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Taiwan

Australia-Taiwan relationship

Overview

Australia has a substantial relationship with Taiwan including trade and investment, education, tourism and people-to-people ties.

In 1949, following a period of civil war and conflict with Japan in WWII, the Chinese Communist Party (CCP) established the People's Republic of China (PRC), with Beijing as its capital. The Nationalist forces under Chiang Kai-shek retreated to Taiwan, relocating the capital of the Republic of China (ROC) to Taipei. Under the Constitution of the ROC, the authorities in Taipei still claim to be the legitimate government of the whole of China. The Australian Government continued to recognise Taipei until the establishment of diplomatic relations with the PRC in 1972. Australia's Joint Communiqué with the PRC recognised the Government of the PRC as China's sole legal government and acknowledged the position of the PRC that Taiwan was a province of the PRC.

The terms of our Joint Communiqué dictate the fundamental basis of Australia's one China policy – the Australian Government does not recognise the ROC as a sovereign state and does not regard the authorities in Taiwan as having the status of a national government. Dealings between Australian government officials and Taiwan, therefore, take place unofficially. For example, Australia's representative office in Taiwan does not have diplomatic status nor do Taiwan's representative offices in Australia, which have the title "Taipei Economic and Cultural Office" (TECO).

The Australian Government strongly supports the development, on an unofficial basis, of economic and cultural relations with Taiwan including a range of two-way visits, state, territory and local government contacts, trade and investment opportunities and people-to-people links. Australia supports Taiwan's meaningful participation in international organisations and conferences.

Australia and Taiwan share an interest in a rules-based, open, inclusive and stable Indo-Pacific region. Australia is a member of the Global Cooperation and Training Framework, which serves as a platform to share expertise with partners around the world. Australia is a long-term, reliable supplier of energy, resources, food and services to Taiwan. Our interests intersect across areas including education, green energy innovation and investment, biotechnology, smart cities and multilateral affairs. Australia and Taiwan have growing people-to-people contacts including in the arts, space, education, science, tourism and sport.

Trade and investment

Taiwan was Australia's seventh largest two-way goods and services trading partner in 2022-23, with trade worth $41.5 billion. Taiwan was Australia's sixth largest goods and services export market in 2022-23, worth $29.9 billion. Major merchandise exports were coal, natural gas, iron ore, copper and aluminium. Australia remains an important exporter of agricultural and forestry products to Taiwan. Australian supplements, and high quality food and beverages are increasingly popular with health conscious consumers in Taiwan. Merchandise imports from Taiwan were worth $10.9 billion in 2022-23, led by refined petroleum, telecommunication equipment and parts, motorcycles and bicycles, computers and inorganic chemicals. Australia's export of resources and primary products to Taiwan and imports of Taiwan's high-technology products feed a virtuous cycle underpinned by our economies' complementarity.

In 2022-23, two-way services trade increased by more than 80 per cent year on year, totalling $1.7 billion with Australia exporting $998 million to Taiwan and importing $704 million worth of services. Taiwan remains a major tourism and education market for Australia. Taiwan and Australia also share a popular mutual working holidaymaker arrangement.

At the end of 2022, Taiwan' total stock of investment in Australia was valued at $15 billion, up 4 per cent from 2021. The value of Australia's total stock of investment in Taiwan was $17.6 billion in 2022, making Taiwan Australia's 19th largest destination for Australian investment abroad in that year. Recent investment interests have expanded beyond minerals and resources to include biomedicine, renewable energy, circular economy and recycling, energy storage, tourism infrastructure, agriculture, food, and financial services.

Australia holds annual Bilateral Economic Consultations with Taiwan. The government-led consultations cover a wide range of issues, including market access, investment and agriculture. We also hold Joint Energy and Minerals, Trade and Investment Cooperation (JEMTIC) Consultations and an Agricultural Working Group (AWG) meeting to support trade and investment in these sectors.

Doing business in Taiwan

Austrade's export services are available to Australian companies looking to grow their business in Taiwan. Austrade also works to promote the Australian education sector within Taiwan and attract productive foreign direct investment into Australia.

People-to-people links

Education and tourism

Taiwan and Australia share a wide range of people-to-people links developed through business and tourism-related travel, academic exchanges, and Australia's Working Holiday Maker Scheme. In 2023, 14,686 young people from Taiwan were granted a visa to come to Australia under the Working Holiday Maker program. In 2022, 8,676 Taiwanese students studied in Australia, making Australia Taiwan's second most popular destination for overseas study.

The New Colombo Plan (NCP) supports scholarships of up to 19 months and flexible mobility grants for short-term and semester-length international education experiences for Australian undergraduate students in the Indo-Pacific. Since 2014, NCP has awarded 54 scholarships and 1,368 mobility grants for Australian undergraduates to undertake study and work-based experiences in Taiwan. This includes 6 scholars and 188 mobility grants in the 2024 round.

The arts

Cultural and creative engagement with Taiwan is an important aspect of our shared people-to-people links. Over many years, Australia and Taiwan have supported exchanges and collaboration in visual arts, performing arts, Indigenous culture, and publishing, including through the Arts Exchange Partnership Memorandum of Understanding signed on 1 June 2022.

Domestic overview

People

Taiwan's Indigenous peoples have inhabited the island for many millennia, and there are currently 16 officially recognised Indigenous tribes. In the early 17th century, Dutch and Spanish settlers established bases on the island. Successive waves of Chinese immigrants of different backgrounds arrived from the 17th century. In 1895, in the First Sino-Japanese War the Qing Government ceded Taiwan to Japan, who ruled the island until the end of World War II.

In 1949, the Nationalist forces under Chiang Kai-shek, who were fighting a civil war with the Chinese Communists, relocated to Taiwan, followed by 1.2 million people from China. More recently, new immigrants, mostly from China and Southeast Asia, have moved to Taiwan. Taiwan's main languages are Taiwanese Hokkien, Hakka and Mandarin, as well as several Indigenous languages.

Political parties

There are three main political parties in Taiwan. The modern Kuomintang (KMT) evolved from the former military government Nationalist Party. The KMT's support base is in northern Taiwan, where the Nationalist government and its supporters from the mainland established their new capital, Taipei. The KMT generally supports a conservative free-market agenda, although it maintains support for some state intervention in important sectors of the economy through a number of large state-owned enterprises established under its leadership. The KMT was in power most recently from 2008-2016 under Ma Ying-jeou and secured a number of cross-Strait agreements, including the overarching Economic Cooperation Framework Agreement (ECFA).

The pro-democracy movement of the 1970s and 80s gave rise to the Democratic Progressive Party (DPP). The DPP's support base is in southern Taiwan, particularly among the "Taiwanese" communities established prior to the arrival of the "mainlanders" in 1949. The DPP's broader policy agenda is generally socially progressive, focusing on issues such as income inequality, the environment, and economic and trade diversification. The DPP's Dr Lai-Ching-te won the 13 January elections in Taiwan. He will succeed Dr Tsai Ing-wen on 20 May 2024.

In 2019, Ko Wen-je established the Taiwan People's Party (TPP) as a third-force, reformist alternative to the two major parties. The party achieved modest success in the 2020 Legislative Yuan elections, earning five seats. The TPP solidified three-party politics in Taiwan during the 2024 elections. Ko Wen-je came third in the electoral race to lead Taiwan with 26.5 per cent of the vote, the best result for a third party since 2000. The TPP increased its number of seats in the legislature to eight and hold the balance of power in the Legislative Yuan.

Cross-Strait relations and international recognition

Hostilities between the Nationalists (who fled to Taiwan) and the Communists (who remained on the mainland) never formally ended. As a result, relations between the two sides of the Taiwan Strait have never been established on an official basis. Nevertheless, strong economic connections across the Strait have gradually been forged, including through a range of agreements in recent decades. Taiwan business investment played an important role in China's opening up, and direct transport and tourism links have been established.

Relations across the Strait are principally managed via semi-official agencies: Taiwan's Straits Exchange Foundation (SEF) and China's Association for Relations across the Taiwan Strait (ARATS). A meeting of both sides in 1992 took place on the understanding that each side could verbally state its opinion of "one China"; for Taiwan, this meant the Republic of China, and for China, this meant the People's Republic of China. This understanding was later referred to as the'1992 Consensus'.

Cross-Strait relations have become more difficult since the DPP were elected in January 2016. Beijing has criticised DPP leadership for not endorsing the'1992 Consensus' and has suspended official and semi-official channels of communication.

For Taiwan, international recognition remains important. The United Nations and most countries – including Australia – recognise the PRC in Beijing as the sole legal government of China (as opposed to the ROC in Taipei). Currently Taiwan has 12 diplomatic allies  that recognise Taiwan as the ROC (and thus do not have official relations with Beijing): Belize, Guatemala, Haiti, Holy See, Marshall Islands, Palau, Paraguay, St Lucia, St Kitts and Nevis, St Vincent and the Grenadines, Eswatini and Tuvalu.

Economic overview

Until the mid-1960s, Taiwan's economy was dominated by agriculture, especially rice and sugar production. One of Asia's "Four Tigers", the development of export-oriented manufacturing transformed Taiwan's economy into one defined by urban and industrial production. By the 1980s, Taiwan began relocating its low technology manufacturing offshore, especially to China. Taiwan is now a world leader in advanced semiconductor manufacturing – a vital component in global supply chains.

With a population of over 23 million in 2023, Taiwan has the 22nd largest economy in the world, with an annual gross domestic product (GDP) of US$751.9 billion. Taiwan is a member of the World Trade Organization (WTO) and Asia Pacific Economic Cooperation (APEC) – as Chinese Taipei. Taiwan is a trade-based economy with strengths in ICT manufacturing (particularly semiconductors), petrochemical refining and plastics, metal refining and consumer products manufacturing. Services account for over 60 per cent of Taiwan's GDP.

Agriculture receives government assistance including import protection and domestic support. Import protection involves high tariff rates, tariff-rate quotas and special safeguard measures. In 2023, Taiwan's average tariff on agricultural products was 17.6 per cent, as defined by the WTO. Domestic support in Taiwan includes price stabilisation measures, subsidised loans and inputs, and income support for senior farmers. Government intervention continues to focus on rice.

Taiwan relies heavily on imported fossil fuels for its energy generation. In 2022, Taiwan's total energy supply was based on 44.1 per cent crude oil and petroleum, 29.5 per cent coal, 19 per cent natural gas, and 2.6 per cent renewable energy. Australia is Taiwan's largest energy supplier, contributing approximately two thirds of Taiwan's coal, and one third of its natural gas. We continue to advance our longstanding energy cooperation, including through supporting Taiwan's uptake of renewable energy, as Taiwan progresses its 2050 net-zero emissions goal.

Taiwan is relatively open to foreign investment. Accumulated approved Foreign Direct Investment (FDI) in Taiwan totalled US$219.3 billion in 2023. Taiwan has relatively few restrictions, although foreign businesses periodically raise concerns about red tape and the slow progress of deregulation in a number of sectors, including telecommunications and financial services. For the most part, foreign investment application and approval processes are straightforward. Taiwan ranked 15th out of 190 economies in the World Bank's Ease of Doing Business Index 2020.

Since the DPP came to power in 2016, Taiwan has sought to boost economic diversification through its New Southbound Policy. The Policy aims to deepen ties with ASEAN and South Asian nations, as well as Australia and New Zealand, through strengthening economic and trade cooperation, and enhancing institutional, professional and academic interaction.

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