A survey by the Center for Strategic and International Studies (CSIS) of more than 500 Taiwanese companies found many are concerned by both their reliance on China and the potential for military conflict.
“Taiwanese companies are highly concerned about their potential over-dependence on the Chinese economy and the possibility of a military conflict,” Scott Kennedy, the Trustee Chair in Chinese Business and Economics at CSIS, states in the report "It’s Moving Time: Taiwanese Business Responds to Growing U.S.-China Tensions," released earlier this month.
The report is an analysis of a CSIS Chinese-language survey sent to Taiwanese business leaders in July, the report states. The online survey asked company executives about their business's performance, Taiwan’s economy, the Covid-19 pandemic, international economic issues, and cross-strait relations, the report summary states.
More than three-quarters of survey respondents agreed that Taiwan needs to reduce its economic dependence on Mainland China, the release reported. Kennedy said that 60.8% of respondents had business operations in China.
Taiwanese businesses are one way China has advanced its “peaceful unification” strategy, with Chinese officials seeking to win support from Taiwanese executives by providing commercial opportunities, according to the report. Taiwanese business has helped China's economy to develop and to advance its industrial progress. China accounted for 42.3% of Taiwan's exports in 2021, and two-way trade between China and Taiwan totaled $273 billion that year, the report said.
However, survey respondents ranked China, Taiwan’s largest trade partner, last when selecting their most important “economic partner,” according to the report. The respondents ranked the U.S. first.
“As a result, there is significant support for expanding trade and investment ties via regional arrangements and bilaterally with the United States," Kennedy states, "as well as for maintaining Taiwan’s technological edge through more spending on research and development and broadening restrictions for technology transfer to China.”
Taiwanese business is important to the U.S., in part because the island's leadership in the technology industry helps the U.S. compete with China. Survey participants indicated a top obstacle in the relationship in the short term was “Taiwan’s exclusion from multilateral/bilateral trade pacts.”
More than one-third of respondents indicated that they believe a military conflict between the U.S. and China in the next 5 years is possible. Respondents were divided on whether they believed that Taiwan's leadership in the semiconductor industry made them a more likely target of a Chinese attack, or whether it would encourage other countries to come to the island's defense in the event of armed conflict.
Kennedy said that while some Western companies have been moving operations out of China as a result of China's pandemic restrictions, Taiwanese companies moving out of China are doing so for different reasons, including security concerns and cross-strait politics.
More than a quarter of survey respondents report their firms have already moved some of their operations out of mainland China to Southeast Asia (61.3%), Taiwan (51.3%), Northeast Asia (19.5%), South and Central Asia (10.3%), North America (10.3), and Oceania (7.2%). The totals are more than 100% because some companies have operations in multiple locations, the survey report states.
The motivations for Taiwanese businesses that are moving out of China “are complex and shaped by a wide range of factors that are broadly rooted in a desire for stability, predictability, and safety,” Kennedy said.
