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Taiwan remains 5th largest net creditor in 2023

06/15/2024 08:44 PM
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The central bank of the Republic of China (Taiwan). CNA file photo
The central bank of the Republic of China (Taiwan). CNA file photo

Taipei, June 15 (CNA) Taiwan remained the fifth largest net creditor in the world in 2023 as its net international investment position (NIIP) hit another new high, the central bank of the Republic of China (Taiwan) said Friday.

Taiwan's external financial assets totaled US$2.91 trillion at the end of 2023, up US$247.04 billion, or 9.3 percent, from a year earlier, data compiled by the central bank showed.

The country's external financial liabilities reached US$1.17 trillion as of the end of 2023, up US$183.12 billion, or 18.5 percent, from a year earlier.

The difference between Taiwan's external financial assets and liabilities at the end of 2023 hit a new high of US$1.74 trillion, up US$63.92 billion, or 3.8 percent from a year earlier, positioning Taiwan as the world's fifth biggest net creditor, the data showed.

According to the central bank, a country's international investment position is the balance sheet of residents' financial assets held in the rest of the world and liabilities to the rest of the world.

The NIIP is the difference between a country's external financial assets and its external financial liabilities, according to the central bank.

Among other countries, Japan took the top net creditor spot with NIIP of about US$3.44 trillion as of the end of 2023, ahead of Germany (US$3.20 trillion), China (US$2.19 trillion) and Hong Kong (US$1.78 trillion), according to the central bank.

The central bank said the rise in Taiwan's external financial assets in 2023 stemmed partly from a boom in global stock markets, which pushed up sharply the value of overseas shares held by investors in Taiwan.

Stock markets worldwide rose about 17 percent in 2023, the central bank said, helping Taiwan's portfolio investments rise 14.1 percent from a year earlier to US$1.39 trillion.

With global financial integration on the rise, Taiwanese investors became more willing to participate in the world's financial markets and saw their appetite to invest overseas grow.

Taiwan's cumulative outbound investment also hit a new high of US$500.14 billion in 2023, up 10.9 percent from a year earlier, as the central bank said a restructuring of global supply chains led many Taiwanese companies to send more of their funds overseas.

The central bank was referring to companies such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which has poured funds into the United States, Japan and Germany to build advanced wafer fabs and diversify its production bases.

Overall, it was no surprise that Taiwan's net assets continued to rise last year because export-oriented Taiwan has long maintained a surplus in its current account, which mainly measures the exports and imports of a country's merchandise and services.

The other big creditors, Japan, Germany and China, have also traditionally been net exporters, though Japan has run trade deficits in recent years.

At the end of 2023, Taiwan's current account hit US$105.33 billion, up from US$100.93 billion as of the end of 2022, according to the central bank.

In terms of external financial liabilities, they were boosted by cumulative foreign direct investment in Taiwan, which reached a new high of US$136.6 billion as of the end of 2023, up 9.8 percent from a year earlier.

In addition, total portfolio investments in Taiwan by overseas investors at the end of 2023 were up 33.5 percent from a year earlier to US$710.9 billion, the central bank said.

The higher portfolio numbers reflected, in part, the 26.8 percent rise in the Taiex, the benchmark weighted index on the Taiwan Stock Exchange, in 2023.

(By Pan Tzu-yu and Frances Huang)

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