LONDON, England — Despite the majority of the island country’s citizens strongly supporting its independence, Taiwan’s economic dependence on China poses a threat to the nation’s stability. Beijing’s politically-motivated bans on Taiwanese exports in the last two years risked compromising the livelihood of farmers, and it is only by turning to the international market that Taiwan can hope to solve the problem.
Ban on Grouper Fish
On June 13, 2022, China banned exports of Taiwanese grouper fish, claiming customs officials reported they found prohibited chemicals in the fish. However, the ban fell only a couple of weeks after U.S. President Joe Biden vowed to defend Taiwan from Chinese attacks. This timing leads many Taiwanese and foreign observers to consider the ban politically motivated.
Though grouper fish are not Taiwan’s most important agricultural export, the farmers and fishers impacted by the suspension are politically significant. These constituencies tend to support the ruling Democratic Progressive Party (DPP), which aims to maintain cordial relations with China while furthering international diplomatic ties.
About 68% of Taiwanese people report being more favorable toward the United States than mainland China, and this support is the strongest amongst DPP members, where the number rises to 82%. Thus, it is no surprise that Beijing is weaponizing Taiwan’s economic dependence on China to destabilize the region.
Even if Beijing fails to sway the DPP voters, the economic impact will significantly burden the farmers. The Pew Research Center reported that Taiwan has almost no people living below the $2 poverty line, and less than 1% of people live in conditions lower than the middle class. A blow to the grouper market, however, means that many Taiwanese farmers will have to start over, for their livelihoods depend on the Chinese market: about 91% of the grouper fish Taiwan exported in 2021 were for China.
Previous Bans: Pineapples and Sugar Apples
It is not the first time China uses export bans to respond to political tensions. In 2021, China banned Taiwanese pineapples and wax apples, claiming the fruits had pests. As with the grouper fish, the claims were politically motivated. Compared to grouper fish, exports of pineapples are an even more essential part of the Taiwan market. In 2019, the Chinese market made up 97% of the export revenue – $63.36 million. This period likely represented the peak of Taiwan’s economic dependence on China.
The Taiwanese government quickly responded by issuing about 1 billion New Taiwan dollars (about $34 million USD) in subsidies to stabilize prices, but it was local Taiwanese efforts and international collaboration that helped solve the crisis.
Taiwan led a campaign to increase national pineapple consumption. Local restaurants created pineapple-filled menus, and the government conducted a “freedom pineapple” social media campaign featuring Taiwanese politicians eating the fruit.
In the long term, Taiwan diversified its trade partners, turning to Japan. The crisis forced Taiwanese producers to overcome logistical hurdles on the pineapple’s shelf life and transportation and abide by Japan’s stricter, more expensive rules. Ultimately the sacrifice paid off: Japan receives 62.3% of Taiwan’s pineapples. Taiwan also diversified its market to include nations with high Chinese populations, such as Canada and Australia.
Democracy Fish: Looking Ahead
Japan again stepped forward as the primary bidder for Taiwan’s grouper market in 2022. Buyers term the Taiwanese groupers “democratic fish,” for Japan’s move is not only logistically advantageous but a sign of support for Taiwan’s democratic values. Japanese fish farmers who dealt with similar export issues after the 2011 earthquake are especially empathetic towards Taiwanese grouper farmers today, as they remember Taiwan’s relief efforts following the earthquake. Many Japanese farmers see it as returning a favor.
Additionally, like in the pineapple crisis, Taiwan’s government put in place loan policies and logistical support for foreign exports of the democracy fish as an immediate measure to protect fish farmers.
However, Japan cannot be the island nation’s solution to every export crisis. Taipei must take economic measures to strengthen its competitiveness in the international market to reduce Taiwan’s economic dependence on China: it must switch from reactive to proactive policies. The government started strengthening diplomatic ties with the United States and the European Union, but it must also negotiate lower export tariff deals.
Taiwan should also work to invest in understanding which products can appeal to markets that are not Chinese. It was successful in this venture following the pineapple ban, where it developed the Tainung No.23 pineapple variety to have a better shelf life and suit Japanese tastes.
Beijing’s attacks on Taipei ironically seem to reduce Taiwan’s economic dependence on China by forcing the island nation to diversify its market to avoid a crisis. Taiwan appears successful in its efforts thus far thanks to Japan’s help and nationwide initiatives. But to prevent further “democracy fish” and “freedom pineapples” crises, the state should aim to diversify its market before China attacks again.
– Elena Sofia Massacesi