Taipei: The United States has emerged as Taiwan’s leading export destination, overtaking China, which could foster industrial development and wage growth given the U.S.’s status as a high-income economy, an economist stated.

According to Focus Taiwan, Taiwan’s exports reached a record US$51.74 billion in May, propelled by robust demand for artificial intelligence (AI) products and continuous orders. Information and communication technology (ICT) and audio/video products were at the forefront of this growth. The U.S. accounted for 30 percent of these exports, surpassing the combined 27.2 percent share held by China and Hong Kong.

Chiou Jiunn-rong, an economics professor at National Central University, highlighted the historical over-reliance on China, which at one point exceeded 40 percent of Taiwan’s total exports. This raised concerns about market over-concentration. However, global supply chain shifts and escalating U.S.-China tensions have significantly altered Taiwan’s export dynamic.

Chiou pointed out that while Taiwan’s export focus has transitioned from China and ICT products to the U.S. and AI goods, the implications are different. The U.S., being the world’s largest economy, makes a 30 percent export share not overly concentrated. Additionally, the U.S. market, being both high-income and advanced, offers different prospects compared to China.

Reflecting on history, Chiou noted that the Economic Cooperation Framework Agreement (ECFA) signed with China in 2010 raised fears of wage depression and unemployment due to the economic theory of “factor price equalization.” In contrast, he suggested that stronger trade ties with the U.S. could enhance industrial development and wage growth in Taiwan, shifting industries toward higher value-added segments.

Nonetheless, Chiou advised that Taiwan should diversify its export markets to mitigate potential risks from unpredictable U.S. policies.

Gordon Sun, director of the Economic Forecasting Center at the Taiwan Institute of Economic Research (TIER), mentioned that AI servers, primarily sold to the U.S., played a significant role in the shift of Taiwan’s largest export market from China to the U.S. Sun cautioned that this shift is largely driven by a single product category, and its sustainability remains uncertain.