In 2023, Taiwan's exports declined by 9.8%, which is of course related to the weakening of electronics exports, but with a total export value of US$432.5 billion, a trade surplus of US$80.56 billion, and a surplus of over US$300 billion in tax revenue, the overall result is not too bad. S&P Global projects a 19.2% growth for Taiwan's exports in 2024. What can be expected optimistically and what should be planned for?
Taiwan's electronics industry is dynamic and forward-looking, and the semiconductor industry has a far-reaching impact. Taiwan's exports are highly dependent on the contribution of major electronics manufacturers, but the electronics industry is linked to the global economy. If we only look at the sluggish export data of electronic products and ask the government to put forward industry revitalization programs, it is going in the wrong direction.
However, some of the data is very meaningful, for example, if the average annual growth rate of the IC design industry is 6% in the next seven years, Taiwan will still need 34,000 IC design engineers, does the government have a "solution" for that? If TSMC's 1nm fab is to be located in Chiayi, then what? Taiwan does not have sufficient resources and infrastructure needed for future development. It is wise to optimize Taiwan's current advantages and leverage the resources in other countries.
At the beginning of 2023, the International Monetary Fund (IMF) estimated the global economic growth rate to be 2.9%, which was raised to 3% in Q4, and the US economic growth rate estimate was raised from 1.4% to 2.1%. However, China has lowered its growth rate from 5.2% to 5%, and China has even revised its economic growth rate assessment benchmark, which is even more confusing for everyone.
For the 2024 outlook, the IMF believes that the global GDP will be lowered from 3.1% to 2.9%, the key lies in the high interest rates and geopolitics. The Israeli-Palestinian war has started while the Ukraine-Russia war is still going on. China's real estate crisis, industrial restructuring, and confrontation between China and the US are all difficult issues to deal with. IMF has downwardly adjusted its forecast for China's economic growth from 4.5% to 4.2%.
When Deng Xiaoping was in power, China had just joined the world economy and tapping into its resources. Deng Xiaoping wanted to let a few people get rich first, later on, Jiang Zemin and Hu Jintao continued the policy. They told investors and enterprises a positive message, and everyone believed China was leading the global growth momentum. China enjoyed a golden period of about 30 years after 1990.
Now, Xi Jinping is chanting the "the Common Wealth." This is an attempt by the Chinese Communist Party leader to adjust to the consequences of China's economic tilt toward the West, which they clearly understand. The challenges facing China have become obvious during the transition process.
People are most concerned about whether China's semiconductor industry can break through the US containment, and the Western countries have been weary of the competition with China's electric vehicle industry and the counter-measures of China. 2024 will not be a peaceful year for China or the global economy.
The number of international media correspondents stationed in China has been greatly reduced. On the one hand, covering China's sensitive news is easily inculpated. On the other hand, if its IC design industry must also follow the policy of "no profits, no IPOs" to move forward, it would not be surprising to see China's IC design start-ups which no longer can export their products end up in failure.
China's hope lies not in the semiconductor industry, which is restricted everywhere, but in the electric vehicle industry, the geosynchronous (GEO) satellite, artificial intelligence (AI), and other areas where it can cut corners to overtake the West. In the Internet of Everything era, electric cars and satellites may serve as Trojan horses. We shouldn't be surprised when the electric vehicle industry is recognized as a "national defense industry" one day.
Article translated by Judy Lin
