The Covid-19 pandemic has boosted Taiwanese investment in China

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Taiwanese companies have boosted investment in China this year, despite Taipei’s efforts to reduce economic dependence on its giant neighbor amid a US-China trade war and growing military threat from Beijing.

Total approved investment from Taiwan to China rose to $ 4.7 billion in the first 10 months of this year, a 47% increase from the same period in 2019, the Ministry of Foreign Affairs said on Friday. Economic affairs in a report. Excluding mainland China, outward investment climbed 19% to $ 7 billion over the period.

With most of the major economies hit hard by the global coronavirus pandemic, China retains its appeal for many Taiwanese companies, even as President Tsai Ing-wen’s government offers incentives to bring investment home. Some companies have relocated their activities across the Strait, but China remains Taiwan’s largest trading partner.

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Angela Hsieh, regional economist for Barclays Plc in Singapore, cautioned against reading too much of this year’s surge, pointing to the low level of investment and a significant slowdown since 2018.

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“Personally, I don’t think we should over-interpret this 47% jump because the amount of investment was extremely low, as investment in China has slowed sharply since 2018,” she said, citing a further fall. 50% of investments in 2019 compared to the previous year.

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Hainan Allure

Yet China’s success in controlling the pandemic and its rapid economic recovery has made it an attraction for investment, not just Taiwan. A survey released by the US Chamber of Commerce in Shanghai on Friday shows that US companies were optimistic about China after the election of Joe Biden, with the majority planning not to change or to increase their investments there.

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Taiwanese-invested facilities involved in technology and automotive supply chains centered around the Yangtze River Delta have shifted production across the Strait. Other companies are starting to look to parts of China like Guangdong and Sichuan.

The island province of Hainan, which Beijing is preparing to become its new free trade zone as part of its economic response to Covid-19, is courting Taiwanese investments. Taiwan is the second largest investor in Hainan in terms of the number of registered companies, Taiwan-based United Daily News reported earlier this month.

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