Taiwan’s Central News Agency (CNA) recently reported that Taiwanese capital is leaving mainland China at an accelerated rate. This is due to geopolitical concerns linked to post-pandemic changes in international supply chains.
In the past, the primary reasons Taiwanese companies might leave China were economic — businesses wished to optimize production costs or avoid high tariffs under the Sino-US trade war after 2018. Now, the primary reason for Taiwanese businesses flight from China is due to international political factors.
New Taiwanese investment in China during the period between January and May of 2023 decreased by 4.05 percent year-over-year. Taiwan-funded consulting companies have been holding lectures on how to close companies and sell factories in China, and Taiwanese companies have been withdrawing large sums of money from the country. Taiwanese listed companies repatriate a total of NT$114.4 billion (around US$3.7 billion) in investment profits from China in 2022, the highest figure since 2013.
In the meantime, Taiwan’s total overseas investment in countries excluding China surged by 197 percent during the period from January to May, totaling US$8.3 billion. Taiwanese investment in Southeast Asia has almost doubled.
In addition to imposing export controls on high-tech products to China, the United States has been promoting the concept of “friend-shoring,” advocating that production should be outsourced to allies with similar values rather than to strategic competitiors like China and Russia.
Source: CNA, July 21, 2023