Behind the Numbers: Taiwan's GDP Surpasses South Korea's After 22 Years
Commercial Times Editorial, September 18, 2025
Recently, a number of figures have shown Taiwan surpassing South Korea. In August, Taiwan’s exports reached $58.5 billion, higher than South Korea’s, a phenomenon not seen in more than three decades. In addition, Taiwan’s per capita gross domestic product (GDP) is expected to exceed South Korea’s this year, marking the first time in over two decades. These consecutive achievements are certainly worth noting.
However, the reality is less rosy. From January to August this year, Taiwan’s exports grew by 29 percent, but this was entirely thanks to two sectors: semiconductors and information and communications technology (ICT). If these two sectors are excluded, exports amounted to only $111.4 billion, with a year-on-year growth rate of just 0.9 percent—instantly shifting the picture from boom to stagnation. Some may argue that any growth compared to last year is positive, but looking back over several years makes the outlook far less optimistic.
In fact, Taiwan’s January to August exports excluding electronics and ICT—$111.4 billion—were lower than in 2023, 2022, and 2021. They were even lower than in the same period of 2008, the year of the global financial crisis, when exports were $127.7 billion. This shows that headline export growth rates no longer reflect the realities faced by most companies. Let us call all sectors outside electronics and ICT “traditional industries.” For these industries, the government’s narrative of “exports climbing steadily” simply does not apply.
There should be no doubt: electronics (semiconductors) plus ICT products now account for 72 percent of total exports. This is a staggering figure, demonstrating that as long as these two sectors thrive, overall exports will look strong, while changes in the remaining 22 categories of goods matter little. Looking at the aggregate numbers, it may appear encouraging that Taiwan has surpassed South Korea. But at the industry level, the picture is different: while electronics and ICT generate significant export revenue, they create relatively few jobs. Most workers are employed in weaker sectors, where life is far less promising.
Beyond exports, recent South Korean media reports estimate Taiwan’s per capita GDP at $38,066 this year, higher than South Korea’s $37,430. This is exciting, since Taiwan has lagged behind South Korea in this metric since 2003. But in truth, this figure is also illusory. For two economies of similar strength, fluctuations in per capita GDP often come down to exchange rates: the appreciating currency wins, the depreciating one loses. Taiwan’s advantage this year is thanks to currency movements. Comparing last year’s average exchange rate with this August, the New Taiwan dollar rose from 32.108 to 30.179, while the Korean won depreciated from 1,363 to 1,390. Under these conditions, Taiwan’s win is hardly surprising.
Looking back at history, Japan’s per capita GDP reached $44,000 in 1995, surpassing both the United States ($28,000) and Germany ($32,000). That was the era of “Japan as Number One.” But excessive yen appreciation hurt exports, and Japan lost its luster. Later attempts to reverse course through yen depreciation failed to boost exports and instead dragged per capita GDP below $40,000. Over 30 years, Japan regressed rather than advanced. Exchange rates, like magicians, can manipulate a nation’s fortunes—a sobering reminder to proceed with caution.
According to IMF forecasts, Japan’s per capita GDP this year will be just $34,000, already lower than Taiwan’s and South Korea’s. Japan’s three-decade trajectory demonstrates just how illusory per capita GDP can be. Even if Taiwan overtakes South Korea this year, there is little cause for celebration.
Moreover, per capita GDP is distant from the lived reality of ordinary people. What truly matters for employees is the share of GDP distributed as compensation to workers. Regrettably, this share has fallen from 51 percent in 1990 to 44 percent today, indicating that a greater portion of GDP is being captured by financial capital, land, and other production factors. Even if per capita GDP climbs to $50,000 or 60,000, it remains a mirage that does nothing to resolve the problem of the working poor.
Taiwan’s export and per capita GDP edge over South Korea highlights the strength of our semiconductor industry, something to be proud of. Yet from a macroeconomic perspective, it also reflects increasingly severe imbalances. Rather than celebrating, government leaders should take this as a warning. With electronics and ICT accounting for 70 percent of exports but employing less than 8 percent of the workforce, the circle of true winners is very small. Few people share in the fruits of GDP growth, and over 70 percent of workers still earn below the average monthly salary. This is the crux of the problem.
Last year, the Executive Yuan proposed a plan for balanced development in Taiwan. But since its implementation, all indicators have shown greater imbalance. Unless extraordinary efforts are made to reverse this trend, today’s cheers over surpassing South Korea will tomorrow turn into anger over working poverty. Laughter will turn into tears. Those in power would do well to reflect deeply.
From: https://www.chinatimes.com/opinion/20250918000115-262113?chdtv