Taiwan’s exports to China under the Early Harvest Program of the Economic Cooperation Framework Agreement (ECFA) fell to a record low last year, the Mainland Affairs Council (MAC) said yesterday on the agreement’s 16th anniversary.
Exports covered by the program fell to US$13.1 billion last year, accounting for 13.1 percent of Taiwan’s exports to China, down from 26.3 percent in 2016 and the lowest level since the agreement took effect, the council said.
In the past few years, Beijing has used trade barrier investigations for political purposes to exert economic pressure on Taiwan and coerce Taiwanese, it said.
Photo: Chen Yu-fu, Taipei Times
These include its unilateral ruling on Dec. 15, 2023, that Taiwan’s import restrictions constituted a trade barrier, as well as announcements on Dec. 21, 2023, and May 31, 2024, suspending preferential tariffs on 146 ECFA product items, it said.
The moves show the use of cross-strait trade measures as political leverage and tools of economic pressure, weaponizing trade to force Taiwan to accept Beijing’s political positions, it said.
Such policies, changed or terminated at will, have seriously harmed the interests of businesses and people on both sides of the Taiwan Strait, it added.
Taiwanese investment in China has also declined sharply, accounting for 83.8 percent of Taiwan’s outbound investment at its peak in 2010, but falling to 3.8 percent last year and just 0.9 percent in the first five months of this year, the council said.
It attributed the trend to geopolitical tensions, US-China strategic competition, China’s economic slowdown, a worsening investment climate and what it described as Beijing’s economic coercion against Taiwan.
Despite those challenges, Taiwan’s economy remained resilient, the MAC said, citing economic growth of more than 8 percent last year and record per capita GDP of US$39,000.
The government would continue pursuing its “Taiwan first” and “rooted in Taiwan, global deployment” strategy by encouraging domestic investment, diversifying export markets, and expanding bilateral and regional economic cooperation to reduce dependence on China, and bolster Taiwan’s economic resilience and competitiveness, it said.
Separately, industry and economic analysts yesterday said that Taiwan’s experience under the ECFA offers lessons for countries that has become heavily dependent on China.
Taiwan’s economy grew heavily reliant on China after the ECFA was signed in 2010, but subsequent economic restructuring helped diversify markets and reconnect Taiwan with the global economy following a change in government, analysts said.
They cited Australia, whose exports to China exceeded 30 percent of total exports by 2020 before Beijing imposed retaliatory tariffs on products including barley and wine after Canberra called for an independent investigation into the origins of COVID-19, affecting about A$20 billion (US$13.8 billion) in annual exports.
South Korea, which signed a free trade agreement with China in 2015, also saw companies such as Samsung and LG lose ground as technologies were copied and Chinese competitors gained market share, they said.
In 2023, South Korea posted its first trade deficit with China in 31 years, totaling US$18 billion. A Korea Economic Research Institute report warned that China could overtake South Korea in semiconductors, electronics, shipbuilding, petrochemicals and biotechnology by 2030.
The analysts also cited Italy, the only G7 nation to join China’s Belt and Road Initiative, saying its trade deficit with China nearly doubled to 41 billion euros (US$46.7 billion) within four years. Italian Prime Minister Giorgia Meloni later called the decision a major mistake, and Italy withdrew from the initiative at the end of 2023.
Taiwan, Australia, South Korea and Italy sought economic gains through closer ties with China, but instead faced technology imitation, low-cost competition and market displacement that damaged domestic industries, the analysts said.
“There is no such thing as a free lunch,” they said, adding that no agreement with an authoritarian regime offers lasting economic benefits.
Sustainable growth depends on strengthening domestic competitiveness and integrating into democratic global supply chains, they said, pointing to Taiwan’s reduced reliance on the “one China” market over the past decade as a model for other countries.
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