Opinion | Taiwan’s wooing of Asean is pointless. It should just accept China and the 1992 consensus again

Taiwan’s policy of improving trade with its southern neighbours is a non-starter. The island has neither diplomatic ties with those countries nor regional expertise, and anyway, it needs the vast Chinese market to build successful brands

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Published: 3:12am, 14 Mar 2019Updated: 4:14am, 14 Mar 2019

In 2016, President Tsai Ing-wen announced a plan to improve Taiwan’s trade and investment ties with a total of 18 countries in Southeast Asia, South Asia and the Pacific. The New Southbound Policy was billed as a programme to promote cooperation in tourism, health care, technology, agriculture and small and medium-sized enterprises with partner countries, including Asean members, Australia and New Zealand.

There are push and pull factors in the policy: cross-strait tensions on the one hand, and regional economic integration on the other.

The Association of Southeast Asian Nations has a combined market of some 639 million people (more than the European Union's 513 million), making it one of the largest trade blocs, and Taiwan wants a piece of that market.

Taiwan’s relations with China are more important, however. The island’s fortunes are closely linked to the mainland. Taiwanese businesses started investing in mainland China in the 1990s, drawn by a common language, low labour costs and a vast market.

Some 70 per cent of Taiwan’s outbound direct investment goes to the mainland, and up to two million Taiwanese businessmen and their families live there. China (including Hong Kong) is Taiwan’s most important export market, accounting for more than 40 per cent of Taiwanese exports.

The Tsai administration seeks to reduce dependence on China by redirecting trade and investment to the 18 countries, but the policy faces several hurdles.