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Taiwan Hoping to Reduce Dependence on China

Taiwan's President Tsai Ing-wen delivers a speech during the National Day celebrations in front of the Presidential Building in Taipei, Taiwan, Tuesday, Oct. 10, 2017. (AP Photo/Chiang Ying-ying)
Taiwan Hoping to Reduce Dependence on China
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Taiwan is setting up overseas investment offices across a number of countries to its south.

The island is also offering to suspend visa requirements for citizens of those nations.

These are the latest actions by Taiwan to expand business with other areas so it can become less dependent on China.

Officials in Taipei hope to improve trade, increase visitors and expand education links with 18 countries in South and Southeast Asia, as well as Australia and New Zealand. Stronger ties with those nations, in theory, could reduce the influence of China in Taiwan.

China is now the island’s top trading partner. But the two sides have deep political differences.

Taiwan’s effort to strengthen ties with the 18 nations is called the New Southbound Policy. Under the policy, citizens of the Philippines are permitted to visit Taiwan without a visa for 14 days between November and July.

Taiwan offered a similar visa waiver to citizens of Brunei and Thailand in August of 2016.

Shaky relations with China

Taiwan President Tsai Ing-wen announced the policy after taking office in May 2016. Its aim is to re-balance relations for the island’s $529 billion economy.

Over the years, Taiwanese businesses chose China for investment because of its low costs, skilled workers and cultural ties. The Council on Foreign Relations, an American research group, estimates that more than 93,000 Taiwanese businesses invested in China between 1988 and 2016.

China claims sovereignty over the island, which operates under a system of democratic self-rule. This political dispute has caused problems between the two sides during Tsai’s presidency.

Dancers perform during the National Day celebrations in Taipei, Taiwan, Tuesday, Oct. 10, 2017.
Dancers perform during the National Day celebrations in Taipei, Taiwan, Tuesday, Oct. 10, 2017.

How the new southbound policy works

Taiwan’s economic affairs ministry has opened investment offices in Indonesia, Myanmar, Thailand, Vietnam and the Philippines. Those offices are supposed to help Taiwanese investors find projects in those countries.

The Taiwan government is offering credit guarantees for small businesses interested in moving to Southeast Asia. Aid from Taiwan will help pay for infrastructure and other major projects in the area. The visa waivers make travel to Taiwan easier, helping to strengthen the economy.

Tsai said trade with the 18 countries had already risen 20 percent this year compared to 2016 levels. Government records show the number of visitors from the countries is rising, while the number of Chinese visitors is decreasing.

The number of post-secondary students in Taiwan from New Southbound Policy countries increased 10 percent over a six-month period from a year ago. But the number of non-degree university students from China has dropped since the middle of last year.

Last year, Taiwan’s Investment Commission approved 252 requests for projects to be built in China. That is almost 22 percent below 2015 levels.

But China is still Taiwan’s top trading partner. Imports and exports totaled $117.9 billion in 2016.

Earlier this year an economics affairs official in Taipei identified Indonesia as a good place for investment projects, especially in agriculture. Thailand approved 274 Taiwanese requests for investment, worth $1.39 billion, between 2010 and 2015.

President Tsai promotes New Southbound Policy
President Tsai promotes New Southbound Policy

Reaction from South and Southeast Asia

About 3,500 Taiwanese invested in Vietnam as early as 2011 because costs were rising in China, while Vietnam was offering incentives to foreign investors.

In the past, two other presidents of Taiwan, Lee Teng-hui and Cheng Shui-bian, tried similar go-south policies, but both failed. During their terms, it was less costly to trade with China, and there was less competition from local companies.

Some observers believe the New Southbound Policy will struggle because Taiwan faces competition in the 18 target counties from overseas sources. Competitors include China, India, Japan and South Korea.

I’m Kaveh Rezaei.

Ralph Jennings reported this story from Taipei for Christopher Jones-Cruise adapted his report for VOA Learning English. George Grow was the editor.

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Words in This Story

waiver – n. a voluntary cancellation of rights or requirements

sovereignty – n. the right of an area to govern itself

infrastructure n. the roads, equipment, bridges and other structures that a country or area needs to operate

post-secondary adj. of or related to education after secondary school

incentive n. something that incites action