Ports key as Taiwan intensifies trade and shipping ties with US while trying to reduce dependence on China market.
It would be naïve for the outside world to believe that the ongoing standoff between the Chinese communist regime in Beijing and Hong Kong over the promised rights of the former British enclave to choose its own leader, is not alarming China’s smaller neighbors, particularly Taiwan that uses the moniker “Republic of China”.
China considers Taiwan to be a “renegade province” which, China hopes, will soon return to the “fold of the motherland”; Taiwan, caught in the thick of trade and business with China, is trying to extricate itself from its huge asymmetric dependency on the mainland.
Two-way trade between China and Taiwan has grown exponentially, thanks largely to the Economic Cooperation Framework Agreement (ECFA) signed between the two sides in 2009. It touched a record $ 124.38 billion in 2013, with Taiwan’s exports to China surging to $ 81.788 billion and its imports from China to $ 42.588 billion. This rising trend also continued in the January-August 2014 period, with two-way trade touching $ 86.317 billion (Taiwan’s exports to China: $ 54.788 billion, and imports from China: $ 31.529 billion).
Taiwan’s politicians, strategic thinkers and trade experts are alarmed by this “unhealthy trend” for the country’s political and economic situation.
“The mantra is diversification. We need to reduce our dependency on China, which does not augur well for Taiwan’s future,” an official of the ruling Kuomintang Party told American Journal of Transportation, insisting on anonymity because he was voicing his “personal views”.
Former Taiwanese presidential advisor Huang Tien-ling raised the alarm in a booklet titled “Crisis of the Service Trade Agreement – a Modern-Day Trojan Horse”, contending that the ECFA accord could “further tie the nation’s economy to the Chinese economy”, and that Beijing’s strategy of reunification through trade was an “open secret”.
Another worrying development is that Taiwan’s investment of over $58 billion, as of July 2013, in China had integrated the latter into the supply chains of Taiwanese businesses, underpinning the movement of goods between and within Taiwan businesses located both in China and Taiwan.
Despite growing public skepticism over becoming heavily dependent on China, Taiwan’s government recently reinforced its commitment to strengthening trade and economic ties with the mainland, as Taiwan’s deputy economics minister Shen Jong-chin said on September 18th during an international media event in Taipei City.
Shen said, “economic exchanges have become an increasingly crucial factor in Taiwan’s push to expand its trade footprint abroad.”
While Taiwan’s calculation is that improving ties between Taipei and Beijing would help smoothen Taiwan’s accession to regional trade blocs such as the Trans-Pacific Partnership and Regional Comprehensive Economic Partnership, the growing number of skeptics in Taiwan see lessons to be learned from China’s treatment of Hong Kong which was promised civil liberties, including freedom of speech and free elections, after China took over in 1997 the former British colony. Despite all the external bonhomie in cross-straits relations, there are strong undercurrents of anxiety within Taiwan.
Not surprisingly, Taiwan’s political and industry figures have recently been vocal in praising the “dependable” US-Taiwan ties, which many observers say that the timing of the lavish praise was not accidental, and comes during the ongoing stand-off in Hong Kong. Skeptics in Taiwan call for a cautious approach to China, fearing the mainland’s designs to force Taiwan to reunite on China’s terms.
The urgent need to diversify is now making Taiwan further intensify its already strong economic ties with the United States. While the USA is Taiwan’s third largest export market after China and Japan, Taiwan was the USA’s 16th largest export market in 2013. With signs that U.S. economic recovery is under way, Taiwan is hopeful that the U.S. will buy more Taiwan-made products.
While U.S. exports to Taiwan in 2013 amounted to $ 25.2 billion, up 5.3% from 2012, U.S. imports from Taiwan totaled $32.6 billion, a 2.4% decrease from 2012, according to Taiwan’s foreign trade bureau.
Two-way Taiwan/U.S. trade in the January-August 2014 period amounted to $ 41.06 billion, with U.S exports to Taiwan amounting to $ 18.24 billion and imports from Taiwan amounting to $ 22.81 billion.
Taiwan Eyes Market of the ASEAN Economic Community
Aside from China, U.S. and Japan, which have been its top three trading partners, Taiwan is also eyeing the Association of Southeast Asian Nations (ASEAN), which collectively would be the island republic’s second largest trading partner and would help Taiwan change its China-centric trade.
But Taiwan, as one trade expert said, is “quietly tiptoeing and not overtly rushing towards ASEAN”.
Besides reducing its dependence on China, trade experts argue, Taiwan can ill afford to miss the “unprecedented trade opportunities” inherent in ASEAN’s integration into the ASEAN Economic Community in 2015.
Lin Chu-Chia, the deputy minister in Taiwan’s Mainland Affairs Council – this is de facto a separate ministry created to handle relations with the mainland –told this correspondent during a meeting with the media in Taipei that it was prudent to intensify trade and economic ties with the ASEAN region.
“The member states of the ASEAN region are all important for us,” Lin emphasized in the conversation, adding that Taiwan, which has signed free trade agreements (FTAs) with New Zealand and Singapore, is equally keen to have similar accords with all ASEAN member states.
“FTAs are a good way to increase trade and economic ties with the ASEAN countries. We are working in that direction,” Lin said.
Taiwan Ports to be Modernized
To boost its foreign trade, Taiwan is aggressively pursuing the modernization of its ports. Officials in its economic ministry have been pointing out that the government has already taken steps to modernize its ports, and create free trade zones equipped with state-of-the-art infrastructure. Six major ports as well as the Taoyuan International Airport and the Pingtung Agricultural Biotechnology Park will be designated as free economic zones.
A three-phase plan will aim at promoting the technological strength of the logistics industry, by installing highly sophisticated machines and equipment as well as setting up a cloud computing platform and developing innovative operation models. These steps had already yielded “huge orders” for food and agricultural products, fish and medical products, etc. valued at NT$ 1.8 billion (NT$ 29,375 = 1 US$), with Taiwan’s refrigeration industry earning an additional revenue of NT$ 200 million. Taiwan’s government considers modernization of the logistics sector a top priority.
Taipei Port Specializes in Car Handling
Taipei Port, which has built up a reputation as the island’s major car-handling port, offers “cutting-edge advantages” such as a free trade zone, a pre-distribution inspection, in-house services for parts and packaging, according to the Port management. The Port, because of its high volume of car handling, closely coordinates with the country’s automotive industry which imports engines and parts from overseas and then distributes them for further use in Chungli, Jangmei and Miaoli. The cars are then, finally, sent back to Taipei Port for further processing and export.
Taiwan manufacturers cooperate closely with international carmakers such as Mitsubishi, Toyota and Ford. The cars produced in Taiwan are exported, mostly, to the Gulf countries; experts describe Taipei Port as a suitable “front shop, back factory.”
Kaohsiung Port Gets Facelift Taiwan’s Kaohsiung Port
Kaohsiung Port, the country’s biggest international port and the world’s fifth largest container shipping port, is being modernized. The plan by Taiwan International Ports’ Corporation, which manages several ports in Taiwan, including Kaohsiung, to purchase two new 5,200 hp tugs was aimed to enhance Asian regional transshipment, comprehensive logistics and vessel-handling services, besides expanding port facilities to accommodate the generation of large cargo vessels. The new tugs will replace outdated models, and ensure capabilities to service post-Panamax ships; phasing out the outdated models started in 2011 with an approved budget of NT$ 419.9 million. The new tugs are expected to handle modern container vessels of up to 10,000 TEUs. The Port of Kaohsiung strategically located on trade routes connecting Northeast and Southeast Asia, processes two-thirds of Taiwan’s total sea-trade volume. It has 118 operating berths on 26.6 km of port waterline that can simultaneously accommodate up to 155 ships. Kaohsiung Port moved a total of 9.94 million TEUs of container boxes in 2013, a 1.6% increase over 2012, according to the Kaohsiung Port Authority.
Although the highest monthly volume last year was recorded In December 2013 with 882,791 TEUs, the 2013 throughput of 9.94 million TEUs falls short of the port authority’s target. David Cheng, harbor-master of Kaohsiung port said Kaohsiung had originally targeted 10 million TEUs last year.
Kaohsiung Port’s current maximum annual box handling capacity is 13 million TEUs. The port is adding 611,000 TEUs of new container handling capacity by 2018 to meet the expected steady rise in throughput over the years.
The throughput expansion project, slated to start in 2015, is estimated to cost NT$143.31 bn (US$477.8m), including NT$3.8bn from the state and NT$10.51bn from private investors in Taiwan.
Kaohsiung port, one of the island’s 11 ports that have direct links to 64 ports in China, has also acquired 133 hectares of hinterland to develop value-added services such as international logistics and manufacturing industries to support the growing container trade.
