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After 30 years, Taiwan poised to leave China behind in economic growth

The Taiwanese government revised up its annual growth estimate to 2.5 per cent at the end of last month in a move which may see Taiwan’s economic growth rate exceed that of mainland China for the first time in nearly 30 years.

"Although the mainland government has not announced a growth target for this year, economists have said it could be around 2 per cent, in light of a relatively quick recovery from the coronavirus this year.
If confirmed when the figures come out early next year, it would be the first time Taiwan’s growth has surpassed mainland China’s since 1991," Sidney Leng <a href="https://www.scmp.com/economy/china-economy/article/3113603/taiwans-2020-economic-growth-looks-outpace-mainland-chinas">wrote in <em>The South China Morning Post</em></a>.

The report said that both mainland China and self-ruled Taiwan emerged as two of the best-performing economies in containing the coronavirus, despite their different approaches. China has also tried to retain foreign investment from Taiwan, which has been falling.

“The main reason why Taiwan may end up with average growth data that is about the same or even higher than China’s is that Taiwan was able to avoid a very large fall in output at the beginning of the year,” Louis Kuijs, head of Asia economics at Oxford Economics told SCMP.

“In China, we saw a lockdown and the closing down of a huge part of the economy in the first quarter. Taiwan is probably the best example that didn’t have to [resort to] such a broad-based closing down of the economy,” he added.

According to the Taiwanese government, the island’s economy grew 3.9 per cent from a year earlier in the third quarter.

“World demand shifted this year towards goods that the island excels at – namely consumer electronics. With work-from-home arrangements raising demand for laptops and other electronics, Taiwanese exporters directly benefited,” Frederic Neumann, co-head of Asian economic research at HSBC, told the newspaper.

“Related to this was also a continued surge in global semiconductor demand, a wave that Taiwan has been riding for quite some time. More broadly, Taiwan’s impressive economic performance this year reflects a little renaissance in its economic dynamism in recent years, being well positioned for high-end electronics and semiconductor manufacturing, all while remaining deeply embedded in regional supply chains.”