Taiwan Businesses Support Reduction In Economic Dependence On Mainland China – CSIS Survey

Taiwan companies support a reduction in the island’s dependence on mainland China, according to a survey released today by U.S.-based Center for Strategic and International Studies. More than half with business there are considering or have already moved production or sourcing away from the mainland, the center found.

The survey was conducted during July 25-August 1 before military exercises by the People’s Liberation Army around Taiwan following a visit to Taipei by U.S. House of Representative Speaker Nancy Pelosi in August.

Some 76% of the 525 survey respondents agreed with the statement: “Taiwan needs to reduce its economic dependence on mainland China,” while only 21% percent disagreed, CSIS said.

“It appears this conclusion is affected by worries about a potential U.S.-China military conflict and China’s zero-Covid policy,” CSIS said. In the survey, nearly 39% of respondents either “strongly agreed” or “somewhat agreed” with the statement: “There will be some sort of military conflict in U.S.-China relations in the next five years.”

Notably, however, more than half said they do not expect a conflict. Overall economic relations between the two have expanded since a thaw in political ties in the 1990s. Communist Party-led Beijing claims sovereignty over democratic Taiwan; the two sides have been divided since the end of a civil war in China in 1949. Taiwan has since become home to some of the world’s biggest technology companies, and is one of the world’s largest suppliers of semiconductors.

Nearly half of respondents said that the mainland’s zero-Covid policies further had a “somewhat negative” or “very negative” effect on their company’s revenue. Only 15% said it had a positive effect, and 39% said it had no effect. “China has repeatedly said that its zero-Covid policy would remain unchanged, creating an expectation of continued unpredictability for business operations in China going forward,” CSIS noted.

The CSIS survey also asked respondents if they have business in the mainland, and if so, if they have already moved, are considering moving, or have no plans to move manufacturing or sourcing from there. More than a quarter of the Taiwan firms with business in mainland had already moved some of their production or sourcing, and another third were considering doing so, CSIS found. Only 31% said they had no plans to move at all, CSIS said.

Of those on the move, 63% were heading to Southeast Asia, but slightly over half were moving some of their business back to Taiwan, CSIS said. And just under one-fifth were moving to Northeast Asia — Japan and South Korea. “Despite all the talk of India as the next best option due to its scale,” only 10% said they were moving to South or Central Asia, the same figure as moving to North America, CSIS noted.

Taiwan has the world’s 22^nd largest economy; businesses there that rank on the Forbes Global 2000 list of the world’s top publicly traded companies include Hon Hai Precision — the big supplier to Apple led by billionaire Terry Gou, and Taiwan Semiconductor Manufacturing Corp., or TSMC, which makes computer chips for Intel. Others among Taiwan’s numerous Apple suppliers include Pegatron, Lite-On Technology, Inventec, Catcher Technology, Largan Precision and Compeq Manufacturing.

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