Taiwan trade chief warns against ‘unnecessary fear’ of China

WASHINGTON –

Taiwan’s chief commerce consultant says his nation’s semiconductor makers will broaden manufacturing within the U.S. as a lot as they’ll afford to take action, however he insists Taiwan stays a really perfect place for that manufacturing and different U.S. commerce, business and funding, regardless of tensions with China.

John Chen-Chung Deng spoke to The Associated Press on a go to this week to Washington, the place he’s main a Taiwanese commerce delegation and assembly with U.S. commerce officers.

Deng’s go to comes at a time of intensifying efforts to harden the U.S. and Taiwanese militaries and economies towards any risk from rival China. As a part of this, President Joe Biden and Congress are transferring to spice up semiconductor manufacturing on U.S. soil within the occasion of any battle disrupting exports from Asia, particularly from Taiwan.

Semiconductors make electronics starting from telephones to electrical vehicles to superior weapons run, and Taiwan produces greater than 90% of the world’s extra superior semiconductors.

At the identical time, Pentagon leaders have been touring the Indo-Pacific to rally regional allies in bolstering army defenses and deterrence. A House committee final month war-gamed a hypothetical assault by China on Taiwan and U.S. positions as a part of a bipartisan congressional effort to seek out particular methods to spice up deterrence.

Deng mentioned Americans ought to see these efforts as guaranteeing that Chinese President Xi Jinping won’t ever really feel assured sufficient to invade Taiwan, which China claims as its personal.

“We should avoid any exaggeration or rhetoric which doesn’t reflect the true situation, that creates fear … unnecessary fear,” mentioned Deng.

He mentioned the U.S. business neighborhood in Taiwan assures him it’s nonetheless increasing and hiring. He cited the skilled workforce and assist industries that Taiwan presents for semiconductor producers and for Google, Amazon and different U.S. companies on its soil.

Relations between the U.S. and China have hit dramatic peaks in tensions over the previous two years as Xi’s authorities asserts China’s rising energy economically, diplomatically and militarily. That contains China underscoring its broad territorial claims within the area.

China, for its half, accuses the U.S. of meddling in its inside affairs and pursuing a containment technique towards China to stop its rise.

Taiwan and China break up in 1949 after a civil battle and haven’t any official relations. They are linked by billions of {dollars} in commerce and funding. The Chinese Communist Party recurrently flies fighter planes and bombers close to Taiwan to implement its stance that the island is obliged to unite with the mainland, by power if essential.

The Biden administration and Republicans and Democrats in Congress broadly assist strengthening the U.S. and Taiwanese positions within the area to discourage any Chinese invasion of the island.

For Taiwan, that swell in U.S. assist general has additionally introduced renewed focus from Washington on the island’s decades-old appeals to the U.S. to overtake its tax and commerce insurance policies towards the island. Taiwanese leaders say the present U.S. insurance policies make it exhausting for Taiwanese firms and staff working within the United States, and will do extra to assist Taiwan strengthen commerce relations with allies.

The U.S. switched its diplomatic relations from Taipei to Beijing in 1979. Without formal relations and the sort of a tax treaty that the U.S. has signed with pleasant nations that it acknowledges, Taiwanese staff within the U.S. need to pay taxes in each the U.S. and Taiwan. That makes the already more-expensive U.S. prohibitively costly for a lot of Taiwanese.

Treasury Secretary Janet Yellen in March referred to as it a problem the U.S. wanted to deal with. Senior members of Congress even have urged the U.S. to succeed in a tax settlement with Taiwan.

Meanwhile, the Biden administration is promising tens of billions of {dollars} to assist building of U.S. chip foundries and cut back reliance on suppliers in Taiwan and elsewhere in Asia, which Washington sees as a safety weak spot.

Answering that U.S. name, Taiwanese chip big Taiwan Semiconductor Manufacturing Corp. is constructing a chip plant in Arizona and plans a second, for a complete funding of $40 billion.

Deng mentioned he hopes for decision of the tax subject earlier than that first Taiwanese plant begins operation in Arizona, given the double-tax burden the operation will face.

“Once they start to produce, this is a real problem,” the commerce official mentioned.

Taiwanese officers additionally hope in coming weeks to shut an preliminary commerce settlement with Washington, in a nod towards the free-trade pacts the U.S. has negotiated with South Korea and different allies.

U.S. worries about angering China have helped maintain Washington from signing a free-trade pact with Taiwan prior to now. Deng argued the hoped-for U.S. commerce settlement would enhance the boldness of Taiwan and encourage different allies to extend commerce with Taiwan as nicely.

That would assist Taiwan reduce its financial dependence on commerce with China, now the client for 35% to 40% of Taiwan’s merchandise, Deng mentioned.

He mentioned Taiwan additionally sees the strategic level in Biden administration measures aimed toward discouraging different nations from exporting semiconductors to China, to starve China’s safety forces of the superior chips they want.

Integrated circuits alone account for about 25% of Taiwan’s GDP. When it involves China’s share of that, nevertheless, Taiwan “realizes there’s no sense in sending chips to them, to build up missiles aiming at us,” Deng mentioned.