Prosperity or precarity? Lai Ching-te's gamble on Taiwan's future

Editor's note: Lin G. is a CGTN economic commentator. The article reflects the author's opinions and not necessarily the views of CGTN.

Lai Ching-te, leader of China's Taiwan region, has a puzzling take on the region's economy. In his recent "Double Tenth Day" speech, he painted the society as going through a period of prosperity, himself as capable of handling pressure from the U.S. and negotiating a fair deal on tariffs, and the island as having spare cash to implement a skyrocketing military budget.

What a delusion!

In recent interviews with young people in Taiwan, many said they are facing difficulties from rising living expenses and stagnant wages. There are fewer employment opportunities opening up. One young Taiwan resident, identifying himself only by his family name Liu, said the Taiwan authorities "don't seem to care much about the economic issues young people face today."

Lai has been advancing a narrative of "economic prosperity" – one that projects confidence on the surface but, in essence, represents a politicized redefinition of growth. Beneath the rhetoric lies a psychological illusion: Lai seeks to convince the public that as long as Taiwan allies with Western powers, it can maintain technological leadership and economic stability. At the core of this reasoning lies the assumption that the so-called "economic strength" can insulate Taiwan from its dependence on the mainland.

The question, then, is whether this vision of prosperity rests on industrial autonomy and technological advancement – or whether it, in fact, relies on another form of dependence. The goal of "reducing reliance on the mainland" redirects Taiwan's diverse external linkages into a single channel dominated by U.S.-led supply networks. In practice, this "de-dependency" is in fact a re-dependency: Taiwan's economic sovereignty would be further constrained as its key industries become increasingly subject to external political and technological influence.

The U.S.-centered high-tech supply chain is no longer an open system driven by efficiency. Instead, it has evolved into a structure designed for control, where political trust outweighs market logic, and "bloc alignment" replaces "industrial complementarity." In this arrangement, Taiwan participates in a system where the levers of decision-making are predominantly guided by external priorities. As a result, critical choices regarding investment flows, technological deployment, and price setting are effectively in Washington's hands. Moreover, Washington's approach is increasingly extractive rather than cooperative, treating Taiwan more as a source of strategic leverage than as a collaborative partner.

The semiconductor sector illustrates the dilemma vividly. The pledge made by Taiwan Semiconductor Manufacturing Company (TSMC) to build fabrication facilities in Arizona was never motivated by industrial efficiency; rather, it amounted to overt coercion under the banner of "America First" as U.S. President Donald Trump repeatedly pressed the island to loosen its dominance in advanced semiconductors and to move production to the United States. The costs of relocation, supply-chain fragmentation, shortages of highly skilled technical personnel, and the loss of operational confidentiality have all undermined the project's commercial rationale. This westward shift exposes Taiwan's high-tech industry to external control and operational constraints.

The mainland's manufacturing ecosystem is comprehensive and fully established – one that remains unmatched by other economies. Even for products from Taiwan ultimately exported to the U.S., many production stages rely on mainland inputs – from intermediate goods and raw materials to precision components. Taiwan's electromechanical, petrochemical, and materials industries are deeply intertwined with this network. In addition, many small and medium-sized enterprises from the island maintain operations on the mainland, deeply integrated into the production network in ways that sustain their global competitiveness. In reality, a substantial portion of Taiwan's industrial vitality stems from this structural complementarity with the mainland.

Severing this interdependence would not enhance resilience – it would only hasten decline. Costs would surge, efficiency would falter, and the island's innovative enterprises would lose access to the mainland's dynamic growth sectors – from new energy vehicles and artificial intelligence devices to green manufacturing. These are precisely the arenas shaping the next wave of global economic competition. To cut Taiwan off from them is to forfeit its future momentum.

Lai's reflections on "prosperity," therefore, suggest a perspective in which Taiwan's economy could be positioned as a lever in external strategic maneuvering. What might be described as a notion of "self-reliant growth" appears, in practice, as a form of strategic one-sided alignment – exposing Taiwan's economic lifeline to risks shaped by foreign interests.

True prosperity has never been born of ideological alignment. It arises from openness, complementarity, and rational cooperation. Artificially erecting economic barriers will only render Taiwan more fragile, forcing its people to bear the cost of political illusion. Taiwan's economic future should hinge on recognizing the mainland's pivotal role in the global production network and on navigating these connections to maintain both resilience and strategic leverage.

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