Tensions between Taiwan and China have escalated in recent weeks following the election of pro-independence candidate Lai Ching-te. Credits: FrankRamspott/Getty Images.

Spending by Taiwanese firms in China plunged by 39.8% year-on-year to $3.04bn, the lowest value recorded since 2001.

The new data, cited by Bloomberg, shows companies are taking measures to shed risk arising from the latest tech disputes between Washington and Beijing.

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According to the Ministry of Economic Affairs, the drop in FDI outbound to China shows that Taiwan’s businesses have “adapted to the restructuring of global supply chains, are adjusting their overseas exposure” and are choosing instead to invest in the US, Europe, Japan and other countries.

In a move illustrating that last year, Taiwan-based giant Foxconn announced plans to invest $1.5bn to expand its operations in India. News about the investment came after, in August, the company pledged $200m to open a components manufacturing plant in the Indian State of Tamil Nadu. The new factory promised in Tamil Nadu could create up to 6,000 jobs.

Tensions between China and Taiwan have escalated in recent weeks and just before the latest elections held in the breakaway island nation. On 13 January, Taiwan held presidential elections, which were won by Lai Ching-te of the Democratic Progressive Party (DPP).

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Lai is a supporter of Taiwanese independence and took 40.1% of the vote followed by Hou Yu-ih of the Kuomintang (KMT) party (33.5%), which favours closer ties with Beijing. The election results have irked Chinese officials, who have seen Taiwan as a breakaway province ever since Chinese communists took power in China in 1949.

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In parallel to a drop in outward FDI investments to China, Taiwanese FDI to 18 other countries reached $5.2bn, according to the US Department of State. Taipei authorities are currently looking to strengthen ties with Western countries and businesses and build supply chains elsewhere.