trade fears

Taiwan Concerned Over US-China Talks

A plastics factory is reflected in a motorbike mirror in New Taipei City
Taiwan's manufacturing base relies on global free trade. Source: Reuters

Taiwan will be keeping a close eye on the first official meeting between US President Donald Trump and China’s president Xi Jinping today.

The island has already found itself at the heart of a diplomatic storm between the two powers, after Mr. Trump took a call from its president in December, infuriating China, which saw it as a direct attack on its One China policy. Mr. Trump later rowed back from his initially defiant stance, but the incident shows the extent to which Taiwan may well be a bargaining chip in this week’s talks.

The Taiwanese administration will also be watching for signs that Mr. Trump will continue to support it through trade: something that is by no means guaranteed.

Mei-Hua Wang, Taiwan’s vice minister of economic affairs, spoke to Handelsblatt about her hope that Mr. Trump will not abandon free trade.

 

Handelsblatt: How dangerous is President Trump’s “America First” strategy for global trade.

Mei-Hua Wang: Taiwan depends a lot on global trade. If worldwide trade is flourishing, our economy is prosperous. If trade goes down, it has an impact on our economy. So we are quite concerned about the development. The US  has a long term friendship with Taiwan. At the same time mainland China makes about a third of our total exports. Companies from Taiwan manufacture products in China and ship them to the US. So every change in global trade patterns has an immediate impact on us, the same as on every exporting country.

How worried are you about the US withdrawing from the global free trade system or a trade war between America and China? 

Mr. Trump has announced many policies, such as high import tariffs or labeling China a currency manipulator. But so far no actions have been taken. That does not mean that the danger is over. But we still have to pay close attention to every policy step.

Xi Jinping promotes China as a protector of global free trade. Can China really be a safeguard of globalization?

China has benefited greatly from global free trade. Beijing has a trade surplus with many countries including the United States, India and even Germany. President Xi Jinping has promised more access to the Chinese market for foreign companies and opening up to more imported products. But at the same time, there are still complaints about discrimination and limited market access by many companies.

In the case of South Korea, there are media reports that Beijing may have even used the conflict over the missile defense system, Terminal High Altitude Area Defense (THAAD), to disrupt a South Korean company: Lotte. The supermarket chain had to close the majority of its stores in China. The Chinese authorities were reported to say that it was because of fire safety issues. But it seems as if it was a decision beyond economic consideration.

Is China using its economic relations to exercise power?

Take Lotte for example. Lotte lost a lot of money and is facing a lot of pressure. Cases like this are the reason why so many investors are concerned about China being not transparent enough. Most foreign investors would agree that there is still room for China to improve the ‘rule of law’. We also got approached by companies from Taiwan, who told us that they are facing increasing scrutiny. China seems to be not fully in line with some policies of the new government. The general perception from business is that monitoring of Taiwanese companies seems to have been increased since the new government took office last year. The mainland authorities claim this is a normal procedure and has no political implications.

Are you worried Mr. Trump will introduce protectionist policies?

We see some protectionist tendencies. At the same time we have long term and very close economic relations with the US. We hope there will be a good long term working relationship. Higher import tariffs on Chinese products would also affect Taiwan’s companies, as many are produced on the mainland. So we follow every step closely.

Might Taiwan become a bargaining chip in Sino-US relations?

I don’t think so. The US and Taiwan are like long term friends and have deep relations. Our relations are still important. So I do not think that Taiwan can become a bargaining chip.

 

Stephan Scheuer is Handelsblatt’s China correspondent, based in Beijing. To contact: scheuer@handelsblatt.com

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