Taiwan’s US representative sees ‘alarming’ signs in China’s economic slowdown
Sign up now: Get ST's newsletters delivered to your inbox
China’s economic slowdown will have an inevitable spillover to the region, said Taiwan’s top representative to the United States. Ms Hsiao Bi-khim.
PHOTO: REUTERS
Follow topic:
WASHINGTON – China’s economy is showing clear signs of a slowdown that will have an inevitable spillover to the region, according to Taiwan’s top representative to the United States.
“There are some alarming indications and we are impacted,” Ms Hsiao Bi-khim told Bloomberg News, citing a drop in Taiwan’s exports to China. “Despite all the political and strategic tension, we are interested in prosperity for the people on both sides of the strait.”
The slowdown has sharpened Taiwan’s focus on reducing its vulnerability to the world’s No. 2 economy, with businesses actively considering ways to diversify their operations, Ms Hsiao said in an interview at Bloomberg’s Washington bureau.
“Given the risk of over-dependence on any economy, friendly or not, it is important to ensure that we are less vulnerable,” she said on Friday. “We have been working to diversify our global assets and global presence.”
Fraying relations
United States President Joe Biden in August called China a “ticking time bomb”, citing a number of economic problems the Communist Party is facing.
“That’s not good because when bad folks have problems, they do bad things,” he said.
Still, Mr Biden on Sunday said China’s recent downturn may diminish any inclination by Beijing to invade Taiwan,
Asked whether she is worried a slowing economy could push Chinese President Xi Jinping to move on Taiwan, either militarily or through an economic blockade, Ms Hsiao said leaders in Taipei are carefully considering all possible scenarios, including the “worst-case scenario”.
China regards Taiwan as a renegade province to be reunified with it, by force if necessary.
Still, “any signs of coercion or military aggression is not good for business”, Ms Hsiao said. “That’s our understanding. We certainly hope that that is also the understanding of the leaders in Beijing.”
China is Taiwan’s largest trading partner, accounting for 25.2 per cent of total trade and 21.6 per cent of Taiwan’s imports in 2021, according to the Commerce Department’s International Trade Administration.
The US comes in second, accounting for 12.6 per cent of Taiwan’s total trade and 10.2 per cent of imports.
Chip exporter
Taiwanese companies will consider market calculations more than political ones, Ms Hsiao said.
“Companies are thinking about how to position assets in a way that best protects their company interests,” she said.
Taiwan is home to the world’s leading chipmakers and has faced a prolonged dip in demand for its technological goods – including its key product, semiconductors.
However, a year-long slump in Taiwan’s exports eased in August as rising global demand for artificial intelligence-related technologies hinted at a more positive outlook.
China’s slump
China has fallen short of expectations for a stronger recovery post-Covid-19.
A real estate slump and trade downturn have prompted Wall Street analysts to downgrade their growth forecasts, though they still match an official government target of around 5 per cent for 2023.
The government in Beijing has in recent weeks rolled out a slew of incremental measures to revive business confidence and help the property market, though they have so far avoided any large-scale fiscal stimulus amid concerns over the high debt levels in the economy. BLOOMBERG
