With a relatively small domestic consumer market of around 23.3 million residents, the economy in Taiwan is highly reliant on its import-export sector. In 2022, Taiwan exported goods with a total value of nearly 480 billion U.S. dollars, accounting for more than 60 percent of its gross domestic product that year. Globally, Taiwan has been a significant trading hub, which was among the leading import destinations in 2021. Besides, Taiwan ranked among the trade entities with the highest trade surplus.
Taiwan has a handful of advantages when it comes to conducting regional and international trade. Geographically, Taiwan is located on the Western Pacific Maritime Trade Route, which connects East Asian nations with the vast Southeast Asian market. Politically, the authority has published a number of favorable trade policies. Diplomatically, the long-standing strategic and economic partnership made Taiwan one of the leading trade partners for the United States.
Exports from Taiwan
As the world's second-largest electronic circuit component exporter and the fifth-largest semiconductor device exporter, Taiwan has taken a crucial position in the global hi-tech supply chain. In 2021, the export value of integrated circuits from Taiwan amounted to more than four trillion New Taiwan dollars, making up more than 35 percent of Taiwan's exports in goods that year. Mainland China, Singapore, and South Korea were the three leading destinations for integrated circuits produced in Taiwan. Other than the long-standing trade partners such as the United States and mainland China, the government has been working on enhancing its trade relationship with Southeast Asia, South Asia, and Australasia since 2016. Since 2020, ASEAN has surpassed the United States to become the second-largest trade partner of Taiwan.
Meanwhile, Taiwan exported nearly 52 billion U.S. dollars worth of commercial services in 2021, of which only 1.5 percent were contributed by travel services, down from over 30 percent before the pandemic. Taiwan was one of Asia's most popular tourist destinations, attracting more than ten million international visitors yearly before the coronavirus pandemic. Aiming at boosting tourism to the pre-pandemic level, the Taiwan government planned to offer every inbound tourist a cash reward of 165 U.S. dollars in 2023 and 2024.
Imports to Taiwan
Lacking natural resources, Taiwan relies on imports for its raw material needs. In 2022, agricultural products and industrial materials accounted for more than two-thirds of the total goods imported to Taiwan. Resulting of its geographical location and historical ties, mainland China has been Taiwan's largest import partner for decades. Despite several trade disputes in recent years, the total import value from mainland China to Taiwan has grown steadily.
Furthermore, Taiwan is also one of the leading destinations for regional and global foreign direct investment. In 2020, Taiwan recorded an FDI inflow of around 5.4 billion U.S. dollars. Japan, Australia, and British overseas territories in the Caribbean were Taiwan's largest foreign investors in that year.
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Research expert covering e-commerce and FMCG in Greater China