Taiwan not alone in facing China's economic coercion: Minister

Taipei, Jan. 6 (CNA) Minister of Economic Affairs Wang Mei-hua (王美花) said the government has been working to prepare Taiwanese businesses for the possible total withdrawal of China's trade agreement with Taiwan, adding that Taiwan is not alone in facing Chinese economic coercion.

In a television interview broadcast on Saturday night, Wang was asked about China announcing the suspension of preferential tariffs on petrochemical products under the Economic Cooperation Framework Agreement (ECFA).

On Dec. 21 last year, China's Customs Tariff Commission announced it was suspending preferential tariffs on 12 petrochemical products, including propylene and paraxylene, citing trade barriers imposed by Taiwan on similar products.

The minister said Taiwan is not alone in facing economic coercion from Beijing, which has also strong-armed South Korea, Japan, Lithuania, Australia, and Canada for its own political ends by leveraging its trade relationship with those countries.

Taiwan's exports to China covered by ECFA fell further in 2023, from US$20.5 billion in 2022 to US$15 billion, due to China's economic downturn and its increase in domestic supply in related industries, Wang said.

"We have discussed with the petrochemical industry in particular and urged them to come up with a long-term plan in response to China's increase in supply in its own petrochemical industry from the industry's upstream to downstream," she said.

Wang added that Taiwan is not the only country that has worries about decreasing petrochemical exports to China, "as with China's increasing production, the global petrochemical industry also feels the pressure and many worry about it could engage in dumping."

The minister stressed that the government has already held many meetings with other industries covered by ECFA to help them broaden their client base.

Taiwan's total exports have performed well over the past three years, benefiting from the returning investment by Taiwanese businesses due to the U.S.-China trade conflict and from the country's resilient manufacturing during the pandemic, said Wang.

According to the ministry's numbers, from 2021 to 2023, the country's exports reached US$400 billion annually, "an all time high," with a new record of US$479.4 billion in 2022.

On foreign investment in Taiwan, Wang talked about the investment of three major corporations in the semiconductor industry - ASML, Applied Materials, and Lam Research - in Taiwan.

The government played a facilitating role in securing the investment of these corporations in Taiwan, which will further embed Taiwan's companies in the global supply chain, she said.

The land for ASML's Linkou plant, for example, required cross-ministerial discussions, and the setup of Applied Materials' Asian equipment parts logistics center in Taoyuan also had the government's help in negotiating for the waving of approval for Chinese-made parts if not for the use of domestic companies, the minister said.

Merck Group from Germany has also invested in Taiwan by setting up a new semiconductor solutions mega site in Kaohsiung in 2023, which both the central government and the local government worked to facilitate, the minister said.