As the Trans-Pacific Partnership (TPP) is pronounced dead by United States President Donald Trump, Taiwan is shifting its focus to a bilateral trade pact with the U.S. and expanding engagement with ASEAN nations hoping to rid itself of its economic plight of perennial slow growth. Trump’s perceived unpredictability and Taiwan’s frozen relations with China have both made the pact and the China-backed RCEP a far-fetched solution to boost growth for the export-reliant island country. Closer engagement with India and other individual countries through bilateral trade pacts, on the other hand, could be an easy way out from its decade-long economic and wage stagnation.
Taiwan has been reliant on China, which accounts for 25 percent of all its exports. Over the past years, with soaring labor costs, tighter taxes and environmental regulations, some Taiwanese small and medium enterprises in China could hardly withstand the challenge and chose to downsize or leave. The Taiwan government has been trying to cope with stagnant wage growth but to no avail, causing weaker domestic spending and demand, with the private sector struggling to compete with its competitors in South Korea. Knowing it is an extremely tough assignment, the new Tsai Ing-wen government is promoting the "New Southbound Policy" as a way out of its economic swamp.
A delegation led by ruling Democratic Progressive Party (DPP) legislator Kuan Bi-ling (管碧玲) to India this week has gotten on Beijing’s nerves, though the visit was not the first of its kind but it was the first under the government of President Tsai Ing-wen. In response to China’s protest, the Indian government downplayed the move, while its local states exhibited greater enthusiasm towards the investments from Taiwan. India believes it can create a win-win situation for both sides, on the one hand for local job creation and technology advancement, and on the other hand for Taiwan’s economic rejuvenation.
An article by the Times of India described the delegation's visit as a move to pave the way for India’s economic prosperity. In the article, Taiwan is said to be "extremely keen on boosting cooperation with India" under its New Southbound Policy of economic diversification, and its direct investments in India have been warmly welcomed.
"Taiwan can be a force multiplier for India by helping remove development bottlenecks,”said the article, and added that the high-cost infrastructure investment from China and the sophisticated technology investment from Taiwan can coexist well in the country.
The Chief Minister of India's state of Maharashtra, Devendra Fadnavis, tweeted on Valentine’s Day about a meeting with Taiwan’s Hon Hai Precision Industry executives and the tech giant’s commitment to an investment deal to build manufacturing facilities bringing jobs to the state.
With its technological and manufacturing expertise, Taiwan can help India improve its Smart Cities, Made in India and Startup India initiatives, and at the same time, expand its presence in the region under the aegis of the ASEAN+6 of 3.5 billion people or 48.5 percent of world population that includes India, with a lower burden of tariff and non-tariff barriers to trade and services.
Taiwan has already had a significant business presence in Southeast Asian countries and in India as well, yet more can be done for Taiwan to tap into the region’s vast market potential, though no doubt there will be some challenges ahead.
The Taiwanese delegation’s visit comes at a time when relations between India and China are going through a difficult patch over Beijing’s repeated blocking of New Delhi’s efforts to list Pakistan-based Islamic militant leader Maulana Masood Azhar on UN terror blacklist. Despite high hopes for a deeper partnership, Indian government officials downplay the visit by denying any political motivations or intent in response to China’s protests.
India knows very well that Taiwan has been a sensitive issue in front of China, but an anonymous Indian official made it clear that New Delhi has no obligation to honor the so-called "one China policy" given the absence of a "one India policy" from Beijing; also, the government doesn't have to bother itself with Beijing's excessive feelings about the economic, cultural, and educational exchanges between India and Taiwan.
Separately, according to the Chinese-language United Daily, around 90 Taiwanese companies have set up business operations in India, including China Steel, Delta Electronics, Continental Engineering Corp., energy corporation CTCI, and Hon Hai Precision, with investments in the fields of steel, electronics, construction, engineering, machinery, and financial services. In the field of education, according to the state media outlet CNA, Taiwan has set up 11 Chinese language learning centers and is to provide more scholarships for Indian students to study in Taiwan in hopes of developing much closer relations. Such partnerships and programs are said to have gained much applause in India.
As Taiwan's Representative to India Tien Chung-kwang (田中光) said recently in a press event, the two have shared the same values of democracy and human rights over the past two decades, with the volume of bilateral trade swelling six-fold in the same period of time. As India's trade deficit with China has increased exponentially and Taiwan has become overtly dependent on the Chinese economy, it is about time for the two to expand partnerships and collaboration to reduce dependence on China and set eyes on each other. For Taiwan, the next big market is India.