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The hidden risks in Taiwan’s boom
A weak-currency policy is punishing consumers and storing up financial risk
Taiwan is ENVIED for its exporting prowess: it is home to all of the world’s cutting-edge chipmaking. Just as extraordinary, but much less appreciated, is its towering current-account surplus, the result not just of a trade boom but of a long-undervalued currency. This aided Taiwan’s export-led rise, but it has long outlived its purpose. While manufacturers have been coddled, ordinary Taiwanese consumers have been deprived of the fruits of growth, and financial risks are building up. It is time for Taiwan to loosen its grip on its currency.
Taiwan’s vast surpluses have been years in the making. For decades its central bank, known as the cbc, has kept the currency undervalued, giving manufacturing exporters a competitive boost. According to the GDP-adjusted Big Mac index, our measure of how far exchange rates depart from their underlying values, the Taiwan dollar is 55% undervalued against the American dollar—the most in the world.
As a consequence, in this century Taiwan has run the world’s biggest current-account surplus as a share of output, once entrepots and petrostates are excluded. And lately, thanks to the artificial-intelligence boom, Taiwan’s imbalances have gone into overdrive. In October its goods-trade surplus hit a record high of 31% of GDP in annualised terms—a quadrupling since the pandemic. According to the latest data for this year, Taiwan’s current-account surplus has reached 16% of gdp. By comparison, China, the archetypal **surplus **economy, is running a current-account surplus of just 3%.
The problem with all this is that the cheap currency has become a costly and dangerous anachronism. For a start, it no longer delivers the benefits it once did. Taiwan is no longer an industrialising economy; its annual GDP per person now exceeds that of Japan. Its stock of foreign reserves, at $600bn, is large enough to cushion the impact of a Chinese blockade or a financial crisis. And the best of Taiwan’s chip- and computer-makers, which are responsible for three-quarters of total exports and nearly half of nominal GDP, can shrug off a stronger currency. A 20% appreciation in the Taiwan dollar would knock perhaps eight percentage points off the operating margins of TSMC, the world’s leading chipmaker—still leaving them plumper than Alphabet’s or Apple’s.
At the same time, the costs and distortions of having an undervalued currency are mounting. First, it is a tax on consumers. In an economy that depends on imports for food, fuel and goods, the cheap currency has shifted purchasing power from ordinary households to exporters. The result has been that even by export-economy standards, Taiwan saves too much and consumes too little. Since 1998 private consumption as a share of output has tumbled by 20 percentage points. A policy that was meant to help Taiwan get rich is now depriving ordinary Taiwanese.
Another distortion is that the cheap currency is inflating property prices. Printing currency to buy foreign exchange has flooded Taiwan’s financial system with liquidity and pushed down interest rates. That combination lies behind a quadrupling of house prices since 1998. And the weak-currency policy has seeded risk deep in the heart of Taiwan’s financial system—a third** distortion.** To recycle the proceeds of its surpluses Taiwan has leant on its life-insurance industry, which has poured nearly $1trn of households’ savings largely into American Treasuries. But that has created a giant currency mismatch, because Taiwan-dollar liabilities are being funded with American-dollar assets. An abrupt move in either currency could wipe out the insurers, threatening a financial crisis.
Why, then, has the policy persisted? One reason is the export lobby. Taiwan’s chipmakers could withstand a stronger currency, but existing policy has propped up a cohort of manufacturers that subsist on thin margins and would be severely hurt by an appreciation. Such firms make up perhaps 70% of manufacturing employment. Another reason is the CBC’s unusual power. Printing Taiwan dollars to hoover up foreign-currency assets has minted handsome profits, which are remitted to the government and have become a big source of revenue. Central-bank transfers make up 6% of total government receipts, compared with a rich-world average of 0.4%. This bolsters the CBC’s political authority, allowing its powerful governor to cow critics into submission (something the CBC denies).
The situation is becoming increasingly precarious. One risk is that further depreciation in the American dollar destabilises Taiwan’s life insurers, which have become too big to fail. A second danger is that American trade-surplus hawks take flight again, using tariffs and their security leverage to force Taiwan to revalue. That could happen at any time: unlike South Korea, Japan or China, Taiwan has yet to clinch a trade deal with Donald Trump. Fears of such a clash after “Liberation Day” were enough to spark an abrupt 9% appreciation of the currency against the greenback in May.
That is why Taiwan must unpick its outdated economic model—and build a better one. The CBC should gradually loosen its grip on the currency. Inevitably, the transition will be fraught with political and financial risks. Manufacturers kept on life-support by Taiwan’s export subsidy will have to scale back or shut down. Too rapid an appreciation could blow up the life-insurance industry. But these risks can be managed.
Taipei 101
Taiwan’s government, with gross debt of just 23% of GDP, has room to help retrain laid-off workers. Insurers will suffer losses, but can manage the transition if they are given time. The CBC also has a crucial advantage: gently strengthening a currency is easier than doing the opposite, as Javier Milei is discovering in Argentina. The cbc can always print Taiwan dollars to fend off speculators pre-empting a stronger currency.
The key is for the cbc to establish a long-term path for the currency, as Singapore does. China, too, has managed a modest yuan appreciation in recent decades. And in return, ordinary Taiwanese will at last be able to enjoy more of the fruits of their country’s** extraordinary export miracle**. ■
台灣繁榮背後的隱藏風險
** 疲弱匯率政策正在懲罰消費者並累積金融風險**
台灣因其出口實力而備受稱羨：它掌握了全球所有最先進的晶片製造技術。同樣非凡但較不被注意的，是其龐大的經常帳順差，這不僅源自貿易熱潮，也歸因於長期被低估的貨幣。這種政策曾助長台灣的出口導向成長，但如今早已不合時宜。製造業者雖受庇護，普通台灣消費者卻被剝奪了成長的果實，而金融風險也正在累積。台灣應是時候放鬆對匯率的控制。
台灣龐大的順差已經累積多年。數十年來，其中央銀行（央行）刻意維持貨幣低估，讓製造業出口商享有競爭優勢。依據經濟學人利用 GDP 調整的巨無霸指數（衡量匯率偏離其基本價值的程度），新台幣相對美元被低估達 55%——為全球最高。
因此，本世紀以來，在剔除轉口國與產油國後，台灣的經常帳順差占 GDP 比重為全球之最。近來拜人工智慧熱潮所賜，台灣的不平衡更達到極致。今年 10 月，其貨物貿易順差在年化計算下達 GDP 的 31%，創下歷史新高——是疫情前的四倍。依據最新資料，今年台灣的經常帳順差達到 GDP 的 16%。相比之下，被視為順差典型國的中國，經常帳順差僅為 3%。
問題在於，這種便宜的匯率已成為昂貴且危險的時代錯誤。首先，它已不再帶來過去的好處。台灣不再是工業化初期的國家；其人均 GDP 已高於日本。其外匯存底高達 6000 億美元，足以緩衝中國封鎖或金融危機的衝擊。而台灣頂尖的晶片與電腦製造商——負責三分之二的出口及近一半的名目 GDP——完全有能力承受較強的匯率。即便新台幣升值 20%，對全球領先的台積電而言，營業利益率或許只會減少約八個百分點，仍將高於 Alphabet 或 Apple 的水準。
同時，低估匯率所造成的成本與扭曲正不斷升高。首先，這相當於對消費者課稅。在高度依賴進口食物、能源與商品的經濟體中，便宜匯率將購買力從家庭移轉至出口商。結果是，即使以出口導向國家來看，台灣的儲蓄仍過高而消費過低。自 1998 年以來，民間消費占 GDP 比重下降了 20 個百分點。這項原本要協助台灣致富的政策，如今反而剝奪了一般民眾的福祉。
另一項扭曲是房價飆漲。為買進外匯而印製新台幣，使台灣金融體系充斥流動性並壓低利率。這個組合促成自 1998 年以來房價的四倍成長。同時，疲弱匯率政策也在台灣金融體系核心埋下風險——第三項扭曲。為了消化龐大的順差，台灣依賴壽險業者，他們將近 1 兆美元的家庭儲蓄主要投入美國公債。然而，這造成巨大的貨幣錯配，因為新台幣負債由美元資產支撐。一旦匯率劇烈變動，可能使保險公司遭受重創，甚至引發金融危機。
那麼，為何此政策仍持續？其一是出口利益集團。晶片製造商雖可承受更強的新台幣，但既有政策卻支撐著一群依賴微薄利潤的製造商，這些企業在升值下將遭受重擊。此類公司約占製造業就業的 70%。另一原因是央行的特殊權力。為購入外匯而印鈔，使央行獲得可觀收益，並繳回政府，成為重要財源。央行移轉收入占政府總收入的 6%，遠高於富裕國家平均的 0.4%。這增強了央行的政治影響力，使其強勢總裁得以壓制批評者（央行否認此說）。
情勢正變得愈發危險。一項風險是美元若進一步走弱，台灣壽險業可能動搖，而它們已經「大到不能倒」。另一個風險是美國再度出現打擊貿易順差的鷹派，利用關稅及安全槓桿逼迫台灣升值。這情況可能隨時發生：與南韓、日本或中國不同，台灣至今仍未與特朗普達成貿易協議。今年「解放日」之後，人們對此可能性的擔憂，便引發新台幣在 5 月對美元突然升值 9%。
因此，台灣必須拆解其過時的經濟模式，並打造更健全的體系。央行應逐步放鬆對匯率的控制。不可避免地，這段過程將伴隨政治與金融風險。那些靠出口補貼維生的製造商將不得不縮編或關閉。升值過快則可能引爆壽險業。但這些風險皆可管理。
台灣政府的優勢在於，其公共債務僅占 GDP 的 23%，有能力協助受影響的勞工再培訓。保險公司雖將承受損失，但若給予時間，仍能完成調整。央行也握有一項關鍵優勢：溫和升值比反向操作容易得多，正如阿根廷的米雷伊（Javier Milei）所體會的。央行隨時可以印鈔，阻止投機者提前押注升值。
關鍵在於，央行應比照新加坡，制定明確的長期匯率路徑。中國過去數十年也曾成功推動人民幣溫和升值。作為回報，普通台灣人終於能享受到其國家驚人成就的更多果實。■
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