Can the Indo-Pacific Open Doors for Taiwan?
Beijing’s campaign to squeeze Taiwan’s international space has shown no signs of letting down, and has actually been intensifying this year. The pressure has been particularly relentless on the economic front. A slew of Latin American nations have opted to pursue diplomatic relations with the PRC rather than the ROC, ostensibly for economic gain, while multinational corporations have been confronted with Beijing’s pressure to label Taiwan as part of the PRC. Yet 2018 to date has also been a great year for Taiwan, as it has secured new investments from some of the most competitive and forward-looking U.S. companies. It also coincides with the growing interest in the Indo-Pacific strategy and the values the initiative supports could well strengthen Taiwan’s economic standing.
The Indo-Pacific strategy’s weakness has been that it lacks details as well as financial support. While Washington has made strides in advocating for the initiative, not least by removing the U.S. Armed Forces responsible for the region to the Indo-Pacific Command from Pacific Command, the $113 million set aside as seed money to fulfill that vision is paltry at best. But while the strategy lacks a clearly defined roadmap, the need for a free and open Asia-Pacific region that counterbalances China’s military as well as economic aggressions has not become more apparent, but also become more financially attractive as well.
So even as multinationals are facing greater pressure from Beijing to retreat from Taiwan, some of the most competitive of U.S. companies have actively chosen to invest in the island instead.
So even as multinationals are facing greater pressure from Beijing to retreat from Taiwan, some of the most competitive of U.S. companies have actively chosen to invest in the island instead. Google, for instance, not only acquired the smartphone design team of HTC earlier this year, but it is also planning to hire more workers and train about 5,000 professionals on artificial intelligence technology. Microsoft too is planning to grow its AI operations in Taiwan, hire about 200 top talent within the next five years, and establish a $34 billion research and development base. Amazon too has invested in Taiwan this year, choosing New Taipei City as the base of its innovation center, while IBM too will hiring and investing more in AI in Taiwan. Taiwan, in short, is well on its way to compete head-on with Singapore as the AI hub for technology behemoths.
Relatively lower wages in Taiwan compared to other Asian nations including Singapore, South Korea, and Japan are without doubt a draw for businesses. Equally important for U.S. giants are proactive policies pursued by President Tsai Ing-wen to promote the technology sector within Taiwan and to encourage foreign direct investment. But the fact that Taiwan distinguishes itself so sharply from mainland China by adhering to the rule of law, ensuring that intellectual property is protected, and committing to promote freedom of speech is as attractive for businesses too, and not just for the success of the Indo-Pacific strategy. In short, there is clearly tremendous financial value in Taiwan continuing to be a thriving democracy, and key U.S. businesses depend on it to remain distinct from the mainland and flourish.
In short, there is clearly tremendous financial value in Taiwan continuing to be a thriving democracy, and key U.S. businesses depend on it to remain distinct from the mainland and flourish.
It may well be that Taipei well face even further pressure from Beijing, challenging its international space. But reinvigorated U.S. corporate interest in Taiwan should give Taipei greater confidence that its economic policies are internationally competitive at the highest level. The fact that the Indo-Pacific strategy is promoting some of the very factors that make Taiwan so appealing to companies that will define industrial growth in the 21st century should bolster Taipei’s economic confidence. The next steps will be for Taiwan to boost competitiveness from within, and encourage further domestic investment into the technology and other high-growth sectors.
Follow Shihoko Goto, senior associate for Northeast Asia, on Twitter @GotoEastAsia.
The views expressed are the author's alone, and do not represent the views of the U.S. Government or the Wilson Center. Copyright 2018, Asia Program. All rights reserved.
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The Asia Program promotes policy debate and intellectual discussions on U.S. interests in the Asia-Pacific as well as political, economic, security, and social issues relating to the world’s most populous and economically dynamic region. Read more