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Economic conditions

Taiwan's Competitiveness at Risk: China-Japan-Korea Economic Integration Threatens Global Markets

Strategic Insights

— 1 min read

Taipei is bracing for economic turmoil as China, Japan, and South Korea move closer to forming a free trade agreement (FTA), potentially leaving Taiwan's manufacturing sector struggling to compete in global markets. The Ministry of Economic Affairs (MOEA) has released a sobering assessment, warning that exclusion from the FTA would severely hamper Taiwan's efforts to explore international markets and damage its trade relationships with the three countries.

Key Takeaways:

  • Taiwan's competitiveness in the global market could be significantly reduced if China, Japan, and South Korea achieve economic integration through an FTA, according to the MOEA assessment.
  • Trilateral trade among the three countries has grown rapidly in recent decades, with a total value of US$257.9 billion in 2022.
  • The combined gross domestic product (GDP) of China, Japan, and South Korea exceeded US$7.6 trillion in 2022, accounting for 20.87% of the world's total GDP.
  • An FTA between the three countries would strengthen their influence in high-tech sectors such as electronics, shipbuilding, steel, semiconductors, and the PC industry.
  • Taiwan firms would find it more difficult to compete in the market if the three countries signed an FTA, leading to potential losses in investment and trade.
  • China, Japan, and South Korea have agreed to join the Chiang Mai Initiative, a pact that supplies short-term liquidity among ASEAN plus three countries, to stabilize currency values in East Asia.

Statistics:

  • Trilateral trade among China, Japan, and South Korea reached US$257.9 billion in 2022.
  • The combined GDP of the three countries exceeded US$7.6 trillion in 2022, accounting for 20.87% of the world's total GDP.
  • Neglecting Taiwan from FTA between China, Japan and South Korea refers the country to facing major challenge in its trade exchange globally.

Sources:

  • Asia Pulse - "Taiwan's competitiveness in global market at risk: MOEA"
  • Ministry of Economic Affairs (MOEA)
  • (XIC) 28-07 1055

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