Taiwan’s trade relations are bending towards the Pacific. Their whole range of exports, from microprocessors to pre-packaged foods, are flowing more frequently to the United States and less frequently to China than once they did, and China is not happy about it. Taiwan’s ever-deepening relationship with the US is one of the factors in China’s escalating threats to bring the island nation under Bejing’s control, and to use military force toward that end.
Spurred by a new round of Federal incentives, TSMC—a Taiwanese firm and the world’s biggest manufacture of high-end computer chips which power everything from bitcoin mining nodes to medical analysis and testing equipment to cell phones—just announced a new round of investment last month, and has already started construction on a third fabrication facility in Arizona. Not long after this announcement, another Taiwanese semiconductor firm said tat it intended to end its two decade-long presence in mainland China. These moves may significantly effect the global race to dominate the high-tech industrial space.
They also come as the US-China economic and geopolitical rivalry intensities. They are the latest in a series of efforts by Taiwanese politicians and industrialists to insulate themselves from Bejing’s pressure tactics, while strengthening their economic ties and trade relationships with the United States. Since the US is Taiwan’s greatest hope for defending against a potential Chinese invasion, the moves make good political sense. But they also make good economic sense, as China’s “economic miracle” seems to have come to an end, and its consumption has entered a protracted slump, which demographic projections show could last several decades. Global businesses who had previously invested heavily in the Chinese market are now looking to diversify to stronger markets, and to insulate themselves from supply chain shocks such as those that happened during the COVID-19 pandemic.
As if to underlying the shifting weight of Taiwan’s trade relations, in the first quarter of this year, the United States was the top destination for Taiwanese exports for the first time since 2016.
