Taiwan's retreat from China's investment is reshaping global supply chains, prompting companies and governments to reassess industrial ties, trade flows, and economic security. The shift affects global manufacturing networks, US-Taiwan cooperation, and regional supply stability as firms relocate factories to Southeast Asia, Mexico, and back to Taiwan, altering risk and opportunity landscapes.
Taiwanese firms have pulled back investment from China amid severe overcapacity and intense price competition, relocating factories to Southeast Asia, Mexico, or back to Taiwan, government officials said. In 2010, 83.8% of Taiwan's outbound investment flowed into China; by 2025, that share had fallen to just 3.8%, highlighting a strategic reorientation with international implications for market access and production resilience.
Officials from Taiwan's Ministry of Economic Affairs highlighted the trend during a Legislative Yuan briefing on April 15, linking it to shifts in international political and economic landscapes that have led countries to reassess supply chains, tariffs, and economic security. The ministry emphasized Taiwan's ongoing role in global industry, citing the island's semiconductor and electronics manufacturing capabilities and a stable supply chain system that underpins steady foreign trade and robust industrial R&D.
According to Ministry of Finance data, Taiwan's exports to the US accounted for 33.5% of total exports in the first quarter of 2026, representing 23.1% of overall trade volume. The MOEA interpreted those figures as evidence that Taiwan is a key partner for the US in industrial development and economic security. The Taiwan-US Investment Memorandum was highlighted as fostering closer cooperation between Taiwan's semiconductor and ICT sectors and American AI technologies.
Taiwan plans to broaden economic and trade relations with additional partners, strengthen semiconductor supply chain links with Japan, and collaborate with Europe on drone technology and green energy. While enhancing industrial competitiveness, the island aims to maintain supply chain stability and meet international expectations for economic security.
China remains a major manufacturing power, accounting for roughly 30% of global manufacturing output in 2025 and dominating markets for new energy vehicles, batteries, and solar power. Chinese officials project moderate growth over the next five years but contend with an aging population, collapsing real estate prices, and weak domestic confidence, leaving observers to watch whether China can successfully transform its industries amid these challenges.
Article translated by Jingyue Hsiao and edited by Joseph Chen
