Beijing Watch | Why Taiwan Can't Quit China's Supply Chains, 16 Years On

Sixteen years after Taiwan and China signed the Cross-Strait Economic Cooperation Framework Agreement (ECFA), the deal has outlived the political consensus that produced it — yet trade across the strait keeps growing anyway. That contradiction sat at the center of a briefing this week by Beijing's Taiwan Affairs Office (TAO), which marked the June 29 anniversary by touting fresh trade figures, defending ECFA's relevance, and renewing its criticism of Taiwan's ruling Democratic Progressive Party (DPP).

According to TAO data, cross-strait trade totaled US$150.8 billion between January and May of this year, a 22% jump from the same period last year. Mainland exports to Taiwan rose 30.6% to roughly US$41.9 billion, while mainland imports from Taiwan climbed 19.1% to about US$109 billion. For full-year 2025, TAO figures put total trade at US$314.3 billion, up 7.3%, alongside 8,132 newly registered Taiwan-funded businesses on the mainland.

Beijing's officials frame these numbers as proof that the two economies remain deeply intertwined regardless of political friction, and that the mainland's market scale and manufacturing ecosystem continue to make it an attractive destination for Taiwanese capital. The underlying driver, according to the data, is structural: Taiwan's semiconductor, electronics, and precision-manufacturing exporters remain wired into mainland supply chains that assemble and re-export finished goods worldwide, a relationship that has proven resistant to years of "de-risking" rhetoric on both sides of the Pacific.

ECFA was signed in 2010 under the political framework then known as the "1992 Consensus," and it was never meant to be just a tariff-reduction pact. Its early harvest list gave immediate duty relief to Taiwanese petrochemicals, machinery, auto parts, textiles, and select farm and fishery goods, a boost credited with helping many small and mid-sized Taiwanese firms establish themselves in the mainland market.

That momentum stalled after 2016. A cross-strait services trade agreement negotiated alongside ECFA was never ratified, talks on a broader goods trade pact collapsed, and Beijing has since pared back tariff preferences on a number of early harvest items — narrowing, in practice, how much of the original framework is still operating. TAO's briefing placed the blame squarely on Taipei, accusing the DPP of opposing ECFA before taking office and then obstructing it in power by maintaining trade restrictions on mainland goods, repeatedly amending regulations, and promoting what Beijing calls "decoupling" and a "de-red supply chain" agenda.

Taiwan's Mainland Affairs Council (MAC) offers a competing interpretation of the same trend lines. It points to a declining share of Taiwan's exports and investment heading to the mainland, a record-low proportion of ECFA early harvest goods in Taiwan's mainland-bound shipments, and a government strategy built around diversifying trade — summarized officially as "rooting in Taiwan, deploying globally" — to reduce economic exposure to any single market.

Whether that shift shows up in the headline trade figures is another matter. Even as Taiwan has pushed its New Southbound Policy and shifted some manufacturing toward Southeast Asia and the United States, cross-strait trade volumes have not visibly contracted — a pattern some observers describe as "political cooling, economic warming," in which state-to-state tension coexists with continued commercial dependence, particularly in semiconductors and electronic components where alternative supply chains are difficult and slow to build.

Beijing's broader posture toward Taiwan appears to be shifting in tone as well. At events marking the Chinese Communist Party's 105th founding anniversary, President Xi Jinping repeated the party's commitment to cross-strait "integrated development," language that analysts noted was framed less as a personal priority of any one leader and more as a standing institutional objective of the party itself. That framing has echoed through provincial outreach programs and cross-strait forums on the mainland, where officials increasingly describe economic integration as a "soft" instrument of Taiwan policy — one aimed at drawing in both the island's industries and its people over the long run.

One market analyst based in Beijing, speaking on condition of anonymity, suggested that Beijing is aware this messaging faces a harder audience in Taiwan than it once did, as public skepticism grows over reliance on a single market and as global supply chain realignment adds pressure from outside.

Sixteen years on, ECFA's trajectory looks less like steady implementation and more like a running argument conducted through trade statistics: strong headline numbers that Beijing cites as evidence of enduring economic logic, and a narrowing formal framework that Taipei cites as evidence of a deliberate pivot away from dependence. Both readings can be true at once. What remains unresolved is whether either side is prepared to bridge the political distance that has kept the agreement's original ambitions — a services trade pact, a full goods trade deal — stalled for nearly a decade. （Related： AI Boom Pushes Japan's Chip Equipment Sales to Record Highs ｜ Latest ）

​Original Article in Chinese​