Taiwan — unlikely beneficiary of the trade war?

Tsai Ing-wen may be the one democratic leader thanking her lucky stars for the U.S.-China trade war. The uncertainty generated by the trade war has Taiwanese companies shifting operations back home. It also is fueling hopes that big multinationals will switch out of China and boost Taiwan’s prospects.

Taiwan’s president took office in May 2016 with an ambitious goal: diversifying the economy away from the mainland and restoring its reputation as a high-tech center.

She rolled out a “New Southbound Policy” of stronger links with Southeast Asia, South Asia, Australia and New Zealand.

Tsai also launched a project for an Asian Silicon Valley. It aims to support key high-tech industries, including biomedicine, defense, green energy, recycling and smart machinery.

Then U.S. President Donald Trump burst on to the scene and unwittingly gave Tsai’s plans new impetus.

Foxconn Technology Group, formally known as Hon Hai Precision Industry, tells the story. Chairman Terry Gou is making Tsai’s year by considering moving some server production from the mainland to Taiwan. The company that assembles most of Apple’s iPhones might also hire some 3,000 high-end software engineers for a giant data-processing center in the southern city of Kaohsiung.

It is not the specific number of jobs that matters, but the trend. Gou is the vanguard of global executives actively responding to the trade war. The damage to supply chains from the conflict and rising uncertainty may increasingly outweigh lower mainland labor costs.

It also puts Foxconn stands companies betting Trump’s brawl with China’s Xi Jinping will not end soon.

Source:

https://asia.nikkei.com/Opinion/Taiwan-unlikely-beneficiary-of-the-trade-war

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