Taiwan Must Not Be Left Out of Supply Chains Reorganized Owing to Trade War

  Taiwan Must Not Be Left Out of Supply Chains Reorganized Owing to Trade War

China Times Editorial (Taipei, Taiwan)

August 1, 2018

 Translation of an Excerpt

The US-China trade war has just started with no end in sight. In the first wave, both parties imposed high tariffs on each other’s merchandise worth US$50 billion, having taken effect; whether the trade war will enter into the second wave involving US$200 billion in merchandise is difficult for the outside world to predict. However, the reorganization of supply chains and investments triggered by the trade war has already begun. Exports are the most important pillar of Taiwan's economy; in the global deployment and the course of reorganizing supply chains for businesses, Taiwan must approach the bright side and shun risks, and make gains.

As far as the basic picture is concerned, Taiwan is a victim of trade wars; how to mitigate the damage, even "seeking gains among risks," is the direction that the government and business must ponder. In order to avoid trade wars, some Taiwan businessmen have considered the idea of moving their production bases and supply chains to Southeast Asia and other countries. At this crucial moment, the government must ponder how to attract "risk hedging" Taiwan businessmen to come home for investment, and ponder whether the domestic investment environment is adequate to attract salmon to return home.

Regrettably, we don’t see this possibility at all. A couple of days ago, the Taiwan-based Chinese National Federation of Industries released its white paper, once again painfully stating that Taiwan’s populism wanted to drive out the manufacturing industry in toto, that insistence on nuclear-free faith made Taiwan’s shadow over power shortages remain, and that EIA blocked investments as usual. Cross-Strait tensions have been escalating daily, leaving Taiwan businessmen on the Mainland worried that though returning home for investment may avoid the US-China trade war, but they may become mired in cross-Strait wrangling. The Hon Hai Group, the world's largest high-tech supply chain operator, in recent years, has made large-scale investments both on the Mainland and US, but has completely shunned Taiwan; it is enough to peek at Taiwan's position in businesses’ global deployment.

The US-China trade war may become a "protracted war"; businesses’ global deployment and reorganization of supply chains are hard to avoid. In the end, will Taiwan will become the victim or beneficiary of this wave’s trade war and reorganization of supply chains? It will probably depend on the actions, even an idea in a flash of a moment, of the Tsai government. However, as now officials only know how to paint Potemkin peace, saying that the trade war has little impact on us, completely lacking an aggressive mentality, nor taking any concrete actions, the future of Taiwan’s economy is indeed worrisome.

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