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Taiwanese Investors Shy China go to India Indonesia

Taiwanese public sentiment strongly opposes reunification with China, leading to a significant decline in cross-Strait investment due to both political and economic concerns.

Taiwanese investments across China dropped by 40 percent to just over $3 billion, marking the lowest levels in 22 years according to Taiwanese government data. Trade relations have also suffered, with Taiwan experiencing a 10.2 percent decrease in imports from China and a 15.6 percent decline in exports, one of the sharpest among its major trading partners.

Meanwhile, Taiwanese business leaders are increasingly skeptical about maintaining their presence in China, citing rising production costs, trade tensions, and geopolitical risks as factors pushing them towards exploring alternative business locations.

Chun-Yi Lee, director of the Taiwan studies program at the University of Nottingham, noted that despite China’s efforts to attract Taiwanese businesspeople to economic zones, known as “taishang,” the response has been lukewarm at best.

Concerns over higher labor costs, local competition, and the broader impacts of the US-China trade conflict are key deterrents for Taiwanese businesses. Wu Liping, president of the Shanxi Taiwan Compatriots Association, expressed Beijing’s hope that deeper economic ties would foster industrial integration and mitigate cross-Strait tensions, emphasizing shared heritage despite political differences.

Overall, while China promotes economic cooperation, Taiwanese firms remain cautious, with many opting for diversification away from China amidst uncertain geopolitical and economic conditions.

In various Taiwan-themed malls, industrial parks, and cultural sites throughout the province, a message is consistently conveyed. For instance, in Fuzhou’s old town, an exhibition at the Taiwan Assembly Hall recreates a historical rest house where Taiwanese scholars prepared for civil service exams during the Qing dynasty. This cultural emphasis suggests that strengthening cultural ties could lead to a positive future of national rejuvenation.

However, amidst China’s increasingly assertive military stance towards Taiwan, exacerbated by the recent inauguration of President Lai Ching-te, whom Beijing views as a separatist threat, tensions have escalated. China recently introduced laws that formally criminalize efforts to advocate for Taiwan’s independence, imposing severe penalties including the death penalty, despite lacking jurisdiction over Taiwan. In response, Taiwan’s policy advisory body has cautioned its citizens against unnecessary travel to China, Hong Kong, and Macau.

Jessie Chen, a Taiwanese business consultant providing technology services to mainland manufacturers, noted a preference for maintaining a low profile and avoiding political entanglements. She acknowledged China’s demand for Taiwanese expertise and technology transfer but emphasized the need to navigate these opportunities cautiously.

Concerns over China’s business environment have prompted many Taishang (Taiwanese businesspeople operating in China) to seek alternative markets. Frank Shih-Chien Chien, vice-president of the Kaohsiung Global MICE Association, observed a trend of Taiwanese investors redirecting their investments to Southeast Asia rather than returning to Taiwan or remaining in China.

Chi Shih-Yuan, a Taiwanese businessman, echoed a sentiment of skepticism towards China’s rhetoric, focusing instead on practical business considerations. He indicated plans to explore opportunities in countries like India or Indonesia for expanding his agricultural machinery company, citing demographic advantages and concerns over China’s industrial subsidies and resulting trade tensions with Europe.

Overall, amidst geopolitical uncertainties and economic challenges, Taiwanese investors are increasingly diversifying their strategies away from China, opting for regions where they perceive greater stability and growth prospects.

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