TAIPEI (Taiwan News) — Taiwan's investment in China has dropped to a 30-year low this year, while it has increased sharply in the U.S. and Germany.

Nikkei Asia reported that from January to November, Taiwan’s approved foreign direct investment (FDI) increased by 87% year-on-year to US$25.7 billion. However, investment in China over that period plummeted by 34% to US$2.9 billion, accounting for only 12% of the total.

The reasons for this decline include China's economic slump and strained cross-strait relations. Furthermore, trade frictions between the U.S. and China have resulted in duties on Chinese goods, making it increasingly difficult for Taiwanese companies to do business in China.

In 2010, Taiwan's FDI to China peaked at 84%, spurred by the Economic Cooperation Framework Agreement (ECFA) signed that year. The overall amount of investment in China this year is likely to fall to less than half of the lowest point in 1999, which was 28%.

In comparison, Taiwan's investment in Europe and the U.S. has reached record highs. From January to November, FDI in the U.S. surged ninefold to US$9.6 billion, accounting for 37% of the total. Taiwan's investment in Germany also surpassed that of China in one fell swoop due to the establishment of a TSMC fab, reaching US$3.9 billion, an increase of 25-fold.

Taiwan’s investment in the U.S. this year is expected to be triple that of investment in China, marking the first time that the U.S. has topped the list since Taiwan opened up direct investment in China in 1993.

As of November 2023, Taiwan has banned the import of 2,509 items from China. China claimed on Dec. 15 that Taiwan's actions constituted "unilateral, discriminatory trade restrictions," and said on Dec. 21 that it would suspend ECFA tariff relief for 12 petrochemical products, including propylene and paraxylene, according to Beijing's state-run China Daily.

Sun Ming-te (孫明德), director of the Taiwan Institute of Economic Research, was cited by Nikkei as saying that as long as U.S.-China relations remain tense, Taiwan's investments in China will continue to diminish.