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China imports of Taiwan’s intermediate goods grow

Report shows Taiwan makes up 14% of China’s intermediate goods imports

Kenda Rubber Industrial Company factory interior. (Wikimedia Commons photo)

Kenda Rubber Industrial Company factory interior. (Wikimedia Commons photo)

TAIPEI (Taiwan News) — Taiwan made up 14% of China’s intermediate goods (IG) in 2022, according to a report released by the Hinrich Foundation.

Lead economist at Oxford Economics Thang Nguyen-Quoc authored the report, which covers changes in global supply chains, China’s decoupling, and emerging supply chain “hotspots” in Asia. The report was published Jan. 9, per CNA.

Thang said, “Despite escalating geopolitical tensions, China has become increasingly reliant on Taiwan for its input.”

“Taiwan’s share of China’s IG imports increased from 12.2% to 14% between 2018 and 2022, partly driven by higher demand for advanced semiconductor products during the pandemic that drove up prices for these products,” he explained.

An IG is “a product used to produce a final good or finished product” per Investopedia. Textiles used to make clothing are an example.

In contrast, China’s import of IGs from Japan and South Korea decreased from 10.8% to 8.6%, and 12.7% to 10% from 2018 to 2022.

Additionally, as China reduces its reliance on Japan and South Korea for IGs, it has set its sights on hotspot countries in Southeast Asia, per Quartz. Vietnam’s imports to China grew from 3.0% to 4.2% while Indonesian imports grew from 1.4% to 2.4% in the same period.

Thang says this is in part due to Chinese businesses expanding into Southeast Asia and diversification of intra-regional trade.