Taiwan is preparing to commit up to $500 billion in investment-related resources to the United States in exchange for reduced import tariffs. Former Vice Premier Shih Chun-chi (施俊吉) warns that while the deal may ease short-term trade pressure, it could impose a substantial long-term cost on Taiwan's GDP and public finances—one that the government has yet to clearly explain.
As government advisory bodies on fiscal and economic policy and national think tanks, the National Development Council (NDC，國家發展委員會) and the Chung-Hua Institution for Economic Research (CIER，中華經濟研究院) must calculate in detail the impact on Taiwan's GDP and fiscal revenues and inform the public accordingly.
Apples and Oranges?
When Tsai Ing-wen (蔡英文) served as chairwoman of the Mainland Affairs Council, she once cited the English proverb “You can't compare apples and oranges” in response to legislators, arguing that oranges should not be compared with bananas. By extension, the argument follows that one cannot add 25 oranges and 25 bananas and then claim the result equals 50 oranges.
Shih applies this logic to recent claims that $250 billion in direct investment plus $250 billion in credit guarantees equals $500 billion in U.S. investment. He argues that such a comparison conflates two fundamentally different financial commitments.
At the same time, he notes that apples and oranges can be added in certain contexts. If the question is how much it costs to buy five oranges and four bananas, the answer is US$5. The issue, he argues, is not whether different items can be combined, but whether they are being combined in a meaningful and accurate way.
According to a fact sheet released by the U.S. Department of Commerce, “direct investments” and “additional investments” are listed separately. “Direct investment” refers to at least $250 billion in actual capital injections by Taiwanese companies. “Additional investment” refers to at least $250 billion in financing backed by Taiwanese government credit guarantees. Together, these commitments amount to $500 billion devoted by Taiwan's economy to U.S.-based investment.
Taiwan's Potential GDP Could Fall by $474 billion
Gross domestic product (GDP) represents the total value added produced within a country’s borders in a given year. Shih notes that the combined $500 billion—approximately NTD$15 trillion—is being invested in the United States rather than in Taiwan. As a result, it cannot be counted as part of Taiwan's GDP.
In practical terms, Taiwan’s potential GDP over the coming years would need to be reduced by NT$15 trillion (approximately USD$474 billion).
Moreover, because the value added generated by investment occurs in the future and abroad, Taiwan would also forgo the additional value that this NT$15 trillion could have created through domestic investment. In Shih's view, the United States would thus take not only the “golden goose”—the investment itself—but also the “golden eggs,” meaning future value creation.
Shih concludes that the NDC and CIER must clearly explain how much Taiwan's potential GDP would decline, by how many percentage points GDP growth would fall, how much fiscal revenue would be reduced, and how the government plans to fill the resulting fiscal gap.
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