Bloomberg / Hong Kong
China’s economic measures against Taiwan are unlikely to have a major impact on trade between the two economies given how closely they’re intertwined, a finance ministry official in Taipei said on Monday.
The remarks from the Finance Ministry’s chief statistician, Beatrice Tsai, came as Beijing-Taipei relations remain fraught, with the former slapping Taiwan last week with trade curbs on some fish and fruit imports and sand exports following US House Speaker Nancy Pelosi’s visit to the island.
“Right now Taiwan’s and China’s electronics industries are highly dependent on each other,” Tsai said, adding that Taiwan is China’s biggest source of imported integrated circuits. “Therefore we expect very little chance of China imposing stricter economic sanctions on Taiwanese businesses due to our highly reliant economic relations.”
Taiwan on Monday reported stronger-than-expected trade data, with export growth rising 14.2% in July from a year ago. That was faster than the most bullish estimate in a Bloomberg survey of economists, and drove total shipments to $43.3bn, the second-highest amount on record.
Export growth to China has been sluggish this year as Beijing contends with Covid outbreaks and lockdowns. Shipments to China and Hong Kong increased just 3% year-on-year in July after contracting in June, compared with double-digit growth earlier in 2022. By contrast, shipments to the US surged 24.8% last month.
Even so, China and Hong Kong combined remain by far Taiwan’s largest export market. Shipments totalled more than $16bn in July, compared with nearly $7bn in total exports to the US.
Economists last week said the risk for Taiwan would likely rely on whether Beijing widened restrictions to cover the manufacturing sector and semiconductors. Agricultural exports accounted for only 0.6% of total exports last year, according to DBS Group Holdings Ltd, while China’s sand exports to the island amounted to just over $1mn last year – small compared with the bigger trade picture.
Another main concern was whether a series of military drills surrounding Taiwan would have a significant impact on the shipping industry. By Monday, however, shipping in the Taiwan Strait showed signs of returning to normal.
Tsai said Monday the developing situation across the strait was difficult to predict. She pointed out, though, that exports were largely unaffected the last time Beijing significantly ramped up pressure on Taiwan in 1995 and 1996, even as financial markets and consumer confidence took a hit.
Barring any major disruption to shipping lanes or new trade measures from China, Tsai said Taiwan’s total exports are likely to rise between 8% and 12% in August.
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