Chunk of PRC's deficit is with Taiwan, says WTO

This article was published by the Taiwan Headlines on March 20, 2006. It reports that according to a recent report released by the World Trade Organization (WTO), Taiwan was China's largest source of trade deficit in 2005. In the same year, "intra-industry" trade across the Taiwan Strait surpassed half of that between China and the rest of the world.

According to the WTO report, although Taiwan has maintained bans on the import of about 2,000 categories of products from China, its huge trade surplus and "intra-industry" trade with China indicate that trade exchanges across the Taiwan Strait have continued to increase. In 2005, Taiwan enjoyed a trade surplus of US$58 billion with China, topping all countries in the world and followed by South Korea and Japan.

According to the WTO report, Taiwan's, South Korea's and Japan's trade surpluses with China partly reflect the huge amounts of investment and large numbers of manufacturing operations that these countries maintain in China. In fact, these three countries have "exported" their trade surpluses with the United States and the European Union to China, by investing in, producing and exporting their products from China. In this sense, China can be considered a "world factory".

In 2005, Taiwan was China's third largest import source. Taiwan provided 11.3 percent of China's entire imports in 2005, after Japan's 15.2 percent and South Korea's 11.6 percent. Meanwhile, in 2005, the United States, Hong Kong and the European Union were China's top three export markets.

According to the WTO report, Hong Kong, the British Virgin Islands, South Korea, Japan, the European Union, the United States and Taiwan were China's top sources of foreign capital and funds in 2005, in that order. A great majority of Taiwanese companies investing in China have their names registered in the British Virgin Islands.