Taiwan's improved ECR ranking attributed to its warming relationship with China

Taiwan climbed two places in the Euromoney Country Risk table during May as the survey reflected economists’ increasingly optimistic view about the economic and political implications of the country’s rapprochement with the communist mainland. Taiwan's ECR score rose by 1.8 points to 81.9 during the month, leaving the country in 16th place in the overall table. Scores for Government Stability, Economic Outlook and Monetary Policy Stability saw the largest improvements in the survey, which measures economists’ opinions of over 20 criteria of political, economic and structural risk. The improvement saw Taiwan rise above both France and the United Kingdom in the table for the first time in its history. In Asia, Taiwan is now the third placed nation in the ECR table, behind Singapore and Hong Kong. The improvement follows a surge in exports and economic growth during the months after the signing of the Economic Cooperation Framework Agreement (ECFA) between Taiwan and China. The agreement, which is being adopted in stages, opens up a number of Chinese markets directly to Taiwanese goods and services. Official data released last week showed that while the economy grew by a healthy 6.3% in the first quarter, total exports to Mainland China increased by 17% year on year during the first quarter of 2011. In April, Taiwan exported $1.8 billion of electrical goods to China, the highest monthly total on record. Cheng Mount Cheng, an economist at Citibank says that "Lower production and export tariffs, constant dialogue between politicians and an open-door policy to the movement of people and goods will continue to significantly benefit the Taiwanese economy." The relationship between Taiwan and China, which is ranked 22 places lower than Taiwan in the ECR table, has warmed since the election of President Ma Ying-jeou in 2008. President Ma’s administration initially oversaw agreements with China allowing for direct flights and shipments of goods between the two nations. The Last week, Chinese Premier Wu Den-yih expressed optimism that China and Taiwan will reach an agreement by the end of this month on allowing independent mainland Chinese tourists to visit.

A version of this article first appeared in Euromoney Country Risk. Euromoney Country Risk is an online service from Euromoney dedicated to sovereign and country risk.