China
Taiwan’s China dependency is a double-edged sword
Author: Roy C Lee, Chung-Hua Institution for Economic Research
Taiwan’s remarkable economic performance in 2020 is something to celebrate given most countries globally plunged into recession because of the COVID-19 pandemic. Taiwan’s GDP increased by 3.11 per cent in 2020 compared to the global average of negative 4.5 per cent. It is the first time in three decades that Taiwan has achieved a growth rate greater than China’s.
But political debate broke out over one key element that enabled this achievement. Taiwan’s GDP growth in 2020 was mainly underpinned by an increased trade surplus and domestic investment. Exports increased to a record-breaking 4.9 per cent in 2020, with China (Hong Kong included) receiving close to 44 per cent of Taiwan’s exports, a 12 per cent increase from 2019. This makes China Taiwan’s single most important trading partner and a key source of trade surplus.
Many in Taiwan argue that trade dependence on China indicates that the current Democratic Progressive Party (DPP) government’s approach — keeping China at arms-length while pursuing a closer alliance with the United States — is just political rhetoric. Taiwan, after all, needs China for economic prosperity.
There are calls to address this high export concentration issue based on economic security concerns. One key risk is that this structure may increase China’s ability to coerce Taiwan for political benefit. China’s decisions in January and April 2021 to block Taiwan’s pork and pineapple imports based on arbitrary quarantine reasons are recent examples that support this argument.
The key question is whether trade concentration represents low resilience levels, over-dependence and other economic security risks that Taiwan faces, or to the contrary, is an indication of China’s ‘supplier dependency’ on Taiwan.
The top five export product categories from Taiwan to China measured in export value are electrical machinery and equipment and parts; machinery, mechanical appliances and computers; optical and other precision instruments and accessories; plastics and articles; and organic chemicals. Together, they accounted for 86.3 per cent of Taiwan’s exports to China in 2020.
Cross-strait trade is predominately electrical machinery trade — it accounts for 64 percent of total exports. Semiconductors are the most important product item under the electrical machinery category, accounting for 78 per cent of electrical machinery exports. As such, the 27 per cent increase in semiconductor exports to China in 2020 was the main factor underpinning the overall increase in exports.
Chinese demand for semiconductors surged in 2020 because of the growing demand for electronic consumer products due to the worldwide proliferation of working from home and home-schooling. The stockpiling strategy of Chinese tech firms, including Huawei and SMIC, in light of potential US export controls contributed to the surge of demand as well.
As far as the danger of economic coercion is concerned, the risk for Taiwan is at this stage limited. Taking semiconductor trade as an example, China’s current domestic capacity can only supply somewhere between 15 to 20 per cent of semiconductor demand. Semiconductors from Taiwan and South Korea are the main sources of supply underpinning China’s position as the global manufacturing powerhouse for semiconductor-enabled electronic products.
This ‘reverse’ dependency structure means that if Beijing were to weaponise semiconductor trade to coerce Taiwan, it could potentially harm China’s own economic growth much more than Taiwan’s. The ‘reverse’ dependency structure is one of China’s primary strategic concerns and was a key driver of China’s semiconductor import substitution policy created more than 20 years ago.
Taiwan’s current trade structure suggests that the threat of economic coercion is small. As a major hub in global supply chains, the future orientation of Taiwan’s trade relationship with China depends more on other external factors, like the direction of US policy towards China and supply chain reform.
As reflected in its Interim National Security Strategic Guidance, the Biden administration has formally initiated ‘strategic competition’ with China. On the supply chain restructuring front, the continuing trade war suggests the pressure for US-based suppliers in China to relocate will remain.
The draft ‘Strategic Competition Act of 2021’ passed by the US Senate’s Foreign Relations Committee in April (which was integrated as part of the US Innovation and…
Business
China Limits Apple Operations as BYD Manufacturing Moves to India and Southeast Asia Amid Trade Frictions | International Business News – The Times of India
China is restricting the export of high-tech manufacturing equipment and personnel to India and Southeast Asia, aiming to maintain domestic production amid potential US tariffs, impacting companies like Foxconn and BYD.
China Curbs on High-Tech Manufacturing
China is intensifying restrictions on the movement of employees and specialized equipment essential for high-tech manufacturing in India and Southeast Asia. This measure aims to prevent companies from relocating production due to potential tariffs under the incoming US administration. Beijing has urged local governments to restrict technology transfers and export of manufacturing tools as part of this strategy.
Impact on Foxconn and Apple’s Strategy
Foxconn, Apple’s primary assembly partner, is facing challenges in sending staff and receiving equipment in India, which could impact production. Despite these hurdles, current manufacturing operations remain unaffected. The Chinese government insists it treats all nations equally while reinforcing its domestic production to mitigate job losses and retain foreign investments.
Broader Implications for India
Additionally, these restrictions affect electric vehicle and solar panel manufacturers in India, notably BYD and Waaree Energies. Although the measures are not explicitly targeting India, they complicate the business landscape. As foreign companies seek alternatives to China, these developments are likely to reshape manufacturing strategies amidst ongoing geopolitical tensions.
China
China’s GDP Grows 5% in 2024: Key Insights and Main Factors
In 2024, China’s GDP grew by 5.0%, meeting its annual target. The fourth quarter saw a 5.4% increase, driven by exports and stimulus measures. The secondary industry grew 5.3%, while the tertiary increased by 5.0%, totaling RMB 134.91 trillion.
China’s GDP grew by 5.0 percent in in 2024, meeting the government’s annual economic target set at the beginning of the year. Fourth-quarter GDP exceeded expectations, rising by 5.4 percent, driven by exports and a flurry of stimulus measures. This article provides a brief overview of the key statistics and the main drivers behind this growth.
According to official data released by the National Bureau of Statistics (NBS) on January 17, 2025, China’s GDP reached RMB 134.91 trillion (US$18.80 trillion) in 2024, reflecting a 5.0 percent year-on-year growth at constant prices. During the 2024 Two Sessions, the government set the 2024 GDP growth target of “around 5 percent”.
By sector, the secondary industry expanded by 5.3 percent year-on-year to RMB 49.21 trillion (US$6.85 trillion), the fastest among the three sectors, while the tertiary industry grew by 5.0 percent, reaching RMB 76.56 trillion (US$10.63 trillion) and the primary industry contributed RMB 9.14 trillion (US$1.31 trillion), growing 3.5 percent.
A more detailed analysis of China’s economic performance in 2024 will be provided later.
(1USD = 7.1785 RMB)
| This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, and India . Readers may write to info@dezshira.com for more support. |
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China
Can science be both open and secure? Nations grapple with tightening research security as China’s dominance grows
The U.S.-China science agreement renewal narrows collaboration scopes amid security concerns, highlighting tensions. Nations fear espionage, hindering vital international partnerships essential for scientific progress. Openness risks declining.
Amid heightened tensions between the United States and China, the two countries signed a bilateral science and technology agreement on Dec. 13, 2024. The event was billed as a “renewal” of a 45-year-old pact to encourage cooperation, but that may be misleading.
The revised agreement drastically narrows the scope of the original agreement, limits the topics allowed to be jointly studied, closes opportunities for collaboration and inserts a new dispute resolution mechanism.
This shift is in line with growing global concern about research security. Governments are worried about international rivals gaining military or trade advantages or security secrets via cross-border scientific collaborations.
The European Union, Canada, Japan and the United States unveiled sweeping new measures within months of each other to protect sensitive research from foreign interference. But there’s a catch: Too much security could strangle the international collaboration that drives scientific progress.
As a policy analyst and public affairs professor, I research international collaboration in science and technology and its implications for public and foreign policy. I have tracked the increasingly close relationship in science and technology between the U.S. and China. The relationship evolved from one of knowledge transfer to genuine collaboration and competition.
Now, as security provisions change this formerly open relationship, a crucial question emerges: Can nations tighten research security without undermining the very openness that makes science work?
Chinese Premier Deng Xiaoping and American President Jimmy Carter sign the original agreement on cooperation in science and technology in 1979.
Dirck Halstead/Hulton Archive via Getty Images
China’s ascent changes the global landscape
China’s rise in scientific publishing marks a dramatic shift in global research. In 1980, Chinese authors produced less than 2% of research articles included in the Web of Science, a curated database of scholarly output. By my count, they claimed 25% of Web of Science articles by 2023, overtaking the United States and ending its 75-year reign at the top, which had begun in 1948 when it surpassed the United Kingdom.
In 1980, China had no patented inventions. By 2022, Chinese companies led in U.S. patents issued to foreign companies, receiving 40,000 patents compared with fewer than 2,000 for U.K. companies. In the many advanced fields of science and technology, China is at the world frontier, if not in the lead.
Since 2013, China has been the top collaborator in science with the United States. Thousands of Chinese students and scholars have conducted joint research with U.S. counterparts.
Most American policymakers who championed the signing of the 1979 bilateral agreement thought science would liberalize China. Instead, China has used technology to shore up autocratic controls and to build a strong military with an eye toward regional power and global influence.
Leadership in science and technology wins wars and builds successful economies. China’s growing strength, backed by a state-controlled government, is shifting global power. Unlike open societies where research is public and shared, China often keeps its researchers’ work secret while also taking Western technology through hacking, forced technology transfers and industrial espionage. These practices are why many governments are now implementing strict security measures.
Nations respond
The FBI claims China has stolen sensitive technologies and research data to build up its defense capabilities. The China Initiative under the Trump administration sought to root out thieves and spies. The Biden administration did not let up the pressure. The 2022 Chips and Science Act requires the National Science Foundation to establish SECURE – a center to aid universities and small businesses in helping the research community make security-informed decisions. I am working with SECURE to evaluate the effectiveness of its mission.
Other advanced nations are on alert, too. The European Union is advising member states to boost security measures. Japan joined the United States in unveiling sweeping new measures to protect sensitive research from foreign interference and exploitation. European nations increasingly talk about technological sovereignty as a way to protect against exploitation by China. Similarly, Asian nations are wary of China’s intentions when it seeks to cooperate.
Australia has been especially vocal about the threat posed by China’s rise, but others, too, have issued warnings. The Netherlands issued a policy for secure international collaboration. Sweden raised the alarm after a study showed how spies had exploited its universities.
Canada has created the Research Security Centre for public safety and, like the U.S., has established regionally dispersed advisers to provide direct support to universities and researchers. Canada now requires mandatory risk assessment for research partnerships involving sensitive technologies. Similar approaches are underway in Australia and the U.K.
Germany’s 2023 provisions establish compliance units and ethics committees to oversee security-relevant research. They are tasked with advising researchers, mediating disputes and evaluating the ethical and security implications of research projects. The committees emphasize implementing safeguards, controlling access to sensitive data and assessing potential misuse.
Japan’s 2021 policy requires researchers to disclose and regularly update information regarding their affiliations, funding sources – both domestic and international – and potential conflicts of interest. A cross-ministerial R&D management system is unrolling seminars and briefings to educate researchers and institutions on emerging risks and best practices for maintaining research security.
The Organisation for Economic Co-operation and Development keeps a running database with more than 206 research security policy statements issued since 2022.
Emmanuelle Charpentier, left, from France, and Jennifer Doudna, from the U.S., shared the Nobel Prize in chemistry in 2020 for their joint research.
Miguel RiopaI/AFP via Getty Images
Openness waning
Emphasis on security can strangle the international collaboration that drives scientific progress. As much as 25% of all U.S. scientific articles result from international collaboration. Evidence shows that international engagement and openness produce higher-impact research. The most elite scientists work across national borders.
Even more critically, science depends on the free flow of ideas and talent across borders. After the Cold War, scientific advancement accelerated as borders opened. While national research output remained flat in recent years, international collaborations showed significant growth, revealing science’s increasingly global nature.
The challenge for research institutions will be implementing these new requirements without creating a climate of suspicion or isolation. Retrenchment to national borders could slow progress. Some degree of risk is inherent in scientific openness, but we may be coming to the end of a global, collaborative era in science.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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