Taiwan’s economic resilience has been remarkable but is becoming an increasingly precarious balancing act in the current geopolitical environment. In the first joint webinar by CAPRI and Brookings’ Center for East Asia Policy Studies, leading experts—Richard Bush, Brookings’ nonresident senior fellow; Alicia García Herrero, CAPRI board member; and Syaru Shirley Lin, CAPRI chair—took a deep dive into the current state of and factors affecting Taiwan’s economic resilience. Moderated by Ryan Hass, director of the John L. Thornton China Center and the Chen-Fu and Cecilia Yen Koo Chair in Taiwan Studies at Brookings, the discussion underscored how Taiwan navigates the tightrope of US–China relations while maintaining its growth.

Assessing Taiwan’s strengths, challenges, and policy priorities, the panelists commented that the key factors casting an uncertain show on its economic outlook are overreliance on the semiconductor industry and dependence on China as both the key market and manufacturing base. Mr. Bush explained that Taiwan’s low-tax strategy, though competitive, limits government revenue for redistribution; the island thus faces a difficult but necessary task of fostering growth while also addressing inequalities. Prof. Lin identified energy policy, health reform, and defense spending as the biggest fault lines influencing Taiwan’s economic resilience. Prof. García Herrero posited that given its aging population, Taiwan must open up to foreign labor and investment and actively promote diversification, for example, in green transition and biotechnology.

To both withstand external policy shocks and overcome internal polarization, Taiwan needs to guide its economic policies in a direction that supports the resilience of its society in the long term.