Despite the tensions… China-Taiwan Economic Relations

Relations between China and Taiwan have been under considerable tensions for some time, as a result of Beijing’s military drills and other surprise decisions against Taiwan, but another aspect of relations between the two countries is economic cooperation.

On economic relations between the two countries, China and Taiwan signed more than 20 agreements between 2008 and 2016, including the 2010 Framework Agreement for Cross-Strait Economic Cooperation, under which trade restrictions were lifted.

Direct contacts by sea, air and mail between China and Taiwan returned after decades of embargo. They also agreed to open both markets to banks, insurance companies and other financial service providers.

Between 2016 when the initiative was announced and 2022, trade between Taiwan and the 18 target countries nearly doubled.

Taiwan’s investment in those countries has increased significantly. Taiwan unveiled a three-year plan in 2019 to encourage Taiwanese manufacturers to return to Taiwan from the mainland.

On the other hand, Taiwan is the world’s largest semiconductor chip manufacturer, with the country having the epicenter of most electronic devices, including computers, smartphones, cars and even AI-powered weapons systems, because they contain these chips.

In 2022, Taiwanese companies produced more than 60% of the revenue generated by manufacturers for semiconductor contracts globally.