◎ Wu Guodong
In the past two years, Taiwan has demonstrated a dramatic "dual-track phenomenon" at the political and economic levels. Relying on the advantage of more than half of the seats, the Blue and White camp has forced the passage of a number of highly controversial bills, and various chaotic political actions that lack procedural justice have led to increasingly fierce confrontation between the government and the opposition. In order to defend the constitutional separation system, the Executive Yuan has not hesitated to adopt a "no counter-signature" strategy and resolutely refused to endorse such bills that would expand powers or violate Article 70 of the Constitution (proposal to increase expenditures), triggering a serious constitutional deadlock between the government and the opposition.
However, what is amazing is that this seemingly noisy political chaos, which some public opinion even worried may lead to the country's idling, has not shaken Taiwan's economic foundation. On the contrary, Taiwan has experienced an epic economic explosion in the past two years. Not only is the economic growth rate in 2025 as high as 8.63%, but it is also expected to reach a record high of 11.05% in 2026, which is extremely rare among developed countries. This strange scene of "political fever and economic failure" reveals the qualitative changes in the global capital landscape and Taiwan's unique political and economic resilience.
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The Blue and White chaos has not shaken Taiwan's economic foundation. On the contrary, Taiwan has experienced an epic economic eruption in the past two years, which reveals the qualitative changes in the global capital landscape and Taiwan's unique political and economic resilience. (Drawing by this newspaper)
The key to Taiwan's economy taking off despite the political gloom lies primarily in the global AI supply chain's absolute dependence on Taiwan.
Looking back at the outbreak of the U.S.-China trade war in 2018, a large number of Taiwanese information and communications companies who invested and set up factories in China moved high-end production capacity back to Taiwan in order to avoid punitive tariffs and ensure information security. This wave of Taiwanese businessmen returning under the guidance of the government's "Three Major Plans for Investing in Taiwan" will seamlessly meet the global fanatical demand for AI, advanced semiconductor manufacturing processes and high-performance computing between 2024 and 2026. When global cloud service providers (CSPs) launch a buying spree, Taiwan, which is a hub for chips and servers, naturally becomes the biggest beneficiary of the global computing power dividend.
This resonance between geopolitics and technological dividends has directly triggered the "geographic reshaping" of the global capital market.
In the past two years, the total market capitalization of Taiwanese and Korean stocks has successively overtaken that of Germany, France, the United Kingdom, Canada and other countries. Taiwan has also surpassed India, with a population of 1.4 billion, to become the fifth largest in the world. It is expected to overtake Hong Kong in the second half of 2026 or the first half of 2027 and become the fourth largest in the world, behind the United States, China and Japan. The weight distribution of foreign capital in Asia has clearly shown a trend of "abandoning domestic demand and passing on production, and overweighting Taiwan and South Korea's hardware." Taiwan, an economy with a population of 23 million, has demonstrated its astonishing ability to attract money in the capital market with its "technological silicon shield."
The author said that Taiwan stocks are expected to overtake Hong Kong in the second half of 2026 or the first half of 2027, becoming the fourth largest in the world, behind the United States, China and Japan; schematic diagram. (File photo)
However, although the rise of AI has greatly increased the profits of Taiwan, the United States, Japan, and South Korea, it has also simultaneously brought about the dual differentiation of the global "K-shaped economy".
This dual-track phenomenon caused by the huge wave of technology appears in the four countries mentioned above at the same time: under the free market mechanism, wealth is crazily concentrated in high-tech groups such as semiconductors and software computing power, which will inevitably lead to the widening of the income gap. This directly debunks the pessimistic argument claimed by the domestic blue-field media that "Taiwan is the only one that has not benefited from transmission of the industry." In comparison, countries such as Germany, France, the United Kingdom, and India, which lack digital industries and are overly dependent on traditional industries, have experienced dull and mediocre economic growth.
Faced with the downward trajectory of the "K-shaped economy" caused by the free market, the Taiwanese government has used the excess tax revenue generated by the technology industry over the past few years to carry out "cross-industry subsidies" and "policy guidance":
First, on the basic defense line of people's livelihood, the government has injected excess tax revenue into Taipower and China National Petroleum Corporation for several consecutive years, launched a dual-stabilization mechanism for oil and electricity to absorb the increase in international energy, and launched TPASS mass transportation subsidies. This is essentially to use the business taxes paid by the high-tech industry to build an anti-inflation protection net for ordinary people's lives, keeping Taiwan's price index stable at a level lower than that of Europe, the United States, Japan, South Korea, and even developing countries for a long time.
Secondly, in terms of industry support, the government does not blindly throw money, but accurately guides financial dividends to assist traditional small and medium-sized enterprises in smart manufacturing and low-carbon transformation. For example, the traditional textile and plastics industries have turned to the world's top recycled green materials and successfully entered the supply chains of Coca-Cola and Nike; Changchun Group has developed high-purity electronic-grade chemicals and has become a key local supplier to TSMC; traditional heavy electrical industries (such as Huacheng, Shidian, and ZTE) have even taken large orders for green power and transformers from the global AI computing power center, and their profit growth in recent years has even exceeded that of technology stocks.
This virtuous cycle of "technology backing up traditional industries and people's livelihood" has successfully stabilized the grassroots of Taiwan's society and allowed most traditional industries to buck the trend and break through the huge K-shaped wave.
Changchun Group developed high-purity electronic-grade chemicals and became a key local supplier to TSMC. (Provided by Kaohsiung City Government)
In democratic countries, competition between the ruling and opposition parties in Congress is normal, but the strong actions of the opposition parties in the Legislative Yuan will eventually face the ultimate test of public opinion. Taiwanese voters have always had a keen "democratic checks and balances" voting mentality. If the Blue and White camp continues to insist on going its own way, disregarding the order of constitutional separation, and turning "parliamentary oversight" into "malicious paralysis of the government," this political baggage will inevitably be reflected in the nine-in-one local elections at the end of this year, and even in the general election in 2028, triggering a tsunami-like backlash from middle voters and young people.
Taiwan's luck and greatness lie in the economic shield built by countless technology industries on the international stage. What's more, it lies in the government's ability to keep pace with the times and use reasonable fiscal means to let the dividends of science and technology overflow, warming traditional industries and disadvantaged groups. The turmoil in Congress is just a pain in the process of deepening democracy. As long as Taiwan's economic strength and social resilience continue to deepen, any malicious political boycotts and idling will not be able to stop Taiwan from reaching the top of global economic and trade. No matter how turbulent the political situation is, the short-sighted and chaotic government of the Blue and White parties in the Legislative Yuan will eventually usher in the most fair and ruthless ultimate judge of the democratic system in the tsunami of votes cast by voters.
The short-sighted and chaotic government of the Blue and White parties in the Legislative Yuan will eventually usher in the most just and ruthless sanctions from the democratic system at the end of the year; diagram. (File photo)
(The author is a retired trade promoter)
