Export growth from Taiwan to mainland China has slowed down in the last three months as mainland China has begun to implement a tight monetary policy to rein in inflation, the Ministry of Economic Affairs said Nov. 29.
In the first seven months of the year, Taiwan’s exports to mainland China were on average 63.5 percent higher compared with the same period of 2009, the MOEA said. But between August and October, year-on-year export growth to mainland China dropped to 15.43 percent, it added.
“Though cross-strait export growth has slowed down considerably, mainland China remains Taiwan’s largest export market and the country with which Taiwan enjoys the highest trade surplus,” the ministry said.
Exports to mainland China accounted for more than 40 percent of Taiwan’s total exports last month, the MOEA said. Cross-strait exports for the first 10 months advanced 42.1 percent from last year to reach US$95.09 billion.
As a result, the cumulative trade surplus with mainland China increased 38.2 percent year on year to US$64.81 billion. The surplus is expected to exceed US$70 billion for the entire year, according to the ministry.
Looking forward, the ministry remains positive on cross-strait trade as exporters are set to enjoy tariff concessions stemming from the Economic Cooperation Framework Agreement at the beginning of next January.
The MOEA, however, cautioned that the nation needs to keep a close eye on intensifying competition from other nations within the Association of Southeast Asian Nations.
The potential appreciation of the yuan is also something that Taiwanese manufacturers need to look out for, as a higher rate could undercut mainland China’s exports to the European and U.S. markets.
“As many domestic suppliers sell raw materials and components for assembly across the strait and export the finished products directly from there, a yuan hike could slow down mainland China’s export momentum and therefore weaken Taiwan’s exports as well,” the MOEA said.
“The ministry will closely monitor possible measures mainland China applies to cool its economy and their impact on our exports.” (HZW)
Write to Audrey Wang at audrey@mail.gio.gov.tw