Taiwan Committed to Pursuing Trade Agenda, Semiconductor Growth, Senior Official Says

Taiwan is preparing for Beijing foreign policy to grow more aggressive in the coming months and is expecting a strong retaliatory response if it signs a free trade deal with the U.S., a senior Taiwan official said. But the official stressed that the country wants to complete a trade and investment agreement with the U.S. and other democracies, which could strengthen its position as a leading global provider of semiconductors.

Chiu Chui-Cheng, deputy minister of Taiwan’s Mainland Affairs Council, touched on those and a range of other China-related subjects during an Aug. 17 event hosted by the Center for Strategic & International Studies. Chiu also criticized Beijing for the imposition of its so-called national security law in Hong Kong and its mass detention of Uyghurs in Xinjiang, which he said has sparked human rights concerns. “We need to stand together to ensure that the [China Communist Party] is held accountable,” Chiu said.

Chiu said he believes China's foreign policy actions will only grow more assertive after the next meeting of its National Party Congress in 2022. Within the last year Beijing has introduced its own sanctions (see 2108100047) and export control laws (see 2105180023) and continues to strongly object to U.S. weapons sales to Taiwan (see 2011040005), which it doesn't view as an independent country. “We can hope for the best but should prepare for the worst,” Chiu said. “I believe the CCP’s aggressive foreign policy is unlikely to be dialed down in the foreseeable future. We will see a more assertive regime.”

Beijing will likely be strongly opposed to a U.S.-Taiwan trade and investment deal, especially because such a deal could empower Taiwan to seek similar agreements with Japan and the European Union, Chiu said. U.S. lawmakers have asked the administration to begin trade negotiations with Taiwan (see 2103250072).

Although Beijing “will do everything in its power” to object to the deal, Chiu stressed that Taiwan will not back down from pursuing its own trade agenda. “Make no mistake,” he said, “Taiwan is a sovereign territory and a separate customs territory.” He said Taiwan wants to “continue our diversification strategy,” especially “in the face of the U.S.-China trade conflict, global supply chain reliability [problems] and the challenges posed by the post-pandemic global economic recovery.” He added that signing a deal with the U.S. is “definitely” an option.

He also said Taiwan plans to strengthen its “key position as the main provider of key technologies in the global semiconductor supply chain.” The more Taiwan can become a reliable provider of chips, the more it can become “crucial and indispensable for the U.S. and other democratic economies,” Chiu said. “We want to show that Taiwan is the best and most reliable partner in the global supply chain as the global supply chain undergoes a fundamental restructuring.”

Chiu also said Taiwan has carefully reviewed and approved plans by Taiwan Semiconductor Manufacturing Co. to expand its presence in Nanjing, China. The expansion of TSMC’s Nanjing fab has raised tensions between China and Taiwan for several reasons: Beijing officials are concerned the move could threaten Chinese semiconductor companies, while Taiwan officials are concerned about a higher risk of technology theft by China.

“Since Taiwan is the home to the world leading chip industry, preventing our key technologies and high-tech personnel from being infiltrated by the CCP” is important, Chiu said. “We are careful to review each and every investment proposal with a high standard, making a comprehensive assessment of the possible impacts of such a project on Taiwan’s own supply chain and the potential implications on national security.”