LDN - Business

Taiwan wants to join the IMF to get financial protection from China

[October 26, 2024] By DIDI TANG

WASHINGTON (AP) — Taiwan, a major economy the size of Poland but absent from global organizations, is making a longshot push to join the International Monetary Fund, the 190-country organization that offers members emergency loans and other financial assistance.

“Taiwan's membership at the IMF would help boost financial resilience,” the Taipei Economic and Cultural Representative Office in Washington said during this week's IMF and World Bank annual meetings. The office serves as Taiwan's de facto embassy in the U.S.

The push is part of a wider effort to boost the self-governed island's global status. Taiwan also is seeking to participate in the U.N. World Health Organization's annual World Health Assembly and join Interpol. The U.S. and its allies are Taiwan's supporters.

But China, which sees Taiwan as a breakaway province and threatens to annex it by force, has blocked such efforts and insists it represent Taiwan in international forums. The island is now designated as “Taiwan Province of China” in IMF literature.

In 2020, then-President Donald Trump signed legislation making it U.S. policy to advocate for Taiwan's membership or observer status in international organizations such as the IMF.

The U.S. State Department said the world “stands to benefit from Taiwan’s expertise and resources to address some of today’s most difficult global challenges.” It said it will continue to support Taiwan’s membership in international organizations where statehood is not required and encourage Taiwan’s meaningful participation in groups where its membership is not possible.

The IMF had no comment on Taiwan's efforts to gain membership. The U.S. has the biggest say within the group, but China is also influential, having more voting power than any other country except for the United States and Japan.

Bo Li, who had worked as vice governor of the People’s Bank of China, now serves as the IMF’s deputy managing director.

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People visit the historic Penghu Tianhou Temple on the outlying Penghu Island, Taiwan, Friday, Oct. 25, 2024. (AP Photo/Chiang Ying-ying)

The idea for Taiwan to join the IMF is to protect the democratically ruled island from a financial assault by China, which is determined to seize the island, by force if necessary.

While Washington is worried over a military conflict in the Taiwan Strait, analysts and observers have raised concerns that Beijing could wage an economic and cyber war to force a surrender from Taiwan.

In a report this month, the research group Taiwan Academy of Banking and Finance warned that China could try to destabilize the Taiwanese currency by placing big bets against Taiwan’s stock market and manipulating foreign exchange markets. Joining the IMF would give Taiwan access to a rainy-day fund it could use to defend itself.

The U.S. House has approved a bill that would direct the United States to advocate for Taiwan’s IMF membership. The legislation reflects growing concern from Republicans and Democrats alike over Beijing’s rising threats to Taiwan, an island critical to the global supply of computer chips.

Rep. Patrick McHenry, a North Carolina Republican and chairman of the House Financial Services Committee, argued in January that the United States needed to look beyond Beijing’s military threats and help Taiwan defend itself financially.

“As one of the world’s most advanced and innovative economies, Taiwan should be included under the fund’s activities,” McHenry said.

Taiwan does not have a seat at the United Nations. But Rep. Young Kim, R-Calif., has noted that Kosovo in southeastern Europe is an IMF member even though it is not recognized by the U.N.

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AP writer Fatima Hussein contributed from Washington.

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