Taiwanese investment in China falls to record low

By Liao Chia-ning and Fion Khan / Staff reporter, with staff writer

Taiwanese firms’ China investments have dwindled to less than 1 percent of their total foreign investments, putting China-based investments on track for a record low this year, Ministry of Economic Affairs data showed.

Taiwan’s investments abroad in the first five months of this year reached US$35.92 billion, Department of Investment Review data showed.

Investments outside China totaled US$35.61 billion, up 133.94 percent year-on-year, while investments in China totaled US$310.3 million, down 32.3 percent and about 0.86 percent of the total, data showed.

Major overseas projects included Taiwan Semiconductor Manufacturing Co’s （TSMC, 台積電） US$30 billion capital injection into an overseas subsidiary, Wiwynn Corp’s （緯穎） US$500 million investment in its US holding and operating subsidiaries, as well as Asustek Computer Inc’s （華碩） US$500 million capital increase for a Singapore subsidiary, data showed.

It is believed that Taiwan’s increasingly critical role in the global artificial intelligence supply chain and major economies’ efforts to develop “non-red” supply chains have contributed to the surge in overseas investment outside China.

Taiwanese businesses have been reportedly placing growing emphasis on risk management and operational resilience as China’s low-cost advantages diminish, resulting in the fall in their investment in the country.

Chung-Hua Institution for Economic Research （中華經濟研究院） First Research Division director Liu Meng-chun （劉孟俊） said structural weaknesses in China’s domestic demand are unlikely to improve significantly in the near term, as three factors are expected to continue to weigh on consumption:

First, the property market downturn has eroded household wealth; second, high youth unemployment has destabilized expected income and purchasing power; third, the population is aging rapidly, he said.

Chinese authorities have become more selective in attracting investment, favoring industries with strategic importance, advanced technologies or control over key components, said Jivan Huang （黃健群）, chief of Mainland China affairs at the Chinese National Federation of Industries.

However, Taiwanese businesses are also taking a more pragmatic approach when assessing the risks of entering the Chinese market, he said.

Taiwanese investment in China reached its peak during the administration of former president Ma Ying-jeou （馬英九）.

Government information showed that during six of Ma’s eight years in office, annual investment exceeded US$10 billion, reaching a record US$14.6 billion in 2010 and accounting for about 83.8 percent of Taiwan’s total overseas investment.