Taiwan Country Risk Ratings

The Taiwan overall country risk score of medium-low reflects economic strength and only moderate and intermittent tensions with China over reunification.  China gray warfare has continued in 2024 with military aircraft intermittently flying close to Taiwan and China naval exercises in May.  However, the gray warfare has not escalated compared to recent years, nor has it been as intense.  China will likely be pleased that a pro-China politician from Kuomintang, Han Kuo Yu, has been elected speaker of the Taiwan parliament.  Additionally, parliament has passed a bill that requires the president to make regular reports to parliament, which is seen to a China friendly policy. This could be a route to a more China friendly view in some sections of Taiwanese society, which China would want to play out in the coming years and avoid the alternative very high risk option of invasion. The current parliamentary domestic focus is also on KMT proposed infrastructure projects for eastern Taiwan, rather than China. Thus China will likely to continue to pressure Taiwan but stop short of major escalation.  Elsewhere, structural economic indicators remain strong helped by a well-balanced economy/controlled inflation and a huge current account surplus.  This leaves exchange transfer at a low rating, while the risk of doing business remains at a low rating. Risk of sovereign non-payment is medium-low, which reflects the low government debt/GDP trajectory.