Taiwan’s global profile is higher than ever following a number of key diplomatic wins

Taiwan’s star is rising on the global stage. The government of neighboring Japan has provided Taiwan millions of AstraZeneca vaccines free of charge, and the US Congress passed a unanimous motion supporting Taiwan's accession to the WHO. The European Parliament urged the European Commission to promote an EU investment agreement with Taiwan, and Lithuania and Slovakia both have donated vaccines to Taiwan.

Meanwhile, the US, a long-time ally, has also publicly supported Taiwan’s international position, assisted it to maintain diplomatic relations or deepen ties with other countries, and, following a five-year hiatus, restarted the Trade and Investment Framework Agreement (TIFA) conference. The BBC observed that “Washington and Taipei are seeking to deepen economic relations amidst frictions with China.” This cooperation between Taiwan and the US in the era of supply chain reorganization has raised expectations for future economic and trade exchanges.

While we can celebrate Taiwan’s promotion on the international stage, however, we still have to understand the underlying reasons, in addition to the efforts of our own government. After US President Joe Biden took office, in order to maintain the influence of democratic values, he has worked closely with the G7 and NATO to improve the results from these alliances. These discussions are finally highlighting Taiwan’s long-neglected international status as an indicator of the strength of democracy against China’s political pressure, allowing Taiwan to receive more (but still insufficient) attention.

However, the financial sector must focus more on  realism and calculation than justice and self-evident truths. The trade, technology and finance wars have prompted global capital account re-allocation, causing China to decouple from global markets. In contrast to the profitable growth of Taiwan’s banking industry in New Southbound countries, the China, Hong Kong and Macau markets – which used to be the main source of overseas profitability for Taiwanese banks – have experienced sharp declines in profitability. Our financial sector needs to continue planning for the next step. Coupled with a possible new economic and trade structure, this can help create a brand-new international strategy for Taiwan’s financial development.

Following the Tiananmen Square incident, due to global sanctions, Taiwan took the lead in capital and technology investment in China. Taiwan helped China’s economic integration with the world for three decades, but now the script has been changed. As Hong Kong’s National Security Law has once again awakened other countries’ concerns about the nature of Chinese communism, with foreign exchange deposits of more than US$500 billion and more than US$2 trillion of total foreign assets, our capital allocation and system linkage will affect our subsequent development path.

Norway and California already have sovereign funds, using their assets to guide the development of ESG finance in the world, and creating a model of finance for a better world. Taiwan, standing at the forefront of the international democratic alliance, can insist on integrating its asset development and democratic values, creating new job opportunities in Central European countries with the help of its strong manufacturing industry, or assisting Central American allies to promote inclusive finance. This will help Taiwan calibrate its new position in the world’s capital system, and the world will see Taiwan not only as a source of wealth, but also as a mature and responsible member of the global family.