In 2016, Taiwan's former president Tsai Ing-wen, implemented the New Southbound Policy (NSP), a key promise of her campaign. This sought to strengthen cultural, educational, technological, agricultural, and economic ties with 18 nations stretching from Pakistan to New Zealand to bolster Taiwan's international presence and reduce its reliance on China. Given rising geopolitical tensions and the tendency of other countries to pursue a similar policy of 'friend-shoring' away from China, this article will explore how this policy was articulated and whether it achieved its intended goals.
President Tsai's flagship policy follows the history of the Taiwanese government's balancing political and economic interests in its relationship with the mainland. On the background of Taiwanese investment in China - significantly increasing during the 1980s - in 1994, the Lee Teng-hui administration implemented the Go South policy. Similarly to the NSP, this aimed to grow investment in Southeast Asia but did not have much tangible impact as this region was less economically attractive.
However, as production costs rose in China and numerous issues, including politics, bad debt, corruption, and environmental damage, grew, South and Southeast Asia became more attractive. This was coupled with the signing of the ASEAN Charter in 2008, which sought to create an EU-style trade bloc, freeing up labour and boosting a growing middle class in many target nations. The alignment of economic conditions and the emphasis on people-to-people exchanges meant that the NSP was better placed to make a long-term impact than its Go South counterpart.
According to the US think tank CSIS, the NSP consists of four pillars:
1) Promote Economic Collaboration
2) Conduct People-to-People Exchanges
3) Enhance Resource Sharing
4) Forge Regional Links
The core pillars would be achieved through five programmes focussing on agricultural development, medical and public health cooperation, talent cultivation, innovative industries, and youth exchanges and policy forums. In the years following the implementation of this policy, investment in both Mainland China and Southeast Asia initially decreased. However, in 2022, investments in the latter surpassed the former for the first time, reaching $5.2 billion.
Lee (2023) noted that the NSP has succeeded in education, agriculture, and tourism but has failed to impact medicine, civil society, and manufacturing. This is partly due to Beijing's international influence, which has forced many target nations to deviate from the programme. Despite some scholars, such as Teng (2022), arguing that the policy aimed to complement its mainland equivalent -the Belt and Road Initiative- Beijing has exerted consistent pressure to encourage target nations to disengage. Due to Chinese influence, Taiwan has not managed to sign any more Free Trade Agreements (FTA) since the start of the initiative, and of the target nations, Taiwan only maintains an FTA with Singapore and New Zealand (both of which preceded 2016). Black (2019) emphasises the impact on the mainland, commenting on the Chinese criticism of the programme, including its potential to backfire by isolating China from development opportunities when the balance of economic growth shifts more in favour of Southeast Asian states.
Despite the efforts of the Taiwanese government to pivot away from an economic reliance on the mainland, it remains their largest import and export partner, accounting for 20.4% of imports and 31.7% of exports. While evidence has suggested that Taiwanese investment tends to shift towards Southeast Asia over mainland China, it is unclear to what extent this holds due to government policy rather than changing market conditions. Regardless, the above evidence shows that Taiwan's prosperity remains inextricably linked to mainland China, suggesting the balancing act must continue. Therefore, the full potential of this programme is yet to be realised even a decade later.
Comments