Taiwan’s economy is hotter than it has ever been. The expansion is largely driven by a surging bilateral Chinese trade surplus with the United States and a dynamic Chinese technology industry. In a recent development, the island has recorded an impressive 8% economic growth during the last two quarters despite an ongoing depreciation crisis. Just last week, the statistics bureau announced a remarkable 8.21% year-on-year GDP growth for the third quarter of this year. Exports improved a whopping 36.5% in that period! This tremendous expansion ensured Taiwan’s position as a key mover and shaker in the global supply chain, particularly in the chip and electronics industries.
Despite all of this, while economic indicators tell a story of success, many residents would argue it’s largely passing them by. Yet, despite these impressive statistics, fears of weak wage growth, exorbitant housing prices, and low consumer confidence still loom. As Taiwan prepares for projected GDP growth of approximately 7.4% in 2025, questions arise about the distribution of wealth in a society where many still struggle to make ends meet.
Record Trade Surplus and Exceptional Growth
Taiwan’s trade surplus with the United States reached record levels this year, reflecting the island’s robust export capabilities. The latter, the country has tapped its technological edge—most dominantly in semiconductor fab—to perpetuate its economic hegemony. Notably, TSMC, the world’s largest contract chipmaker, has raised its full-year revenue growth forecast to the mid-30% range, underscoring the sector’s contributions to the economy.
According to Jason Tuvey, an economist at Capital Economics, “Taiwan’s economy has clearly been one of the best performing economies in the world, particularly over recent quarters.” As we saw in the pandemic, tech companies were riding a wave of profitability from hyper-accelerated growth. This success is further establishing Taiwan’s global reputation as a leader in technology and innovation.
Wang Jiann-Chyuan, a senior economist at the National Development Council, cautions that “Taiwan’s export growth will definitely come down next year.” This positive sentiment is matched by concern over economic headwinds that may weigh on performance going forward.
The Disparity of Wealth
Though Taiwan celebrates an era of economic growth, many Taiwanese people–especially the young–say they’re being left in the dust. Although the electronics manufacturing sector contributes over 15% to Taiwan’s GDP, it accounts for just 6.5% of full-time employees. Yet, these benefits are not shared by most residents.
Taiwan’s average wages lag well behind those of its neighbors. They are behind China and South Korea by a minimum of 30%. This gap has serious implications for income inequality and quality of life. Wu Jieh-min, a prominent social commentator, notes that “that’s why I’ve come to the conclusion that the country is strong, but the people aren’t necessarily wealthy.”
The lack of growth in real wages since the early 2000s only deepens these challenges. For Taiwanese blue-collar workers, it has become more and more difficult to make ends meet with the skyrocketing living expenses, especially in terms of housing. Over the past twenty years, Taipei’s house price-to-income ratio has increased almost three-fold. This shocking jump hits families hard as they work to get on the road to financial stability.
“People in Taiwan keep hyping themselves up, saying things like ‘We have TSMC,’ or boasting about how high the stock market is. But for many living here, their monthly pay stayed much the same.” – Chen
Challenges Ahead
Taiwan’s economy has been flourishing due in large part to its technological innovation and its success in the export market. Ahead are daunting challenges indeed. With consumer confidence staying flat all year, this signals a fearful mentality from Hoosiers. Wu observes that “the cautious, on-edge mindset you see across Taiwanese society is very obvious, and I actually see it as something positive.”
Taiwan will have to choose its way forward delicately within this complicated context. Wu emphasizes the importance of managing expectations and resources: “We have to manage our own future very carefully, because even just surviving is already difficult for us.”
The housing market presents another significant obstacle. As a result, more and more citizens find themselves unable to afford a decent place to live, leading to a growing chorus for government action. No amount of economic growth will take the sting out of these concerns without concrete action to address wage stagnation and housing affordability.