Introduction

Taiwan is an island in the Pacific Ocean, separated from the China mainland by the Taiwan Strait. Although its population of 23 million is similar to that of Australia, the island is about half the size of Tasmania, making it one of the world's most densely populated areas. Since the end of martial law in 1987, Taiwan has transformed itself into a vibrant democracy. Taiwan imports 99 per cent of its energy needs, and most of its wheat, sugar, beef and lamb consumption.

After rapid industrial development as one of the 'Asian Tigers', Taiwan has an export-oriented economy which produces high-tech products and manufacturing, having transferred much of its lower-end manufacturing to the China mainland and Southeast Asia over time. China is Taiwan's largest export market. Over half of the cross-strait trade is conducted through Taiwanese multinational companies, often as trade between subsidiaries. Around 80 per cent of Taiwanese outward investment is to China – a factor that has been important in China's modern industrial development. The cross-strait Economic Cooperation Framework Agreement aims to further liberalise trade with China and increase inward investment from foreign companies seeking to use Taiwan as a springboard into China.

Government, business and people-to-people links

Australia and Taiwan share a strong friendship based on a significant trading relationship, shared democratic values and cultural ties.

Although Australia and Taiwan do not have diplomatic relations, the Australian Government strongly supports the development, on an unofficial basis, of two-way economic and cultural contacts. In the absence of formal representation in Taiwan, the Australian Office in Taipei unofficially represents Australia's interests. Australia cooperates with Taiwan in international and regional organisations of which it is a member, such as the World Trade Organization and the Asia–Pacific Economic Cooperation (APEC) forum.

Taiwan is Australia's sixth-largest merchandise export market, and relies on Australia as a secure and reliable source of minerals and resources (especially coal, iron ore, aluminium, copper and liquefied natural gas). Australia's chief agricultural exports to Taiwan include beef, wheat and wool. The main merchandise imports from Taiwan are telecommunications equipment, refined petroleum, motorcycles and bicycles.

Bilateral investment activity lags compared with the overall strength of trade. But recent investments in Australia by Taiwan's CPC Corporation and China Steel Corporation, and the entry of Taiwanese commercial banks into Australia, signal growing recognition of the benefits of investing in Australia. Major Taiwanese resource purchasers have a strategic goal of increasing overseas investment to ensure supply security, and Australia is one of Taiwan's preferred destinations.

Australia and Taiwan enjoy strong people-to-people links. In the 2011 census, over 28,000 listed Taiwan as their place of birth, many of whom have settled in southeast Queensland. In 2011, nearly 84,400 Taiwanese visited Australia, including nearly 17,000 participating in a working holiday maker program.

Australia is the second most preferred overseas destination for Taiwanese students, behind the United States. Australia and Taiwan have substantial educational and alumni links, including through the Taiwan Australia Alumni Association. Since the 1960s, many Australian students have studied Mandarin in Taiwan; and, according to Taiwan's Ministry of Education, between 100 and 300 are doing so at any given time.

Many Australian expatriates in Taiwan stay connected through social and business networking opportunities organised by the Australian and New Zealand Chamber of Commerce in Taipei. In Australia, enhancing trade and investment ties with Taiwan is the focus of the Australia–Taiwan Business Council (ATBC), which holds regular networking events and an annual joint conference with its Taiwanese counterpart.

Australia and Taiwan have formal sister-city relationships between Brisbane and Kaohsiung, the Gold Coast and Taipei, the Gold Coast and Tainan, and Port Macquarie and Keelung. Under these arrangements, the Gold Coast has gifted koalas to the Taipei Zoo, Taipei offers artist residences and language scholarships for Gold Coast residents, and both cities participate in an annual exchange of children’s books. There are also regular high-level visits between sister cities. In November 2012, Gold Coast Mayor Tom Tate led an investment mission to Taipei and Tainan.; In October 2012, Brisbane Lord Mayor Graham Quirk led a business delegation to Taipei and Kaohsiung, marking one year before Kaohsiung’s hosting of the 2013 Asia Pacific Cities Summit, a Brisbane City initiative.

The sophisticated cultural scene in Taiwan has nurtured many collaborative projects in the arts. For example, Opera Australia teamed with Taiwan's National Symphony Orchestra to co-produce the operas Carmen in 2009 and Madam Butterfly in 2012 at the National Theatre in Taipei.

Towards 2025

By 2025, Taiwan aspires for harmony in its relations across the Taiwan Strait and in the region. By then, it may have become better integrated into regional economic architecture through trade liberalisation not only with China but also with the members of the Association of Southeast Asian Nations and APEC members.

There is likely to be greater two-way trade and investment between Australia and Taiwan. Australia's minerals and energy exports are likely to be further strengthened, and the relationship could be expanded to include cooperation in areas such as smart grids and solar, wind and biomass energy. With Taiwan aspiring to further lower barriers to regional integration, trade with Australia could diversify to include a broader range of goods and services, including more opportunities for financial, architectural and legal services and better market access for agricultural, dairy and meat products. Both sides could also cooperate in agriculture, hospitality, medical devices, pharmaceuticals, clinical trials and emerging high-tech industries.

The strong bilateral people-to-people links would be further strengthened through greater mobility in education, high-level research and working holiday-makers in both directions. There are likely to be more opportunities for student exchanges as more Australians take advantage of Taiwan's strengths in Chinese language training and commercial innovation. Both sides would benefit from closer cooperation in science and technology. Closer links would lead to collaboration to commercialise innovative ideas, taking advantage of opportunities in regional markets and a greater presence of Australian professionals operating from an important hub in the global supply chain for high-value information, communication, and technology goods.