Taipei: Taiwan’s economic growth outpaced that of China’s for the first time in 30 years, helped by its early control of the virus and stellar export performance.
Gross domestic product expanded 2.98% last year, official data showed Friday, compared with China’s 2.3% rise. Growth was also faster than the 2.55% median estimate in a Bloomberg survey of economists.
In 1990, Taiwan was a $166 billion economy dominated by exports of consumer electronics and plastic goods, while China had just opened its first McDonald’s restaurant, an early milestone in its reform and opening up that led to a generational shift in global economic power. That was also the last year that Taiwan’s economic growth outpaced that of its giant neighbour.
Taiwan was able to avoid the strict lockdowns last year that brought most other economies to a halt. With a few exceptions, Taiwanese businesses, offices and schools stayed open throughout the year and there was something of a boom in domestic travel as people opted to vacation at home rather than head overseas.
The island’s largest technology companies, such as Taiwan Semiconductor Manufacturing Co. and Hon Hai Precision Industry Co., have also soared alongside a global demand boom for semiconductors, 5G smartphones, electric vehicles and high-performance server equipment. Taiwan’s eight largest tech companies are on track to announce record or near-record earnings for last year.
Exports contributed about 60% of GDP growth in 2020, according to Natixis SA Economist Gary Ng in Hong Kong. And judging from TSMC’s ambitious capital expenditure plans, there’s little sign of a slowdown any time soon.
“There will always be demand for semiconductors and no-one can replace TSMC,” he said in a recent interview before the data was released.
The expansion in overseas shipments came despite the currency strengthening more than 5% against the U.S. dollar last year, its biggest gain since 2017.
Still, Taiwan’s out-performance of China is likely to be short-lived. Growth in the world’s second-largest economy roared back to pre-pandemic levels in the fourth quarter after Beijing managed to get Covid-19 under control and deployed fiscal and monetary stimulus to boost investment.
Taiwan’s GDP growth also sped up in the fourth quarter, growing 4.94% compared to a year ago, the fastest pace of expansion since 2011.
China’s GDP will likely rebound to 8.4% this year, according to a survey of economists, its fastest rate of growth since 2011. Taiwan’s is forecast to grow 3.7%.- Bloomberg