Alarm over £500m British taxpayer contribution to Taiwan

Taiwan is facing the threat of Chinese invasion of its self-governing state. Credit: AP Photo/Chang Ying-ying

The exposure of British taxpayer investments in Taiwan is under investigation amid concerns over rising political tensions between the island nation and China.

UK Export Finance (UKEF) has hired private consultants from Deloitte to explore the risks of supporting future offshore wind projects. in Taiwan after providing £500 million in taxpayer support to the sector since 2019.

The government-backed organization provides guarantees to help UK exporters win contracts overseas and takes over if the client does not pay.< /p>

The review will examine the legal, economic and commercial risks associated with supporting future projects on Taiwan, and the UKEF's risk appetite for further credit risk in the country.

This comes amid rapidly rising tensions in the region and concerns that China could invade the self-ruling nation.

Chinese President Xi Jinping had previously pledged to «reunite» Taiwan with China, prompting US President Joe Biden to make such a promise. that the US will defend the territory from any invasion.

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Tensions have forced investors to rethink their influence in the country: earlier this year, Warren Buffett sold his entire stake in the world's largest chipmaker, as his headquarters is in Taiwan.

Asked to explain his decision, the billionaire dubbed the «Oracle of Omaha» replied, «I don't like its location and I overestimated it.»

» I feel better about the capital we placed in Japan, than in Taiwan. I wish it wasn't, but I think that's the reality and I've overestimated it in light of some of the events going on.»

UKEF, linked to the Ministry of International Trade, has provided £500 million in loan guarantees since 2019 to fund three offshore wind projects in Taiwan. The most recent guarantee was given in 2021 when Liz Truss was Minister for International Development.

Ms. Truss, a former prime minister, was a vocal supporter of Western support for Taiwan amid Beijing's aggression.

During a visit to the nation in May to show «solidarity » Ms. Truss said Taiwan is «at the forefront of the global freedom battle» and called for «economic NATO» to challenge China.

The government, which has strong informal ties but no official diplomatic relations with Taipei, distanced itself from the visit.

A UKEF spokesperson said: «The UKEF has a market appetite of over £4 billion per support for new business in Taiwan. We have supported several offshore wind projects in Taiwan, which is a growing renewable energy investment market.

“UKEF actively monitors all of its risks and conducts regular market risk assessments.”

UKEF is led by Tim Reed, former senior banker at HSBC.