Taiwan will hasten divestment from China

Significance Trump’s threats add to rising political risks for Taiwanese businesses in China, which have been reducing their exposure there in recent years amid elevated cross-Strait tensions. Legal action targeting those deemed separatists compound the longer-standing risk of commercial hostage-taking. Impacts China will increasingly use anti-espionage legislation, detention, deportation and exit bans against the foreign business community. The foreign business community will continue to shrink due to legal risks and rising labour costs, relative to other regional markets. Taiwan will face increasing economic pressure from Beijing, including bans on agricultural imports and limits on inbound Chinese tourism. China will attempt to reassure international investors via symbolic gestures rather than concrete regulatory or legal measures. China will increase domestic capacity to produce advanced semiconductors, decreasing its reliance on Taiwan’s chipmakers.