Taiwanese President Tsai Ing-wen has indicated in a recent speech that her government will boost efforts to cut the island’s economic reliance on China, saying the days when “Taiwanese firms make goods in China for export to the US” are over.

Tsai revealed a plan to push for a bilateral trade agreement with the US that would adhere to the principles of free and fair trade, and make the island a major exporter to the US when retailers and consumers there look elsewhere to replace Chinese goods.

The key to that, she said, was to entice overseas Taiwanese businesses, many of which are manufacturers of high-value-added industrial goods and gadgets, back home.

Presiding over a national-security meeting last Friday, when US President Donald Trump’s hike of tariffs targeting US$200 billion worth of Chinese goods took effect, Tsai told reporters that the protracted US-China trade disputes and tit-for-tat tariffs were here to stay. And, it was high time that Taiwanese companies and original-equipment manufacturers returned home to start anew.

She also sought to assuage misgivings that Taiwanese companies that run factories in China will take a toll amid more punitive tariffs. “Taiwan’s economic fundamentals are strong enough, as the goods covered by higher tariffs do not include Taiwan’s main export products, but overseas Taiwanese firms should return home amid a renewed trade war,” she said, promising to amend laws to facilitate their return.

Under Tsai, Taiwan has managed to book 12 consecutive quarters of economic growth and increased overseas investment, despite Beijing’s economic subjugation. And the self-governed island also saw an inflow of NT$250 billion (US$8.1 billion) of repatriated investments by Taiwanese businesses so far this year, according to official data.

A bird’s eye view of the Kaohsiung Port, a major trade hub in southern Taiwan. Kaohsiung’s new mayor Han Kuo-yu wants to set up a pilot zone to attract Chinese manufacturers. Photo: Twitter

Tsai also brushed off plans by some local governments to rezone industrial plots for export-oriented businesses and entrepôt services, like the one being touted by the newly installed Kaohsiung mayor Han Kuo-yu, of the Beijing-friendly opposition party Kuomintang, to attract Chinese firms to package their goods for export to the US.

The president dismissed Han’s scheme as aimed at blurring the distinction between Taiwan-made goods and Chinese exports.

Meanwhile, a number of Hong Kong manufacturers operating in China’s southern Guangdong province are considering relocating away from the mainland as the trade war bites.

Local newspapers report that Hong Kong companies in Dongguan, an industrial powerhouse in Guangdong that exports tens of billions of electronic and daily consumer goods to the US, have not had any new orders from their US buyers for months.

An aluminum producer that faces heightened tariffs of 16%, from the original 5.7%, has already started looking at Taiwan, Malaysia and other Southeast Asian nations to set up subsidiaries, with relocation costs feared to be as high as US$10 million.

A number of export-dependent cities across China including Shenzhen, Suzhou, Shanghai, Dongguan and Ningbo are also starting to see an exodus of foreign-invested companies.