With its New Southbound Policy, Taiwan, a dynamic country, is emerging as an important trading power in the Asia-Pacific region despite Chinese frequent threats and pressure.
Launched in 2016, New Southbound Policy was aimed at Taiwan’s less dependent on China, the main rival, and deepen the relations with 18 countries from Southeast Asia, South Asia, Australia and New Zealand. The policy was a broader economic security strategy.
China wants to occupy Taiwan by all means. It claims that Taiwan as a renegade province. But Taiwan says that it is an independent and democratic country.
Taiwan’s trade in 2025 has crossed the record US$1 trillion mark with highest exports and imports. Its exports reached $640.75 billion, a 34.9 percent increase from the previous year. Its imports were also surged to $483.61 billion, a 22.6 percent increase. Its over all trade reached $1.12 trillion. It also recorded a record annual trade surplus of $157.14 billion.
Taiwan’s Ministry of Finance (MOF) attributed strong export numbers to robust global demand for artificial intelligence applications, high performance computing and cloud services.
Information communication technology and audio-visuals, electronics components and parts, and machinery were the top three export items, with the first two categories both reporting the highest export values on record, the MOF said.
According to the Taiwan Today newspaper, the U.S., China and Hong Kong, and 10 major Association of Southeast Asian Nations (ASEAN) countries remained the top three destinations for Taiwan’s exports. Exports in 2025 to the U.S. and ASEAN nations were both the highest on record.
While potential geopolitical risk and uncertainties stemming from the U.S. administration tariff policies may slow down global trade, the MOF anticipates major cloud service suppliers to step up investment spending, while many countries will continue supporting sovereign AI development and computing infrastructure construction.
Taiwan’s total trade with ASEAN reached $190 billion in 2025. ASEAN was the third biggest trading partner of Taiwan behind the U.S. and China. Malaysia, Singapore and Vietnam are Taiwan’s top three biggest trading partners in ASEAN.
Taiwan is also emerging as a an important investor in ASEAN region.
The Taiwan ASEAN Studies Center (TASC) of the Chung-Hua Institution for Economic Research (CIER) has jointly released the Report on Investment Trends of Taiwanese Companies in ASEAN 2018–2024 with Dun & Bradstreet Taiwan recently.
It is the first domestic study to analyze Taiwanese business expansion using actual corporate data. Tien-Wang Tsaur, Chairman of the CIER, stated that due to geopolitical shifts and the reorganization of global supply chains,
ASEAN has emerged as the most significant overseas investment destination for Taiwanese businesses. Since 2018, the number of companies investing in ASEAN has shown steady growth, in sharp contrast to the decline in Taiwanese investment in China.
Kristy Hsu, Director of the TASC, indicated that the report covers three major events: the “US-China Trade War,” the “COVID-19 Pandemic,” and “Pelosi’s Visit to Taiwan.” The results show that Taiwanese business investment has shifted from traditional manufacturing to the electronics industry, with high-value-added production chains gradually relocating to Southeast Asia.
During the U.S.-China trade conflict, new Taiwanese investments were primarily concentrated in Vietnam, Indonesia. Myanmar and Malaysia. Following Nancy Pelosi’s visit to Taiwan, electronics industry investment growth in Thailand was most notable, reflecting the accelerated expansion of Taiwanese supply chains.
Global corporate investment in ASEAN is relatively dispersed, but Taiwanese businesses are highly concentrated in Vietnam, Thailand, and industries such as electronics and wholesale/retail.
The New Southbound Policy has now entered its 10th year. Facing de-risking trends, Taiwan needs to continue deepening economic and trade cooperation with ASEAN to strengthen supply chain resilience and capture the next wave of growth opportunities. Chairman Tien-Wang Tsaur emphasized that by utilizing real data from over 6,200 business locations in Taiwan, the goal is to provide more comprehensive evidence for both policy and corporate decision-making. This initiative aims to help Taiwan strengthen its strategic capabilities in response to global changes.
This strategic adjustment was clearly articulated in Taiwan’s President William Lai’s remarks at this year’s Yushan Forum, where economic partnerships were linked to resilience and closer alignment with like-minded partners in the Indo-Pacific region.
At its core, this approach aims to reduce structural dependence on China while embedding Taiwan more deeply in alternative production networks. The scale of this shift is visible in the data. In 2010, more than 83 percent of Taiwan’s outward investment went to China.
By last year, this had fallen to about 3.75 percent. Over the same period, investment in Europe rose sharply, while exports to the U.S. increased by 78 percent, making it Taiwan’s largest export market. Exports to New Southbound countries also grew by more than 30 percent, pointing to a sustained — not temporary — reorientation.
April 28, 2026
By Veeramalla Anjaiah