In an unprecedented event, Taiwan overtook China in terms of economic growth for the first time since 1990. As per reports, Taiwan recorded 2.98% growth in 2020 as compared to 2019.
The country’s growth was even higher than China’s annual growth rate of 2.3% in 2020. The last time Taiwan edged out the Communist-run country was 30 years ago when it clocked 5.5% growth as compared to China’s 3.9%. Taiwan also became the fastest growing economy in Asia in 2020, surpassing Vietnam’s 2.9% growth.
The historic feat was achieved amidst the global economic slowdown caused due to the Coronavirus pandemic. Taiwan’s economic success story can be attributed to the country’s tech exports, especially semiconductors, that helped tide over the financial crisis. Unlike other countries, Taiwan was successful in checking the spread of Coronavirus and avoided a strict lockdown. This factor also contributed to the growth of Taiwan’s economy.
Taiwan’s semiconductor exports boosted its economy growth
The global shortage and demand for semiconductors, used in mobile phones and computers, paved the way for imports from Taiwan. Automakers such as Ford Motor and Nissan Motor had to cut down their production due to the shortage of semiconductors. With people forced to stay indoors, coupled with a surge in electronic devices, countries had to look towards the superconductor power Taiwan.
According to economists at TS Lombard, Taiwan and South Korea have a ‘near-monopoly’ status in memory chip output and global processor chip production. The two Asian countries will use their tech exports as leverage over world powers such as the United States and China. “Taiwan and Korea are on the front line of the US-China confrontation, reliant on China for growth, but on the US as a guarantor of national security,” they argued.
Experts believe that Mainland China might become self-reliant in future in semiconductor production and emerge as the primary competitor to Taiwan. But with China still far behind in the semi-conductor race, it will continue to procure them from Taiwan amidst escalated tensions with the United States. It is important to mention that despite the global pandemic, TSMC (Taiwan Semiconductor Manufacturing Company Ltd.) grew by 60% in 2020 and rose by 11.5% in January as compared to last year.