed relatively
well in the context of the great Asian economic crisis
of 1997-1998. However, the growth rate then slowed
somewhat compared to the previous one.
By contrast, Taiwan was hit harder than many other
countries in the region because of its export dependency
when the global financial crisis hit full force in 2008.
In order to stimulate the economy, the government
decided on tax cuts for new investments, financial
support for small and medium-sized businesses, and cash
grants to households. A turnaround after the crisis came
in 2010, when growth was higher than for a long time.
Soon, however, economic problems in EU countries led to
a weakening of Taiwanese exports. But a few years into
the 2010s, exports regained momentum and gave the
economy a push forward. In 2017, the economy grew faster
than it has in the past five years, with exports as a
continued important engine along with increasing private
consumption. However, structural problems in the economy
remained. Among other things, the average wages for
workers had not risen in several years, while food and
house prices soared. Therefore, private consumption
remained low.
FACTS - FINANCE
Inflation
0.8 percent (2019)
Government debt's share of GDP
35.1 percent (2018)
Currency
Taiwanese Dollar
2010
November
Kuomintang receives Taipei's mayor post
In the local elections in the five largest cities, Kuomintang won the mayor
post in Taipei and its suburb Xinbei as well as in Taichung while DPP candidates
won in Tainan and Kaohsiung. More people vote for DPP than Kuomintang overall.
Suspicion of corruption is investigated
Trials are initiated against a dozen judges as well as prosecutors and
lawyers who are suspected of receiving bribes in exchange for acquitting a
corruption-charged politician.
June
Free trade agreement with China
A historic free trade agreement is signed by China and Taiwan.
The president's penalty is reduced
The Supreme Court cuts the sentence for the president and his wife to 20
years in prison.
May
Official tourist offices are opened
Taiwan and China open official tourist offices in Taipei and Beijing
respectively, which is seen as an important milestone in the increasingly
intensive cooperation.
January
Arms agreement with the United States
The US government concludes an agreement with Taipei to sell weapons for $
6.4 billion. The agreement, which included air defense robots and helicopters,
had in principle been signed several years before, but was delayed by political
resistance in both Taiwan and the United States. China strongly protests against
the agreement.
Continued success for DPP
New successes for DPP. The party wins the election for three seats in
parliament.
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