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Taiwan must seize supply chain opening: academics

It would be in the nation’s interest if the US were to create an alliance of ‘trusted partners’ to restructure global supply chains away from China

Taiwan must seize the opportunity to work with major economies seeking to relocate global supply chains outside of China amid the COVID-19 pandemic, academics said ahead of President Tsai Ing-wen’s (蔡英文) second term, which begins tomorrow.

The pandemic, which has made many nations aware of their growing economic dependence on China for goods in several critical sectors, has led to calls to delink global supply chains of major industries from China.

That trend offers an extremely good opportunity for Taiwan, said Ray Yang (楊瑞臨), consulting director of the Industrial Technology Research Institute’s (工業技術研究院) Industry, Science and Technology International Strategy Center.

The US, China and Europe could all look to develop independent production capabilities in the post-COVID-19 world, and Taiwan has an opportunity to become an important partner for all of them, he said.

The US would still be the world leader, but would not be able to go it alone, and would have to form partnerships with economies such as Taiwan, Japan, South Korea and the EU, he added.

Taiwan is well positioned, because the COVID-19 pandemic has opened the world’s eyes to the strengths of Taiwanese businesses, including their ability to respond quickly to different situations, their high degree of flexibility and the quality of their goods, he said.

That was seen most clearly in the ramping up of production of masks and personal protective equipment for medical workers to meet high demand during the pandemic, he added.

Taiwan Institute of Economic Research (台灣經濟研究院) research fellow Darson Chiu (邱達生) predicted that the US economy would recover faster from the pandemic than China.

That trend has already prompted more Taiwanese businesses operating overseas to increase their investments back home, while reducing their investments in China and other nations, Chiu said.

It would be in Taiwan’s interest if the US were to create an alliance of “trusted partners” to restructure supply chains away from China, as has been reported, he said.

An alliance would apply common standards to everything from digital business, energy and infrastructure to trade, education and commerce, with South Korea, Japan, New Zealand, Australia, India and Vietnam among the potential partners, Reuters reported earlier this month.

Though Taiwan was not on that list of “trusted partners,” it is a reasonable assumption that it would have an opportunity to be included in the next phase given that it is considered a US partner in the “Free and Open Indo-Pacific strategy,” Chiu said.

“We must let the United States know that Taiwan can make its planned supply chains more complete,” he said.

The Taiwanese semiconductor industry’s advantage in wafer fabrication, as well as packaging and testing technology, would help the US build up its IC design capabilities, Chiu said.

The strength of the nation’s small and medium-sized enterprises in producing spare parts and components would also strengthen the new supply chains, he said.

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