Increased demand from China: Taiwan's exports are booming

Taiwan's exports are currently rising sharply.

Increased demand from China: Taiwan's exports are booming

Taiwan's exports are currently rising sharply. But the tense relationship with China, Taiwan's largest trading partner, could increasingly become a problem. That's not the only reason why the Treasury warns of a "high degree of uncertainty".

Taiwan's exports rose for the 25th straight month in July. They grew by 14.2 percent compared to the same month last year to 43.3 billion dollars, as announced by the Ministry of Finance in Taipei. That's the second-highest gain since statistics began, driven by strong global demand for technology products. The government sees good prospects for the domestic semiconductor industry, but at the same time warns of the growing uncertainty in the global economy.

Exports to China, Taiwan's largest trading partner, also increased in July by three percent to a good 16 billion dollars, after there had been a decline of 4.5 percent in June due to various corona lockdowns in the People's Republic. However, the relationship between the two neighbors has deteriorated noticeably after the visit of US top politician Nancy Pelosi last week. China has launched military maneuvers and, according to the government in Taipei, simulated an attack on the island state.

The status of Taiwan, which few countries recognize as independent, is one of the main points of contention between the US and China. Beijing considers Taiwan part of its territory. Like many other countries, the USA does not maintain formal diplomatic relations with Taiwan out of consideration for the People's Republic of China. However, they support it with military equipment and are its main supplier of armaments.

Taiwan's total semiconductor exports rose 17.4% in July. Many companies expect the global chip shortage to continue for at least the rest of the year. That should continue to fill the order books of Taiwanese semiconductor companies. Companies like TSMC, the world's largest contract manufacturer of chips, are key suppliers to Apple and other global tech companies, as well as suppliers of chips to automakers and low-end consumer electronics.

The Treasury Department warned of a "high level of uncertainty" for the global economy due to the war in Ukraine and inflationary pressures, even as chip demand continues. "Growth dynamics are gradually becoming more restrained, which will inevitably affect our country's foreign trade situation," it said. Still, total exports are likely to surpass $500 billion this year, Ministerial official Beatrice Tsai said.