Sudpolitik: the political economy of Taiwan's trade with Southeast Asia

Abstract

In December 1993 the Taiwan government adopted a policy called nanjin zhengce or sudpolitik, a policy aimed at diverting part of Taiwan's trade and investment flows from China to Southeast Asia. This paper addresses the following questions: what is sudpolitik? why adopt such a policy? what are the economic, political, and strategic considerations in the pursuit of this policy? which countries are its specific targets? how do the countries directly affected by this policy respond to it? The paper also discusses the issue of Taiwan's aid in connection with sudpolitik. While the effectiveness of the policy is far from clear at present, the paper concludes with four observations: Taiwan's trade and aid are beginning to intertwine; Taiwan's diplomacy is largely economically or commercially led; Taiwan has achieved some positive results in improving its relations with Southeast Asian countries; and, Taiwan has reached a new stage in its economic development whereby it needs to invest overseas in order to sustain its economic growth. Overall, sudpolitik represents a novel step in Taiwan's diplomatic practice.