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Taiwan's Trade Relations: Balancing Between China and the United States

Trade Relations with China

Let’s begin with Taiwan’s trade relations with China. As mentioned earlier, China is Taiwan’s largest trading partner. According to the Ministry of Economic Affairs in Taiwan, “Mainland China has been Taiwan’s largest trading partner since 2003, accounting for 26.1% of Taiwan’s total trade in 2020.” This economic relationship has grown over the years, with many Taiwanese companies investing in China to take advantage of its large market and lower labor costs. 

However, the relationship between Taiwan and China is complicated by the political tension between the two sides. China considers Taiwan to be a part of its territory and has not renounced the use of force to bring it under its control. This has led to a difficult relationship between the two sides, which is reflected in their economic ties. As Shirley Lin, a political economist and expert on cross-Strait relations, notes, “economic cooperation between the two sides has been hindered by political tension.” China has sought to isolate Taiwan diplomatically and economically, using various tactics to limit Taiwan’s participation in international organizations and pressure foreign companies not to do business with Taiwan.

Trade Relations with US

Moving on to Taiwan’s trade relations with the United States, it is important to note that the United States does not officially recognize Taiwan as a separate country, and instead maintains a “One China” policy that recognizes the People’s Republic of China as the sole legal government of China. This has led to some restrictions on trade and investment between the United States and Taiwan.

However, despite these political factors, the economic relationship between Taiwan and the United States remains strong. The United States is Taiwan’s second-largest trading partner, and Taiwan is an important supplier of components and materials to many American companies. According to the American Institute in Taiwan, “In 2020, Taiwan was the United States’ 12th largest goods trading partner and the 16th largest export market.” The two sides have a long history of economic cooperation, particularly in the technology sector.

As Bonnie Glaser, Director of the China Power Project at the Center for Strategic and International Studies, notes, “Taiwan’s trade relationship with the United States is primarily driven by the private sector, and is based on market principles rather than political considerations.” This highlights the complex nature of Taiwan’s trade relations with China and the United States, which are influenced by both political and economic factors

Conclusion and the Future

In conclusion, Taiwan’s trade relations with China and the United States are complex and fluid. While China remains Taiwan’s largest trading partner, the relationship is complicated by political tensions between the two sides. In contrast, Taiwan’s economic relationship with the United States is based primarily on market principles, but is influenced by political factors such as the “One China” policy. As global economic and political conditions continue to evolve, it will be interesting to see how these relationships develop and how Taiwan navigates its way through the challenges and opportunities of the global economic landscape.


Ministry of Economic Affairs, R.O.C. (2021). 2020 Taiwan’s Foreign Trade Statistics.
Lin, Shirley. (2018). Cross-Strait Relations: Challenging the One China Principle. Cambridge University Press.
American Institute in Taiwan. (2021). U.S.-Taiwan Relations: Overview and Key Issues.
Glaser, Bonnie. (2018). Taiwan and the United States: Enduring Partnership in a Changing World. Center for Strategic and International Studies.