Taiwan’s former President Tsai Ing-wen’s administration achieved a significant milestone with the introduction of the New Southbound Policy (NSP). This policy marked a strategic pivot from Taiwan’s traditional focus on the West and its dependence on China, redirecting attention towards South and Southeast Asia. The NSP aimed to diversify Taiwan’s economic and strategic partnerships to reduce its reliance on China amid escalating cross-Strait tensions and China’s economic leverage.
Under the Democratic Progressive Party (DPP), Taiwan sought to expand its international presence. Since 2016, the NSP has fostered closer relationships with 10 Southeast Asian neighbors, as well as with Australia, New Zealand, and six South Asian countries particularly India. While Taiwan had previously engaged with Southeast Asia through the Go South Policy, the NSP broadened this outreach, creating a more extensive regional network and countering its limited global diplomatic recognition.
The NSP has also played a crucial role in reshaping Taiwan’s regional and global identity. By shifting focus beyond the China-centric perspective, Taiwan has asserted its relevance and showcased its contributions and connections on its own terms.
With President Lai Ching-te’s administration, Taiwan’s foreign policy, including outreach to NSP countries, shows continuity. At the 2024 Ketagalan Forum, President Lai stressed, “We have also achieved significant results with our New Southbound Policy. In the first half of this year, Taiwan’s exports to the 18 New Southbound countries reached US$ 50.2 billion, the highest amount ever for this timeframe.” Taiwan’s Foreign Minister Lin Chia-lung has suggested potential advances through initiatives like the New Southbound Fund.
Progress So Far
In its eight years, the NSP has established a comprehensive framework for engaging with South and Southeast Asia—regions traditionally favorable to relations with China. This shift is significant given Taiwan’s historically sporadic interactions with countries like India and Australia. The emergence of the Indo-Pacific region has made strengthening ties with key countries in this area essential. The initiation of the NSP marked a substantial change in Taiwan’s foreign policy approach.
The NSP has not only redefined Taiwan’s regional strategy but also highlighted its commitment to advancing mutual interests with NSP countries. The policy has lessened Taiwan’s reliance on China and significantly improved economic and educational ties with regional partners. The NSP proved timely as China suspended dialogue with Taiwan, poached its diplomatic allies, and increased economic coercion. Despite these challenges, Taiwan successfully built like-minded partnerships. Taiwan has trade agreements with two NSP countries: Singapore and New Zealand, and investment agreements with India and Thailand. According to the government estimates, investments in NSP countries surged by 92.1 percent, reaching US$ 2.71 billion in the first quarter of 2024. Trade between Taiwan and India exceeded US$ 10 billion in 2023-24, reflecting deeper economic ties, and Taiwanese companies increasingly established operations in India.
Taiwan has also become a leading destination for Mandarin studies. From 2016 to 2022, the number of students from NSP countries studying in Taiwan more than doubled, supported by scholarships like the New Southbound Policy Elite Study Program and the Huayu Enrichment Scholarship.
Increased reciprocity and proactive engagement from some NSP countries have been notable. For example, Filipino President Ferdinand Marcos extended congratulations to President Lai on his electoral victory in January this year, while India has been actively courting Taiwanese investment, particularly in the semiconductor sector. A momentous exchange took place between Indian Prime Minister Narendra Modi and President Lai on X (formerly Twitter), following Lai’s congratulations on Modi’s electoral win in June. Additionally, Taiwan’s presence in India is rapidly expanding with the establishment of a new representative office in Mumbai, Foxconn’s announcement of establishing a township, and a joint venture between India’s Tata Group and Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC) to build India’s first 12-inch water fab.
The NSP aligns with Taiwan’s broader Indo-Pacific policy, involving priority countries like India and Australia, which are members of the Quad and advocates of the Indo-Pacific. Although the NSP is not security-oriented, it offers opportunities for broader regional engagement. With China’s aggressive policies and various countries’ efforts to protect territorial integrity, Taiwan is positioned to extend its outreach and consider collective responses to common challenges. In this context, the policy has raised Taiwan’s profile within NSP countries, overcoming previous mutual neglect.
Challenges
Despite its achievements, the NSP faces several challenges. The policy has struggled with diminishing focus on Asia, episodic highs, and a lack of reciprocity from NSP countries. While Taiwan has prioritized countries like India, Australia, and Indonesia, assessments of the policy across all 18 partner countries show mixed results. Some countries have been less supportive or less engaged, partly due to their intricate relationships with China.
Coordination among different departments and agencies in Taiwan has also been challenging, particularly regarding the relevance of priority countries. A more targeted approach, including sub-policies and action plans for key nations, could enhance the policy’s effectiveness.
Occasionally, the goals of the NSP overlap with Taiwan’s strategic interests, which can limit cooperation and hinder efforts to strengthen ties. It is crucial to clearly separate policy objectives from broader national interests to address this issue.
The Way Forward
The NSP represents an unconventional form of diplomacy, emphasizing civil society, think tanks, and a people-centric approach. Despite significant constraints, it has expanded Taiwan’s soft power and facilitated cooperation amid challenges posed by China and the lack of formal diplomatic ties.
While outcomes vary by bilateral relationship, the NSP has succeeded in increasing Taiwan’s presence in previously underrepresented regions. Metrics such as higher trade and investment flows, improved people mobility, and stronger think tank and civil society connections support the NSP’s success.
Diversifying external engagement remains crucial for Taiwan’s strategic interests. Continuing and strengthening the NSP can further broaden Taiwan’s partnerships and complement regional strategies such as the US pivot to Asia and Indo-Pacific strategy, India’s Act East Policy, and Japan’s Enhanced Partnership for Quality Infrastructure. Enhancing the NSP will help mitigate Taiwan’s isolation amid the China challenge, underscoring the policy’s value and the need for its ongoing vigor. Undoubtedly, the NSP has proven to be—and will continue to be—a holistic and distinctive approach to multifaceted cooperation with key countries in the region.
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Sana Hashmi is a postdoctoral fellow at the Taiwan-Asia Exchange Foundation.