Following a high-level national security meeting on the morning of May 10, President Tsai Ing-wen held a press conference to explain the US-China trade dispute and cross-strait political situation to the public, and respond to questions from the media.
A translation of President Tsai's remarks follows:
Starting today, the United States will raise punitive tariffs on US$200 billion worth of Chinese imports from 10% to 25%. This is a major event that will impact the global economy and financial system, with several variables that will influence future developments.
Currently, those tariffs have not affected our major export industries, so their impact on Taiwan is relatively limited. But that impact will increase if the United States imposes further punitive tariff measures.
So discussions at today's high-level national security meeting specifically addressed these latest developments, and a complete action plan was proposed. We will closely monitor future developments and adopt the necessary response measures.
Here, I want to explain four things:
First: Taiwan's economic fundamentals are quite sound.
Our stock and foreign exchange markets are stable and healthy, the economy has seen positive growth for 12 consecutive quarters, and Taiwan ranks number 1 in the world in terms of overall economic stability. Over the past year, the government has actively responded to the escalating US-China trade dispute, with great results. We are perfectly capable of responding to any impact that results from changing international circumstances.
Two: Investments in Taiwan saw explosive growth this year.
We have seen an influx of foreign capital, as major brands have upped their investments in Taiwan. Taiwanese companies have also returned and made unprecedented investments, exceeding NT$250 billion. Yesterday, I also gave the Ministry of Economic Affairs a new goal for investments in that category: NT$500 billion. Both the Forward-looking Infrastructure Development Program budget and new investments from the "5+2 industrial innovation program" will also help fuel economic prosperity. These are our best assets in adapting to ongoing changes.
Three: To proactively address the US-China trade dispute, the government is welcoming Taiwanese businesses home with open arms.
Here I want to ask the Executive Yuan and the Legislative Yuan to help by completing deliberations on legislation governing how repatriated offshore funds are used and taxed, and make sure that legislation is passed this year. That will encourage Taiwanese businesses operating overseas to repatriate funds and invest in future-oriented industries, using the collective power of our domestic and overseas businesses to speed up the transformation and upgrade of Taiwan's industries.
Four: And this is the most important point—Taiwan has to choose the right path to economic development.
The US-China trade dispute is a long-term structural issue that will fundamentally change the global trade order and supply chains. So the triangular trade model of "placing product orders in Taiwan, to be manufactured in China, and then exported to the United States" will also change.
So our goals are to expedite the return of overseas Taiwanese businesses and rebuild high value-added industry chains to spur overall industrial transformation and upgrading. At the same time, we need to speed up our efforts to sign a bilateral trade agreement with the United States centered around free and fair trade, and replace "Made in China" products with high-quality, high local content products that are "Made in Taiwan" to become a major force in exports to the United States.
I also want to remind everyone that many political figures and local government heads have recently advocated setting up free economic zones that will allow Taiwan to become a special processing and export zone for Chinese goods, and blur the line that separates Taiwan products from Chinese products.
This could be considered a way to disguise "Chinese manufacturing," with Taiwan reverting back to the processing export zones from decades ago. That would completely contradict the spirit of the free trade agreements (FTAs) recently signed by the United States and other countries, and become the biggest obstacle to transforming and upgrading Taiwan's economy.
Although it hasn't been easy, over the past three years Taiwan has reversed our economy's overreliance on China, upgraded our industries, expanded domestic demand, and deployed globally. Structurally, our economy is strong, so we don't need to revert back to free trade zones.
Economics and national security go hand-in-hand, and developing the economy promotes national security. Our principle is simple: Put Taiwan first ; make Taiwan our first priority. Bring in foreign investment, bring back Taiwanese businesses, increase exports, and look after the best interests of Taiwan's enterprises and people.
Because we have a sound economic structure and an appropriate industrial strategy, we are confident that we can respond to changes in international economics and trade. But I think what we really need to warn people about is that after Xi Jinping's (習近平) "five-point proposal," there have been three important changes in the cross-strait political situation.
The first change is that China has intensified its propaganda pushing the "one country-two systems model for Taiwan," trying to conduct so-called "democratic negotiations" with people from all walks of life in Taiwan, and using military and diplomatic means to isolate Taiwan and compel Taiwanese to accept China's political views.
The second change is that this year is a presidential election year, and the Beijing authorities have continued their past practice of trying to induce Taiwan political figures to adopt Beijing's political position, while Chinese Communist Party (CCP) organs involved in Taiwan affairs are using every means possible to divide and sow confusion in Taiwanese society and interfere in the election.
The third change is that in addition to the ongoing US-China trade dispute, both countries have intensified political and military activities in the South China Sea. China's provocations in the Taiwan Strait also continue unabated, undermining the cross-strait status quo.
To address these three changes, today I directed the national security team to counter CCP infiltration and United Front tactics—especially the recent revelation regarding corporations that own media outlets have accepted Chinese funds or are influenced by China—as well as the disinformation issue that the public is so concerned about, by completing mechanisms to thwart infiltration and United Front activities as soon as possible to safeguard Taiwan's sovereignty and national security.
Next, we have to accelerate the institutionalization of security network for our democracy under a formal legal framework. I want to thank the Legislative Yuan for recently completing amendments to the Criminal Code and The Classified National Security Information Protection Act. I also hope to speed up deliberations on the draft amendments to the Criminal Code of the Armed Forces, Trade Secrets Act, National Intelligence Services Act, National Security Act, and the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area to give us a fully functioning security network for democracy.
To counter CCP military threats, Taiwan's armed forces will also step up development of asymmetric warfare capabilities. On one hand, that means upholding the principle of national defense self-sufficiency by speeding production of domestically manufactured submarines and anti-aircraft and anti-ship missiles. It also means updating our main battle weapons and strengthening battle training by normalizing military procurement channels.
There's also been some good news recently, including the continued strengthening of US arms sales to Taiwan and military cooperation, the normalization of arms sales to Taiwan as required by the Taiwan Assurance Act, and the achievement of new milestones in the domestic production of submarines.
We will deter China from stirring up trouble in the Taiwan Strait. So the public can rest assured that Taiwan will continue to strengthen our defensive capabilities, and become a force for regional peace.
And finally, when faced with isolation and oppression, Taiwan has never backed down. The international community has also seen Taiwan's determination to venture out into the world. This year, China is once again blocking our participation in the World Health Assembly, and many countries have been increasingly vocal in their support for Taiwan while criticizing China's obstruction. I have directed the Ministry of Foreign Affairs and related government agencies to utilize diverse channels to continue publicizing the nature of China's aggression, and inform the world about Taiwan's efforts and achievements in contributing to the international community to garner the support and cooperation of more countries.
To close, I want to remind my fellow citizens that of course, the growing incursion of external forces is a matter of great concern. But if we ourselves can't unite as one, and muster the determination to protect Taiwan, the situation will only worsen.
Our national security strategy over the past three years has sought to protect Taiwan's sovereignty and democracy, and resist China's aggression . In these ever-changing times, the key to stabilizing the cross-strait situation is absolutely not to surrender, compromise, or make concessions! Only a determined government, with a unified society, can ensure the integrity of our nation's sovereignty and the security of our national territory, and guarantee that our democratic way of life will continue for generations to come.
This is our only choice!
A reporter then asked President Tsai about our relationship with Japan and how the government intends to handle that relationship moving forward, as some think that the import of food products from Japan's Fukushima Prefecture is a major impediment to Taiwan's membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
President Tsai responded that during the election on November 24 last year, a referendum was held addressing the issue of food products from Fukushima, and as the referendum result is binding, for at least the next two years we cannot do anything that contravenes those results.
The president pointed out that after that referendum was passed [requiring that the government maintain the prohibition of agricultural and food products from areas affected by the Fukushima March 11th Disaster ], the Executive Yuan accepted the referendum result. Due to that result, we must find other ways to improve economic and trade ties with Japan.
In fact, she said, since then we have continued to improve and strengthen commercial ties with countries throughout the world, including Japan. So given the circumstances, we will continue to use other means to strengthen commercial ties with Japan and other countries, highlight Taiwan's importance to the international economic and trade system as well as regional economic and trade, bolster the legitimacy of Taiwan's participation in the CPTPP, and win the support of more countries.
President Tsai also addressed US-China economic and trade issues, saying that an important point from the discussions at the high-level national security meeting earlier in the day was that given the US-China economic and trade dispute and the current situation, we have to change our strategy.
The president pointed out that in the past, China's market size and status as a production base made many people feel that Taiwan's economy was overly reliant on China. But our current economic development strategy is to give Taiwan greater economic autonomy, so that goods manufactured in Taiwan are internationally competitive and popular with consumers.
In fact, as everyone knows, for some time Taiwan's economy has been linked too closely to China's, and Taiwan will inevitably continue to be affected by changes in international trade. So within this newly emerging international economic and trade order, Taiwan's economic autonomy, and the international competitiveness of goods manufactured in Taiwan, are the real focus of our efforts.
When asked about the economic impact on Taiwan of the US decision to raise tariffs on imports from China, and the government's target figure for investments by returning Taiwanese firms, President Tsai said that the impact of the US decision to raise tariffs from 10% to 25% was indeed discussed at the high-level national security meeting that day. Essentially, she said, the impact of the higher tariff rates on Taiwan will be limited because they don't apply to Taiwan's major products. But if future punitive tariffs cover higher-priced goods, we will have to handle the situation with greater caution. In other words, not many of the tariff rates that rose from 10% to 25% apply to Taiwan's main products, so the impact will be limited. But those rate hikes will still affect overall global trade activity, as well as economic ties among the world's major powers. So we will continue to monitor conditions closely.
President Tsai then explained that hopefully, this year's economic performance will begin to show the results of the economic foundation we have laid through our restructuring and transformation efforts over the past two to three years. One example is that we hope to accelerate implementation of the Forward-looking Infrastructure Development Program this year. Because much of that program involves the construction of domestic infrastructure, it can help us maintain a certain level of economic growth momentum. Our "5+2 industrial innovation program" will also benefit many industries. For example, the national defense industry's indigenous production of submarines and other naval vessels will benefit shipbuilders, but benefits will also extend to other industries. In other words, many of the industries included in the "5+2 industrial innovation program" are now beginning a major push that will contribute to economic growth as a result of our efforts over the past two to three years.
President Tsai went on to say that wind farms off the coast of Changhua County will also entail major investments. Offshore wind power and transforming our energy industry are our largest domestic-demand industries, and promise to make a major contribution to economic growth, both this year and in the future. As they develop and start realizing their potential this year, these industries will maintain Taiwan's economic growth momentum. Despite all the changes in external circumstances, Taiwan will see sustained economic growth momentum, said the president, thanks to the strong foundation we've laid over the past two to three years.
Action plan in response to the US-China trade conflict