Da-Nien Liu, Director of the Regional Development Study Center at the Chung-Hua Institution for Economic Research (CIER), notes that the rules of global competition are undergoing a fundamental shift. While market forces once dictated corporate strategy, governments are increasingly steering market directions. Global competition is steadily transitioning from a market-driven model to a policy-driven one. Due to geopolitical tensions, technological rivalry, and supply chain realignment, economic security is supplanting efficiency as the core of national policymaking, re-establishing the role of governments as key players in shaping global competition.
In recent years, the scale of global industrial subsidies has reached highs not seen since the 2008 financial crisis. Notably, this surge is not a response to an economic downturn. Even amidst a relatively stable global economy, nations continue to ramp up support for strategic industries such as semiconductors, artificial intelligence, critical minerals, and green energy. Director Liu stated that this trend not only reflects intensifying competition in advanced technologies but also illustrates how countries are leveraging subsidies, tax incentives, policy financing, and government procurement to channel resources into strategic sectors. Major economies, including the U.S., the European Union, and Japan, are actively wielding industrial policy to forge competitive advantages. Consequently, the focus of global competition has shifted from pursuing market efficiency to fortifying economic security, technological leadership, and supply chain resilience.
This policy competition is also driving a paradigm shift in trade governance. Nations are continually expanding their arsenal of policy tools, ranging from subsidies and tax breaks to investment screenings and export controls. When companies expand overseas, they no longer base their decisions solely on cost and market scale; they must now navigate complex institutional mandates. Policy factors have emerged as critical variables influencing investment decisions.
Driven by this trend, the regulatory scope of trade policy is rapidly expanding. Beyond traditional trade remedies such as anti-dumping and countervailing duties, countries are extending their oversight into investment screening, import and export controls, and supply chain management. Governments are no longer solely concerned with whether a product meets regulatory standards. They are scrutinizing whether a company has gained an unfair competitive advantage through state backing. Regulatory oversight has thus expanded from goods to encompass corporate subsidies, investment origins, and supply chain backgrounds.
Director Liu highlighted an even more noteworthy development: major economies are increasingly compelling foreign companies to comply with their domestic laws, extending their legal reach beyond their borders to form a “long-arm jurisdiction.” Global trade governance is shifting from “regulating products” to “regulating companies,” with a sharper focus on the state support behind these enterprises. Regulation is evolving from a domestic affair into cross-border governance. For companies seeking entry into major markets, meeting product standards is no longer sufficient. Their supply chain sourcing, investment backgrounds, and corporate governance must also align with local legal requirements. Institutional compliance has become the critical key to market access.
However, as national policy tools rapidly proliferate, international trade rules have failed to keep pace. A lack of global consensus on subsidies, economic security, and supply chain governance has led to increasingly divergent regulatory frameworks. Conflicts and overlaps between different systems are escalating global trade frictions, subjecting companies to a more complex and uncertain operating environment. Looking ahead, companies will face challenges beyond navigating divergent market regulations. They must simultaneously comply with various national regulatory standards, disclosure obligations, and supply chain audits. Consequently, compliance costs, supply chain management expenses, and operational risks are set to rise continuously.
For Taiwan, this trend presents both a challenge and an opportunity. In the future, the primary risks facing companies may not stem from tariffs, but rather from institutional mandates such as subsidy investigations, rules of origin reviews, import/export controls, supply chain compliance, and cross-border oversight. The government must not only establish a global trade policy early-warning system to help companies track regulatory changes but also accelerate the alignment of domestic laws with international standards. Enhancing Taiwan’s overall institutional competitiveness is essential to fortifying its strategic position in the global supply chain.
Globalization has not ended, nor has free trade vanished, but the rules of global competition have undeniably changed. Director Liu argued that while nations previously competed on cost, efficiency, and market access, the future battleground will be defined by institutions, policies, and national governance capabilities. Future competitive advantage will be determined not just by whether a company holds cutting-edge technology, but by whether a country possesses a robust institutional environment, effective policy tools, and the governance capacity to sustain continuous industrial innovation.
Source: Da-Nien Liu (July 10, 2026). The World Enters an Era of Policy Competition.
United Daily News. https://udn.com/news/story/7340/9618787