Economic trends
After almost five decades of sound economic management, Taiwan has managed to go from an underdeveloped agricultural island, to an economic power that is a leading producer of high-technology goods.
Taiwan has a dynamic capitalist economy in which the authorities' control of investment and foreign trade is gradually diminishing. The island shows a significant trade surplus, and its foreign exchange reserve is amongst the world largest. This notwithstanding, the country was severely affected by the international financial crisis, with its real GDP growth decreasing in 2008 and especially in 2009. Exports, which are Taiwan's main growth drivers, dropped by more than 22% during 2009. With a loss of more than 30%, private investment disintegrated. As for consumption, it reduced by 8% and lastly, the unemployment rate settled at 6%, the highest level since July 2003.
In Parallel, the government launched a recovery plan in the form of purchase coupons which are accepted by all of the island's traders. This huge consumption recovery plan that costs NTD 85.7 billion, should allow for growth recovery in 2010. The government additionally intends to invest NTD 858.5 billion in the economy in the next four years and to allocate loans to companies worth NTD 1,100 billion NTD. A part of these public investments, NTD 500 billion, will go to financing infrastructures. NTD 200 billion will also be apportioned to developing company competitiveness.
Main branches of industry
The agricultural sector contributes very marginally to the GNP. Taiwan's main crops are rice, sugar-cane, fruits and vegetables. Taiwan has limited natural resources.
The secondary sector accounts for a significant part of the GNP. Even though traditional industries such as iron and steel, chemical products and mechanics still account for almost half the industrial production, the new industries are more dynamic. Taiwan is one of the world's biggest suppliers of semi-conductors, computers and mobile telephones. It is also the world's biggest supplier of computer monitors.
The country, which has to deal with the continuous relocation of labor-intensive industries to countries where labor is cheaper (especially China), will have to rely on new conversions and go from an high-technology based economy to a services oriented economy.
International trade
For the past 40 years, foreign trade has been Taiwan's growth driver. Taiwan's economy remains very export-oriented, so much so that it depends on an open world trade regime and remains vulnerable to downturns of the world economy, as the present economic crisis shows. The electronics sector is Taiwan's most important industrial export sector and also the one that receives most of the American investment. Taiwan, as an independent economy, became a member of the World Trade Organization (WTO) as the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu ("Chinese Taipei") in January 2002. Taiwan main exports partners are China, Hong Kong, United States and Japan. For more information, refer to the COMTRADE website.
The island showed a surplus trade balance in 2007 and 2008. However, the trade balance deteriorated sharply from 2009. Faced with the crisis, the government has chosen to accelerate economic and commercial reconcilliation with Mainland China and launch a considerable recovery plan whose effects are still uncertain. However, the Chinese economy's poor figures affect Taiwanese investors directly, taking into account that Tawain was still the mainlaind's primary investor in 2009.
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