iFund-Is Taiwan’s economy coming up while China is suffering from Trade war?

2019-06-05 01:41
Share
  • Share

As Taiwan accounts for 67.6% of global value chains, ranking second in the world, and trade wars have complicated political and economic interactions between different countries. It is not easy to assess the real impact of trade wars on Taiwan.

featured

The tension between US and China in the trade war is escalating. If the Sino-US trade war extends to all trades, the IMF expects the global GDP will be subtracted 0.3%, with half stemming from business and market confidence effects. However, the Chinese Communist Party has always been pragmatic in dealing with international issues, and Trump will also announce his re-election campaign this month. Let’s see if the Presidents can bring us some good news in the coming G20 submit.

Taiwan’s presidential election has low impact on China-Taiwan relationship

The Sino-US fight also affects the geopolitical map. Taiwan presidential election is coming soon, what will be the critical impacts to the election as well as the China-Taiwan relationship amid current backdrop? Potential candidates from the KMP camp are Taiwan’s richest man, Guo Taiming, and mayor of Kaohsiung city, Han Kuo-yu. The potential candidate from the DPP is the current president, Tsai Ing-wen and the former premier, Lai Ching-de. In addition, the mayor of Taipei City, Ke Wenzhe seems willing to join the competition.

It is true that the more pro-Beijing Taiwan presidents can reduce some political dispute, such as the “92 Consensus” issue, but it hardly bring any real changes to the cross-strait relationship. The stance of former presidents of Taiwan on the Taiwan-China issue is basically to maintain the status quo, which is line with the mainstream public opinion of the Taiwanese. Although China hopes to implement ‘one country, two systems to Taiwan’, it is not practical at all. In fact, China’s bottom line is very clear: as long as Taiwan does not declare independence, CCP will not unify Taiwan with force.

Can Taiwan benefit from the US-China trade war?

It is hard to determine whether the Taiwanese economy can benefit from the current trade war. Deutsche Bank expects that if trade war is fully launched, the economic growth of Hong Kong and Taiwan will fall by 3.9% and 3% respectively. On the other hand, a researcher at the National Bureau of Economic Research (NBER) and a professor of economics at the City University of New York argues that Taiwan’s GDP can increase by 1.3% if the trade war reaches the most intense level.

The amount of Taiwan’s exports to the United States in the first quarter of this year was US$12.664 billion, up 21.19% year-on-year. On the contrary, the amount of China’s exports to the United States in the first quarter was US$105.974 billion, down 13.92% year-on-year. The figures seem to reflect that the trade war is good for Taiwan’s exports, but investors should be cautious. After all, as Taiwan accounts for 67.6% of global value chains, ranking second in the world, and trade wars have complicated political and economic interactions between different countries. It is not easy to assess the real impact of trade wars on Taiwan.

Related Articles

Manage your asset round-the-clock

Hotline

852
3896 3896

1501, 15/F, 101 King's Road,
North Point, Hong Kong

Mon - Fri (excluding public holidays)
09:00 - 18:00

Copyright © 2019 Noble Apex Advisors Limited. All Rights Reserved.