ISSUE 313                                                                                            September  22, 2025
U.S. Raises “Taiwan Status Undetermined” Narrative
to Stack Leverage Against China
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The American Institute in Taiwan’s (AIT) narrative that Taiwan’s political status remains undetermined has sparked controversy, with the ruling Democratic Progressive Party (DPP) echoing the view. The debate over whether to abolish Retrocession Day has become a focal point.
Featured Editorial

“Taiwan Status Undetermined” Narrative Could Trigger Cross-Strait Crisis

 

The American Institute in Taiwan (AIT) suddenly raised the claim that “Taiwan’s final political status remains undetermined.” The Ministry of Foreign Affairs promptly expressed “thanks,” while Secretary-General Hsu Kuo-yung of the Democratic Progressive Party (DPP) went further, declaring that there is “no Taiwan Retrocession Day,” saying that “at that time, Taiwanese were still Japanese.” A DPP spokesman later affirmed that Mr. Hsu’s statement reflects the ruling party’s position. AIT’s revival of the Cold War-era “Taiwan undetermined status” theory appears aimed at countering Beijing’s assertion that “Taiwan belongs to China,” but at the same time it downplays the legitimacy of the postwar restoration of Taiwan to the Republic of China, triggering fierce controversy within Taiwan.
Featured Opinion
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Following the mass recall, President Lai Ching-te’s cabinet reshuffle shows no signs of introspection. Controversial remarks by DPP Secretary-General Hsu Kuo-yung has further depend social divisions.

After Month-Long “Recovery,” DPP’s Combative Nature Re-merges

 

President Lai Ching-te recently carried out a sweeping reshuffle of presidential office, cabinet, and party personnel in response to the political setback of the mass recall vote. Given the combative nature of the newly appointed Secretary-General Hsu Kuo-yung of the Democratic Progressive Party (DPP), few expected his role would help foster cross-party harmony. As expected, it did not take long before he sparked controversy with remarks such as “Taiwan’s status is undetermined” and “there is no Taiwan Retrocession Day,” tearing apart the façade of “lying low and recuperating.”
Featured Editorial
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Taiwan’s exports and per capita gross domestic product (GDP) have both surpassed South Korea’s, but the growth is largely driven by semiconductors, with most industries and workers feeling little impact.

Behind the Numbers: Taiwan’s GDP Surpasses South Korea’s After 22 Years

 

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.
This Week in Taiwan
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Under financial pressure, the Taiwan Power Company raised electricity rates, affecting over 10 million households. With reserve capacity critically low, the Taiwan Semiconductor Manufacturing Company (TSMC) is forced to frequently reduce usage.

September 13:

According to the latest official estimates from South Korea and Taiwan, South Korea's per capita gross domestic product (GDP) this year is approximately $37,430, trailing behind Taiwan's $38,066. This marks a reversal after 22 years. Originally, market expectations suggested that Taiwan might overtake South Korea as early as next year, but due to its weak economic performance, the reversal occurred a year earlier than expected.

 

September 15:

The American Institute in Taiwan (AIT) stated that documents such as the Cairo Declaration, Potsdam Declaration, and the Treaty of San Francisco did not determine Taiwan's final political status, sparking controversy. The U.S. Department of State responded to Taiwan media, affirming that the AIT had accurately conveyed the message. The administration of President Lai Ching-te expressed gratitude, while newly appointed Secretary-General Hsu Kuo-yung of the Democratic Progressive Party (DPP) added that Taiwan does not have a "Retrocession Day." Mainland China's Ministry of Foreign Affairs issued a strong protest.

 

September 16:

A surge of hot money has recently flowed into Taiwan's stock market, driving up share prices and causing the New Taiwan Dollar to appreciate sharply, by 2 percent in just two weeks. Media reports indicate that some funds entered the market not for their declared investment purposes, but to speculate on exchange rate differences. The Central Bank has issued a warning, urging investors to adhere to declared investment purposes to prevent excessive appreciation of the NT dollar and block short-term arbitrage from disrupting the foreign exchange market.

 

September 17:

The Taiwan Semiconductor Manufacturing Company (TSMC) has hit the brakes on its second advanced packaging facility in Chiayi. Equipment suppliers were notified that shipments would be redirected to its Arizona plant, suggesting that TSMC may significantly scale back its advanced packaging investment in Taiwan and shift resources to the United States. However, TSMC responded by stating that it remains committed to investing in Taiwan, and that its announced investment plans remain unchanged.

 

September 18:

The U.S.-Taiwan tariff negotiations have not reached a final agreement, and efforts to reduce tariffs are ongoing. Led by Minister of Agriculture Chen Junne-jih, a Taiwan agricultural delegation signed a letter of intent with American industry representatives at Capitol Hill, committing to purchase over $10 billion in agricultural products over four years, an increase of 25 percent compared to previous levels.

 

September 18:

The Central Bank held is third-quarter board meeting and announced that interest rates would remain unchanged for the sixth consecutive time, keeping the rediscount rate at 2 percent. Although it did not follow the Federal Reserve's rate cuts, the Central Bank stated it would maintain a "loose monetary environment" to support traditional industries impacted by tariffs and mainland China's overcapacity. Due to tariff pressures, the Ministry of Labor reported that the number of workers on unpaid leave doubled within half a month, surpassing 7,000, with the manufacturing sector being the hardest hit.

 

September 19:

The Washington Post reported exclusively that President Donald Trump, in pursuit of a trade agreement with China and summit with Chinese President Xi Jinping, refused to approve over $400 million in military aid to Taiwan. In response, the White House issued a statement saying that the aid package for Taiwan has not yet been finalized.

 

September 19:

The Taiwan Power Company is under heavy financial pressure. The electricity price review committee of the Ministry of Economic Affairs approved a slight increase in residential electricity rates across all tiers, with an average hike of 3.1 percent, affecting over 14 million households; industrial rates remain unchanged. Taipower's power generation units have recently experienced consecutive failures, with reserve capacity dropping to as low as 3.8 percent, triggering the first "power supply warning" orange light of the year. TSMC reportedly had to reduce electricity usage and activate emergency generators three times within a week, prompting internal pushback.
Published since 2019 by the Fair Winds Foundation and Association of Foreign Relations, Taiwan Weekly provides in-depth report and analysis of the major issues facing Taiwan.

The conclusions and recommendations of any Taiwan Weekly article are solely those of its author(s) and do not reflect the views of the institutions that publish the newsletter.

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