TAIWAN’S INTERNATIONAL ECONOMIC RELATIONS

ECONOMIC INTEGRATION ACROSS THE TAIWAN STRAIT

“We must certainly complete the great task of unifying the mother country” (1978)

A comparison of two Chinese economies- China and Taiwan in 2006

China Taiwan

GDP (official exchange rate)Index with Taiwan GDP = 100

US$ 2,527 billion

688.0

US$ 346.7 billion

100.0

GDP (purchasing power parity)Index with Taiwan GDP = 100

US$ 10,210 billion

1,410.0

US$ 681.8 billion

100.0

GDP comparison (2006) with Taiwan GDP = 100

2,527

367.7

10,210

681.8

0

2,000

4,000

6,000

8,000

10,000

12,000

China Taiwan

2006

GDP

(US$

m.)

GDP at official exchange rate GDP at PPP

GDP in China and Taiwan (at current prices)

China GDP(US$ m.,

current prices)

Taiwan GDP(US$ m.,

current prices)

Taiwan GDP as % China GDP

1978 210,649 26,836 12.7

1980 303,056 42,285 13.7

1985 307,022 63,409 20.7

1990 390,278 164,513 42.2

1995 727,981 273,792 37.6

2000 1,198,476 321,230 26.8

2001 1,324,818 291,694 22.0

2002 1,453,820 297,668 20.5

2003 1,640,967 305,624 18.6

2004 1,931,644 331,007 17.1

2005 2,244,563 354,918 15.8

2006 2,645,212 364,422 13.8

Changing relative levels of GDP (1978-2006)

China GDP

Taiwan GDP

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

1978 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006

GDP

(US$

m.)

A comparison of per capita GDP in

China and Taiwan (2006)

China Taiwan

Average per capita GDP(PPP terms)

With Taiwan per capita GDP = 100

US$ 7,800

26.4

US$ 29,600

100.0

Per capita GDP (PPP), 2006

Per capita GDP (ppp)

7800

29600

0

5000

10000

15000

20000

25000

30000

35000

China Taiwan

Per ca

pita

GDP

2006

(PP

P)

Quantitative indicators of Taiwan’s merchandise trade

  All figures in US$ million

  Exports Imports Total Balance

1952 117 187 304 -70

1960 164 297 461 -133

1965 450 556 1,006 -106

1970 1,481 1,524 3,005 -43

1975 5,309 5,952 11,261 -643

1980 19,811 19,733 39,544 78

1985 30,726 20,102 50,828 10,624

1990 67,214 54,716 121,930 12,498

1995 113,342 104,012 217,354 9,330

1999 123,733 111,196 234,929 12,537

2000 151,950 140,732 292,682 11,218

2001 126,314 107,971 234,285 18,344

2002 135,317 113,245 248,562 22,072

2003 150,600 128,010 278,611 22,590

2004 182,370 168,758 3511280 13,613

2005 198,432 182,614 381,046 15,817

2006 224,017 202,698 426,715 21,319

Taiwan’s merchandise trade

0

50000

100000

150000

200000

250000

1952 1960 1965 1970 1975 1980 1985 1990 1995 1999 2000 2001 2002 2003 2004 2005 2006

Exp

orts

/Im

ports

(US$

m.)

Exports Imports

Taiwan’s outward investment (1952-2006, selected years)Total outward

investment(US$ million)

Shares to (%):

North America Asia Europe

1952-79 59.3 22.9 82.6 0.2

1980 42.1 83.4 7.5 0.2

1985 41.3 86.7 10.2 2.2

1990 1,552.2 54.0 38.8 6.2

1995 1,356.9 58.0 34.5 4.4

2000 5,077.1 77.7 16.7 1.2

2001 4,391.7 78.8 18.6 1.0

2002 3,370.0 73.5 15.7 3.7

2003 3,968.6 68.8 26.8 2.0

2004 3,382.0 55.6 37.7 1.8

2005 2,447.4 66.1 17.6 4.1

2006 4,315.4 54.1 32.2 2.9

NOTE: Asia here excludes Mainland China

“Resolutely liberate Taiwan. Save theTaiwanese people from their misery” (1955)

“We must liberate Taiwan” (1958)

“We must liberate Taiwan” (1971)

“We must liberate Taiwan” (1977)

“Taiwanese compatriots are our brothers” (1976)

“Taiwanese compatriots are our blood brothers” (1978)

China’s economic potential in comparative perspective

China’s per capita GDP as % of each region (country)

Implied US dollar gap

1995 2015 1995 2015

Seven dynamic Asian countries (incl. Taiwan)

42.5 51.6 - 3,603 - 6,010

32 advanced capitalist

countries

15.8 28.9 - 14,157 - 15,801

Eastern Europe 51.6 68.9 - 2,492 - 2,894

World 51.1 87.4 - 2,541 - 925

USA 11.3 21.1 - 20,724 - 23,870

Japan 13.5 25.1 - 17,067 - 19,135

India 169.2 205.1 + 1,085 + 3,278

Former Soviet Union

73.9 108.8 - 937 + 516

Changing cross-straits trade dependence All figures shown as % estimates

Taiwan’s total trade with China as share of Taiwan’s global

trade

Taiwan’s exports to China as share of Taiwan’s global

exports

Taiwan’s imports from China as share of Taiwan’s global

imports

China’s imports from Taiwan as share of China’s global imports

1985 1.06 1.40 0.58 2.34

1988 2.47 3.70 0.96 4.06

1990 4.23 6.54 1.40 8.24

1991 5.57 9.79 0.46 11.75

1992 7.31 12.84 1.03 13.09

1993 9.19 16.28 1.31 13.46

1994 9.93 16.99 2.17 13.86

1995 10.36 17.15 2.97 14.71

1996 10.79 17.63 2.97 14.93

1997 11.03 18.08 3.41 15.77

1998 11.00 17.62 3.91 14.15

1999 11.00 17.22 4.07 12.86

2000 10.67 16.46 4.43 11.11

2001 13.45 20.27 5.47 10.51

2002 15.89 23.30 7.04 10.68

2003 17.70 25.43 8.61 9.28

2004 18.72 26.83 9.95 8.72

2005 20.04 28.36 11.00 8.53

2006 20.65 28.27 12.23 8.00

Taiwan and China – changing mutual trade dependence

0

5

10

15

20

25

30

1985 1988 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

(%)

Taiwan’s total trade with China as share of Taiwan’s global trade Taiwan’s exports to China as share of Taiwan’s global exports

Taiwan’s imports from China as share of Taiwan’s global imports China’s imports from Taiwan as share of China’s global imports

Taiwan’s outward investment

Investmentdestination:

1991-2006 cumulative January-July 2007

Amount of investment

(US$ m.)

As % totaloutward

investment

Amount of investment

(US$ m.)

As % totaloutward

investment

China 54,898.5 54.5 4,831.1 71.1

British CentralAmerica 18,449.9 18.3 582.4 8.6

United States 7,629.5 7.6 183.6 2.7

Hong Kong 2,483.4 2.5 100.1 1.5

Singapore 3,477.4 3.5 303.3 4.5

Vietnam 1,353.1 1.3 52.6 0.8

Japan 1,102.2 1.1 3.7 0.05

Thailand 991.9 1.0 26.0 0.4

Philippines 499.0 0.5 8.0 0.1

Others 8,678.3 8.6 614.6 9.2

Cumulative investment by Taiwan, 1991-2006 (US$ million)

China, 54,898.50

British Central America , 18,449.90

United States, 7,629.50

Hong Kong, 2,483.40

Singapore, 3,477.40

Vietnam, 1,353.10

Japan, 1,102.20

Thailand, 991.9

Philippines , 499

Others, 8,678.30

Outward investment from Taiwan

PRC estimates of Taiwan’s utilised investment (FDI) in mainland China (2006)

Region or country of origin Value of FDI(US$ million)

GLOBAL 63,020.5

ASIA 35,084.9

Taiwan 2,135.8

Cayman Islands 2,095.4

Virgin Islands 11,247.6

SUB-TOTAL(Taiwan, Cayman and Virgin

Islands)

15,478.8

Samoa 1,537.5

United States 2,865.1

Hong Kong 20,232.9

Japan 4,598.1

Source: China Statistical Yearbook, 2007.

Regional distribution in China of Taiwanese FDI

1995 2000 2005 Cumulative 1991-2005

US$ m. % US$ m. % US$ m. % US$ m. %

ALL CHINA 1,092.7 100.0 2,607.1 100.0 6,007.0 100.0 47,256.2 100.0

Jiangsu(incl.

Shanghai)

394.8 36.1 1,251.6 48.0 3,366.6 56.1 21,218.0 44.9

Guangdong 222.8 20.4 1,019.7 39.1 1,220.2 20.31 13,135.6 27.8

Fujian 56.0 32.1 121.7 11.1 398.3 6.6 3,882.9 8.2

Zhejiang 0.19 0.1 57.43 5.3 484.8 8.1 3,225.5 6.8

Hebei 7.47 4.3 83.19 7.6 196.0 3.3 2,023.2 4.3

Shandong 2.06 1.2 24.04 2.2 109.0 1.8 830.4 1.8

Sichuan 0.17 0.1 6.50 0.6 43.8 0.7 535.0 1.1

Hubei 0.80 0.5 24.44 2.2 39.4 0.7 471.3 1.0

Hunan 0.14 0.1 31.56 2.9 12.0 0.2 180.1 0.4

Liaoning 0.31 0.2 36.61 3.4 18.6 0.3 390.2 0.8

Other 9.33 5.4 89.76 8.2 118.2 2.0 1,363.8 2.9

Distribution of Taiwanese investment in China, 1991-2005

Jiangsu and Shanghai , 44.9

Hubei, 1

Hunan, 0.4

Liaoning, 0.8

Other, 2.9

Sichuan, 1.1

Shandong, 1.8

Hebei, 4.3

Zhejiang, 6.8

Guangdong, 27.8

Fujian, 8.2

Distribution of Taiwanese investment in China, 2005

Jiangsu and Shanghai 56%

Zhejiang8%

Fujian7%

Guangdong20%

Sichuan1%

Hunan0%

Hebei3%

Other2%

Liaoning0%

Shandong2%

Hubei1%

“The feelings of sisters on both sides

of the Taiwan Straits” (1990)