About HKTDC | Media Room | Contact HKTDC | Wish List Wish List () | My HKTDC |
繁體 简体
Save As PDF Print this page
Qzone

Taiwan: Market Profile

Major Economic Indicators

Economic Indicators20162017Jan-Feb 2018
Area (km2)36,19736,19736,197 (end-Feb)
Population (million)23.5423.5723.57 (end-Feb)
GDP (US$ billion)531.9
(+1.41%)*
573.4
(+2.86%)*
(+2.42%)*f
GDP per capita (US$)22,56124,337
25,893f
Inflation (CPI)1.39%0.62%2.19% (end-Feb)
Unemployment Rate3.92%3.76%3.63% (end-Jan)
Exports (US$ billion)280.3 (-1.8%)317.2 (+13.2%)49.7 (+7.3%)
Imports (US$ billion)230.6 (-2.8%)259.3 (+12.4%)44.2 (+11.7%)
Trade Surplus (US$ billion)49.757.95.5
Inward Direct Investment (US$ billion)11.0 (+130.1%)7.5 (-31.9%)1.3 (+122.4%)
Approved Indirect Investment in Mainland (US$ billion)9.7 (-11.8%)9.2 (-4.4%)0.6 (-50.0%)
Exchange Rate (NT$ per US$)32.31830.439
29.308
(end-Feb)
Foreign Currency Reserves (US$ billion)434.2 (end-Dec)451.5 (end-Dec)456.7 (end-Feb)

Remarks:
figures in ( ) = year-on-year change
* = in real terms
f = forecast
Source: www.stat.gov.tw; www.moea.gov.tw; www.cbc.gov.tw; www.dgbas.gov.tw

Latest Development

  • With the global economy recovering at a steady pace, the value of Taiwan’s exports and imports has begun to pick up. In dollar terms, Taiwan’s imports and exports were 12.4% and 13.2% respectively higher in 2017 than in the previous year. Overall, the continuous expansion of the global economy has accelerated the development of a number of emerging technologies, such as artificial intelligence, high performance computing, automotive electronics and the IoT. Meanwhile, the output and export of Taiwan’s non-electronics sectors, including plastic and rubber products, chemicals, machinery and basic metals, are set to benefit from surging raw material prices and renewed demand. According to the latest forecast from the Directorate General of Budget, Accounting and Statistics (DGBAS), which reports to the Executive Yuan, Taiwan’s imports and exports will increase by around 5.5% and 4.5%, respectively, in 2018.

  • Taiwan and the Chinese mainland entered into the ECFA on 29 June 2010. According to the Early Harvest List of ECFA, both parties have eliminated import tariffs on a number of products as of 1 January 2013. The mainland has also opened up 11 sectors to Taiwanese service providers, and Taiwan has reciprocated by opening nine, covering both financial and non-financial services, to mainland service providers.

  • Taiwan and the Chinese mainland signed the Cross-Straits Agreement on Trade in Services on 21 June 2013, under which the mainland pledged to further open up 80 categories of services to Taiwanese service providers – e-commerce, securities brokerage, banking, insurance, culture and creativity, transportation, and technical certification and analysis. In return, Taiwan committed to further opening up 64 service sectors, including securities brokerage, banking, insurance, tourism, medical services, and technical certification and analysis, to mainland service providers. The two parties are currently going through the ratification procedures related to the agreement.

Current Economic Situation

In tandem with the steady recovery of the global economy, Taiwan’s economic growth has begun to pick up. Driven by the demand for electronic goods, rising demand for machinery in overseas markets and the rebound in crude oil and basic metal prices in the international arena, Taiwan’s goods exports in dollar terms rose 13.2% year-on-year in 2017, with exports of electronic goods, communication and audio-visual products and basic metal products registering significant growth.

The continuous improvement in advanced processes enjoyed by Taiwan's semiconductor manufacturers, the endless supply of new mobile devices and the rapid development of emerging technologies are all expected to help boost the export of electronic goods in 2018. The rise of IoT and the growing demand for automotive electronics and other new smart applications is also likely to lead to a rise in capital expenditure on the part of semiconductor manufacturers.

In terms of local consumption, although many in Taiwan seem to have remained pessimistic about the economic prospects for the coming six months, the Consumer Confidence Index (CCI) actually bounced back from 74.35 in January 2017 to 87.69 in January 2018. The range of CCI values spread from 0 to 200, with values ranging between 100 and 200 rated as “optimistic” and between 0 and 100 as “pessimistic”.

In 2017, while Taiwan’s average unemployment rate hovered at a low level (3.76%), youth unemployment remained a serious problem. This, coupled with slow wage growth, is likely to have restricted the scope for spending growth. The forecast made by DGBAS in February 2018 is that Taiwan's economic growth for the whole year will be around 2.42%.

Foreign Trade

In 2017, Taiwan’s exports increased by 13.2% to US$317.2 billion compared to the previous year. Major export categories included electronic goods (accounting for 33.8% of total export value), communication and audio-visual products (10.7%), basic metal products (9.2%), machinery (8.1%) and chemicals (6.1%). Leading export markets included the Chinese mainland (28% of total export value), Hong Kong (13.1%), the US (11.7%), Japan (6.5%) and Singapore (5.6%). 

Meanwhile, Taiwan’s imports rose by 12.5% to US$259.3 billion over the year as a whole. The major import categories were electronic goods (19.1% of total import value), minerals (17.1%), machinery (11.8%), chemicals (10.7%) and basic metal products (7.9%), largely sourced from the Chinese mainland (19.3% of total import value), Japan (16.2%), the US (11.6%), South Korea (6.5%) and Germany (3.5%).

Foreign Investment

In 2017, US$7.5 billion worth of foreign direct investment (FDI) from locations other than the Chinese mainland was approved by the Investment Commission of the Ministry of Economic Affairs of Taiwan, down 31.9% on the year before. The biggest source of FDI was the Netherlands, accounting for 25.2% of the total, followed by the British Overseas Territories in the Caribbean (22.8%), the UK (15.0%), Japan (8.5%), Hong Kong (3.7%), Canada (3.4%) and the US (2.9%). The electronic parts and components manufacturing sector attracted the largest amount of FDI, 28.4% of the total. Other major sectors included information and communication (16.1%), finance and insurance (12.5%), wholesaling and retailing (11.7%) and professional, scientific and technical services (5.9%).

Economic and Trade Relations with Chinese Mainland

Under Taiwan’s Regulations Governing Permission of Trade between Taiwan Area and Mainland Area (《台灣地區與大陸地區貿易許可辦法》), trade with the Chinese mainland is generally allowed, although there are a number of exceptions. In accordance with the Cross-Strait Agreement on Air Transports (《海峽兩岸空運協議》) and the Cross-Strait Agreement on Ocean Transports (《海峽兩岸海運協議》) reached in November 2008, direct air / ocean transportation between designated Taiwan and mainland seaports / airports are also allowed.

As regards investment, under Taiwan’s Regulations Governing the Approval of Investment or Technical Co-operation in Mainland China (《在大陸地區從事投資或技術合作許可辦法》), business investment and technical co-operation undertaken in the mainland by Taiwanese companies is subject to the approval of Taiwan’s Investment Commission. Taiwan has also been gradually relaxing its restrictions on mainland investment, including such hi-tech projects as the production of semiconductors and wafer fabrication, as well as any investment under US$200,000. Since the beginning of 2010, it has also lifted technical restrictions on investing in the production of TFT-LCD panels on the mainland and allowed mergers and acquisitions or equity investment of TFT-LCD panel factories.

According to figures from the Investment Commission, approved investments on the mainland during 2017 dropped 4.4% from the year before to US$9.2 billion. As at 2017, a total of 42,589 mainland investment projects had been approved, amounting to a cumulative total of US$173.8 billion. The main areas of investment are the production of electronic parts and components, computers, electronic and optical products, and finance and insurance. Jiangsu, Guangdong and Shanghai are the regions which receive the majority of Taiwanese investment.

Taiwan’s Approved Indirect Investment on the Chinese Mainland (by Major Industry)

 

Industry

Cumulative investment as at 2017
No. of projectsApproved investment amount (US$ billion)Share of investment amount
All industries, of which:42,589173.8100.0%
Manufacturing of electronic parts and components2,95731.818.3%
Manufacturing of computers, electronic and optical products2,86324.013.8%
Finance and insurance37113.17.5%
Wholesaling and retailing3,25211.46.6%
Manufacturing of power equipment3,19111.06.3%

Source: www.moeaic.gov.tw

Taiwan’s Approved Indirect Investment on the Chinese Mainland (by Major Region)

 

Region

Cumulative investment as at 2017
No. of projectsApproved investment amount (US$ billion)Share of investment amount
All regions, of which:42,589173.8100.0%
Jiangsu7,07753.530.8%
Guangdong13,07231.918.4%
Shanghai6,04325.614.7%
Fujian5,72614.18.1%
Zhejiang2,26910.76.2%

Source: www.moeaic.gov.tw

Cross-Strait Economic Co-operation Framework Agreement

Taiwan and the Chinese mainland entered into the Economic Co-operation Framework Agreement (ECFA) (《海峽兩岸經濟合作架構協議》) on 29 June 2010, with the treaty officially coming into effect on 12 September 2010.

The ECFA included an Early Harvest List for trade in goods across the Strait. The mainland promised to reduce / exempt import tariffs on 539 Taiwan-origin products (according to 2009 tariff codes), including petrochemicals, machinery, textiles, transportation vehicles and parts, and agricultural produce. Reciprocally, Taiwan undertook to reduce / exempt import tariffs on 267 mainland products (according to 2009 tariff codes), including petrochemicals, machinery, textiles, transportation vehicles and parts. The related import tariffs have been lowered since 1 January 2011 and were eliminated completely by 1 January 2013.

As to the Early Harvest List for trade in services, the mainland committed to opening up 11 service sectors to Taiwanese service providers – accounting, auditing and bookkeeping, computer services, R&D services in natural sciences and engineering, conference services, professional design services, films, hospitals, aircraft maintenance, insurance, banking services, and securities and futures. Taiwan promised to open up nine service sectors to mainland service providers – R&D services, conference services, exhibition services, special product design services (except interior design), films, brokerage services, sport and leisure services, computer reservation system services for air transport, and banking services. Both the mainland and Taiwan opened up the agreed sectors to the other party in two stages, the first in November 2010 and the second in January 2011.

The Cross-Strait Investment Protection and Promotion Agreement and Cross-Strait Customs Co-operation Agreement, signed between Taiwan and the mainland on 9 August 2012, both came into effect on 1 February 2013. The former provides investors on both sides of the Strait with systemised protection of their investment interests, including property rights, management rights and personal safety. The latter was instrumental in simplifying customs clearance procedures, thereby lowering operating costs for cross-Strait businesses and deterring smuggling activities across the Strait. In addition, the governments on both sides of the Strait have published a statement of mutual understanding on personal freedom and safety issues under the investment protection agreement. This has seen both sides committed to improving the protection of the personal freedom and safety of cross-Strait investors and related personnel through enhancing the contact and communication mechanisms in accordance with the respective rules of each side.

Taiwan and the Chinese mainland signed the Memorandum of Understanding (MoU) on Cross Strait Currency Clearing Co-operation (海峽兩岸貨幣清算合作備忘錄) on 31 August 2012 and have implemented the cross-strait currency clearing mechanism. The Taipei branch of the Bank of China has been authorised to offer renminbi clearing services in the Taiwan region. Since February 2013, designated forex banks (i.e. domestic banking units, or DBUs) and overseas financial institutions have, after signing currency clearing agreements with the Bank of China's Taipei branch and completing the account opening procedures, been able to launch renminbi business in Taiwan. In return, the Chinese mainland has allowed the Shanghai branch of the Taiwan Bank to conduct New Taiwan dollar cash buying and selling business.

Taiwan and the Chinese mainland signed the Cross-Straits Agreement on Trade in Services on 21 June 2013, under which the Chinese mainland pledged to further open up 80 categories of services to Taiwanese service providers, including e-commerce, securities brokerage, banking, insurance, culture and creativity, transportation, and technical certification and analysis. In return, Taiwan committed to further open up 64 service sectors, including securities brokerage, banking, insurance, tourism, medical services, and technical certification and analysis, to mainland service providers. The two parties are currently going through the relevant ratification procedures. The agreement will enter into force when two parties receive a notification on the completion of the relevant procedures from the other party.

Taiwan and the Chinese mainland also signed the Cross-Straits Agreement on Avoidance of Double Taxation and Enhancement of Tax Co-operation in August 2015, which provides Taiwan and mainland enterprises with preferential tax reductions or exemption measures and a mechanism for dispute resolution in order to resolve the problem of double taxation for people and enterprises on both sides. The tax exemptions cover such areas as business profits, sea and air transportation and investment. The two sides are in the process of ratifying the relevant procedures of the agreement.

Economic and Trade Relations with Hong Kong

Hong Kong’s total exports to Taiwan in 2017 increased to US$11.46 billion, a 19.9% increase compared to the previous year. Major export items included semiconductors and integrated circuits (accounting for 28.7% of the total), deep-frozen food (19.1%) and telecommunications equipment and parts (8.6%). 

In 2017, Hong Kong’s imports from Taiwan rose to US$42.27 billion, a year-on-year increase of 12.9%. Major import items included semiconductors and integrated circuits (72.1% of the total), telecommunications equipment and parts (4.2%) and office machine and computer parts / accessories (3.2%).

 

(US$ billion)

2017Jan 2018
ValueChange (%)RankingValueChange (%)Ranking
Total exports11.46+19.95
1.26+40.05
Domestic exports0.27+12.95
0.03+68.44
Re-exports11.19+20.15
1.23+39.45
Imports42.27+12.923.51+17.52
of which re-exported44.07+12.123.86+28.32
Total trade53.72+14.33
4.76+22.73
Trade balance-30.81

-2.25

Remark: Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies.
Source: Hong Kong Census & Statistics Department

According to Taiwan’s Investment Commission, Taiwan approved 749 investment projects from Hong Kong companies during 2017, amounting to US$280 million in total value, a fall of 53.2% from the year before. In the same period, approval was given for 57 investment projects in Hong Kong from Taiwanese companies, with a total value of US$290 million, down 27.7% year-on-year. 

A considerable number of Taiwanese companies have established a presence in Hong Kong. According to the latest figures from the Census and Statistics Department of Hong Kong, as of June 2017, 19 Taiwan companies had set up their regional headquarters in Hong Kong, while 109 had regional offices in the city and another 253 had established local offices to manage their business in the territory.

 

Content provided by Picture: Alice Tsang
Comments (0)
Shows local time in Hong Kong (GMT+8 hours)

HKTDC welcomes your views. Please stay on topic and be respectful of other readers.
Review our Comment Policy

*Add a comment (up to 5,000 characters)