BEIJING — Taiwan’s trade is more dependent on China than it is on the U.S., despite U.S. House Speaker Nancy Pelosi’s high-profile visit this week to Taiwan.
Taiwan was under military and economic pressure from Beijing after Pelosi – the highest-ranking U.S. official in 25 years – visited the democratically self-governing island.
Taiwan is considered part of China, which maintains that it is not entitled to conduct foreign relations. The visit took place anyway despite warnings from China. Beijing is the only legitimate government in China, and the U.S. maintains unofficial relations with Taiwan.
Regardless, Taiwan’s trading relationship with mainland China and Hong Kong is by far the largest it has ever had, making it by far the most economically beneficial partner the island has.
Taiwan’s largest chipmaker, Taiwan Semiconductor Manufacturing Co., or TSMC, has factories in mainland China.
Last year, mainland China and Hong Kong accounted for 42% of Taiwan’s exports while the United States accounted for 15%.
In total, Taiwan exported $188.91 billion in goods to mainland China and Hong Kong in 2021. Of these, more than half were electronic parts, followed by optical equipment, according to Taiwan’s Ministry of Finance.
That is, Taiwan’s exports to Southeast Asia, which totaled $70.25 billion, were even greater than those to the U.S., which totaled $65.7 billion.
Of Taiwan’s imports, the mainland of China and Hong Kong were responsible for 22% of the total share. Meanwhile, the U.S. only accounted for 10% of the shares, which ranked third behind Japan, Europe, and Southeast Asia.
Increasingly trading with mainland China
Taiwan has been purchasing an increasing number of products from mainland China in recent years.
In the last five years, imports from mainland China have surged 87% as opposed to imports from the US which have only risen 44%.
Taiwan’s exports to China between 2016 and 2021 went up by 71%. And Taiwan’s exports to the U.S. increased by 97% during the same time period.
The most important products that Taiwan sells to the U.S. are electrical machinery, vehicles, plastics, and iron and steel.
As an example, Taiwan-based company Foxconn runs factories in mainland China.
Taiwanese businesses accepted $200.1 billion in U.S. orders in 2021, according to the U.S. Congressional Research Service.
Shanghai is comparable
In 2020, 157,900 Taiwanese lived in mainland China, down about 7% over the past decade.
In 2020, Taiwan had a population of about 23.66 million, slightly less than Shanghai’s population of 25 million at the time.
As of last year, Taiwan’s economy was $781.58 billion, compared with $680.31 billion in Shanghai.
The share of Shanghai’s GDP in mainland China was 3.8% in 2021.