Taiwan’s New Southbound Policy and the Cross-Strait Relations

Abstract

Taiwan still faces the problem of identifying its relationship and developing its attitude within the Cross-Strait Relations, not only due to the well-known political considerations and diplomatic isolation, but also because it is widely perceptible that Taiwanese investors and the Taiwanese government are scared of the possible implications of a trade war between the USA and the People’s Republic of China (PRC, hereinafter: Mainland China). Besides other reasons, this is the main motivation behind the sudden Taiwanese FDI divestment from Mainland China. This huge amount of capital, however, does not return to Taiwan to create new jobs and develop new, high value-added industries, rather it flows to Southeast Asia, an area still focusing on the low-cost labour-intensive manufacturing sector. Besides other, non-industrial fields, the present NPP-based Tsai administration fosters its New Southbound Policy (NSP), which is partially implemented under the umbrella of a special NGO, the Taiwan–Asia Exchange Foundation (TAEF). The 18 target countries of NSP comprise the complete ASEAN plus South Asia, Australia and New Zealand. However, among Taiwan’s target countries, the most intensive investment and trade relations are maintained with the ASEAN region (mostly Vietnam, Philippines, Thailand, Malaysia and Indonesia). The future might, however, bring about significant changes, as Mainland China has still been by far the biggest export market of Taiwan.