Taipei [Taiwan], July 14 : Taiwanese investment in China has plummeted to a historic low, with experts attributing the decline to China's deteriorating business environment, rising authoritarianism, and increasing strategic risk, Taipei Times reported.
According to Li Pao-wen, spokesperson for the Straits Exchange Foundation (SEF), the percentage of Taiwanese businesses investing in China has dropped from a staggering 83.8 per cent in 2010 to just 2.7 per cent in the first quarter of 2025. In an exclusive interview with Liberty Times, the Taipei Times' sister publication, Li confirmed that this exodus reflects a long-term trend of economic disillusionment and rising distrust toward Beijing.
"Seventy per cent of Taiwanese businesses reported profit declines in China last year," Li said. He explained that Taiwanese firms began scaling back China investments over a decade ago, not due to Taiwan's New Southbound Policy, but because of Beijing's own economic and political missteps. Regulatory burdens, environmental costs, and inflated labour expenses have all made investment in Chinese cities far less appealing, the Taipei Times noted.
Li highlighted that China's "Made in China 2025" policy has worsened the situation by turning local Chinese companies into direct competitors, squeezing out Taiwanese firms once welcomed as partners. "China is no longer a friendly environment for Taiwanese investors," he said.
The US-China trade war further accelerated the decline. Taiwanese businesses, once dependent on China for manufacturing, found themselves caught in escalating tariffs and geostrategic hostility. "Products once shipped from Taiwan and assembled in China for export to the U.S. can no longer flow through that pipeline safely," Li explained.
China's recent move to offer incentives through its "Fuzhou-Matsu integrated living zone," including issuing Regional Comprehensive Economic Partnership (RCEP) certificates to Taiwanese firms, has raised red flags. Li warned that these efforts blur the line between "red" and "non-red" supply chains, effectively laundering the origin of goods, a tactic that jeopardises Taiwan's global trade credibility, Taipei Times reported.
With China's economy slowing and political interference deepening, Taiwan's business community is voting with its feet, rejecting dependence on an increasingly unstable and authoritarian regime, Taipei Times concluded.