Taiwan will further liberalise its economy and offer more financing products, aiming to become an Asian financial and asset management hub, President Tsai Ing-wen said, pitching the island at a time of turmoil in next-door Hong Kong.

Export-dependent Taiwan, which already has a very open economy, is trying to diversify from its traditional reliance on trade with China, its largest trading partner but also a political rival, with Beijing claiming democratic Taiwan as its own territory.

Instability in Chinese-ruled Hong Kong, especially after Beijing enacted a new national security law there, has called into question how long the city can remain Asia’s dominant financial centre.

While Taiwan is unlikely to supplant Hong Kong immediately, the government does hope to seize the opportunity to attract professionals and capital from the city.

Speaking to the Third Wednesday Club, a business group made up of 78 of Taiwan’s most important companies including Foxconn, the world’s largest contract electronics manufacturer, Tsai made no direct mention of Hong Kong.

However, she noted the growing interest in Taiwan from foreign companies.

“More and more internationally renowned companies, and even more international-level capital, talent and technology, are bullish about Taiwan, are coming to Taiwan and increasing their investment in Taiwan,” she said.

“The government will continue to adopt even more open measures, open up diverse financial products, expand the scope of our wealth management business, and let Taiwan become an Asian corporate financing centre and high-level asset management centre.”

She gave no details.

Tsai also said the government would strive to sign more bilateral trade deals, including a long-mooted one with the United States, and reiterated her desire for Taiwan to join the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP.

Taiwan has only a limited number of international trade deals, with countries wary of signing such agreements lest they anger the world’s second-largest economy China.

However Taiwan is a member of the World Trade Organisation and Asia Pacific Economic Cooperation bloc, and Tsai said Taiwan would seek to deepen its participation in both.

Taiwan’s July export orders grew at the strongest pace in two-and-a-half-years, surging on strong demand for telecom products, as the coronavirus pandemic forced millions of people around the world to stay home.

The island nation’s export orders, a bellwether of global technology demand, rose 12.4% in July from a year earlier to $45.6 billion, the Ministry of Economic Affairs data showed.

The outcome far exceeded a 3.7% rise projected in a Reuters poll and a 6.5% increase in June. It was the fifth consecutive month of gains and the strongest since January 2018.

The ministry said the better-than-expected performance was helped by strong orders for products such as laptops and tablets, with overall orders in July reaching their highest on record for the month.

Smartphone orders alone jumped 29.9% from a year earlier, it said, adding the second half could be boosted by upcoming launches of new models as well as continuing telecommuting demand, though it warned the pandemic and trade tensions remain major uncertainties.

Taiwan usually sees strong electronics orders in the third and fourth quarter ahead of the year-end holiday season when vendors launch new smartphone models.

Huang Yu-ling, director of the ministry’s statistics agency, said the July figures were a “very special situation” that may partly be accounted for from pent-up demand as countries begin emerging from lockdown.

“The worst is over for this year. We should see a stronger third quarter than in the second quarter,” Huang said.

The ministry said it expects August export orders to expand between 5.9% and 9.6% from a year earlier.

Taiwan’s manufacturers are a key part of the global supply chain for tech giants such as Apple.

July orders from the United States rose 22.2% from a year earlier, compared with 13.6% growth in June, while those from China were up 16.8% versus a 13% gain the previous month. European orders rose 18.2%, while those from Japan dropped 7.2%.

Taiwan-based Catcher Technology, a supplier to Apple, has agreed to sell two units from its Lyra International division in China to Hunan-based Lens Technology Co for $1.43 billion, a company filing showed.

Reuters