Taiwan possesses a dynamic capitalist economy, with government guidance of investment and foreign trade slowly decreasing. Exports of electronics, machinery and petrochemicals have been the primary driver of economic development. This reliance on exports, though, can mean that the economy is open to fluctuations when world demand alters.
The island currently runs a large overall trade surplus due to its links with China, and its foreign reserves are currently the sixth largest in the world. Since 2009, Taiwan has gradually loosened rules governing Chinese investment on the island, and has secured greater market access for investors on the mainland.
Major long-term challenges for the Taiwanese economy include the low fertility rate (just over one child per woman), diplomatic isolation and a rapidly ageing population (over 65s account for 11.2% of the total population).
Composition of GDP: