Ministry of Economic Affairs export order and production data for June continued to show signs of declining contraction as the new-found warm relations with the mainland have paved the way for expanded trade. New orders declined by 10.9% Y/Y, a big sequential jump from last month’s -20.1%, while production decreased by 11.35% Y/Y.
As in May, the key drivers for the improvement were the consumer electronics and information/communication components, which account for almost about half of the total orders received. As the Chinese tax incentives for rural buyers have spurred on demand for televisions and computers, the newly expanded direct trade channels have also contributed to the improving picture.
Although the primary conclusion to draw from this data is that the improving demand from China continues to support the bullish case for expanding consumer spending, it also underscores the political reality that Taiwan now faces. With increasing dependence on trade with a foreign market that, by definition challenges its right to exist as an independent nation, Taiwan’s government must continue to strike a careful balance.