Foreign trade is of ultimate importance to the island economy. To fulfill both production and consumer needs, Taiwan must import large quantities of energy, industrial raw materials, food, and manufactured goods. With rising consumer wealth within Taiwan as well as tariff reductions and other liberalization measures by the government, imports have risen rapidly from $24 billion in 1986 to an estimated $122 billion in 2000.
The export pattern has changed significantly since the end of World War II. In 1952, industrial products represented only 10% of Taiwan's total exports and agricultural exports made up the rest; but by 1992, industrial exports (excluding processed agricultural products) had jumped to an overwhelming 95.7% share of the total. Exports increased from $8.2 billion in 1976 to an estimated $112 billion in 2000. However, the export growth rate has declined steeply in recent years, from 23% in 1986 to 13% in 1991 and 0.4% in 1992, due to recession in Taiwan's major markets and the movement of export-oriented manufacturing plants to China and Southeast Asia. Exports leveled off in 1997, and dropped by 9.4% in 1998, in part due to the financial crisis in all of Asia. The growth in services has overtaken that of industrial production.
Most of Taiwan's export commodities are electronic equipment and other small manufactured goods. The top 10 exports are as follows:
|% OF COUNTRY TOTAL||% OF WORLD|
|Transistors and valves||7.2||5.0|
|Office machine parts||6.8||8.3|
|Automatic data processing equipment||6.6||5.9|
|Toys and sporting goods||2.9||10|
|Bicycles and motorcycles||2.8||18|
|Woven man-made fiber fabric||2.8||9.2|
|Articles of plastic||2.7||6.2|
|Special textile fabric and products||2.3||14|
The United States remains Taiwan's single most important trade partner, although Japan has made major gains, becoming Taiwan's major supplier in the 1970s and 1980s. Over 18% of imports come from the United States, while Taiwan exports more than 27% of goods to the United States. Trade with mainland China via Hong Kong expanded rapidly during the late 1980s and early 1990s, resulting in a sharp increase in Taiwan's trade surplus with the latter country. Following cross-strait tension from 1995 onwards, Taiwan investors have limited their relations with mainland China, resulting in a 50% drop in investment during 1998. Exports to China fell by 13% in 1998.