• Paradox of Prosperity: Between 2024 and 2026, Taiwan presents an economic paradox. While macro indicators are strong (GDP growth predicted to peak at 7.37% in 2025; PPP per capita exceeding $85,000) due to the AI and HPC boom, this wealth is not evenly distributed.
• Double Decoupling: Taiwan is experiencing a "double decoupling":
    1. The high-tech sector has decoupled from the global manufacturing recession, soaring on AI demand.
    2. Traditional industries and the service sector have decoupled from this high-tech boom, stagnating due to China's slowdown and domestic inflation.
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Chapter 1: Macroeconomic Paradox: Data Prosperity vs. Perceived Stagnation
• Statistical Outlier: While the EU, China, and US face slowdowns or soft landings, Taiwan is an outlier with rapid growth. This is driven almost entirely by its monopoly in the global AI supply chain (semiconductors and servers).
• Fallacy of Averages: The public feels "perceived poverty" because GDP growth is skewed by capital-intensive tech sectors. The "average" is pulled up by high-tech profits, while the median stagnates.
• Sector Disconnect: Export growth (driven by ICT) masks weak domestic consumption power. High salaries are concentrated in the tech sector, leaving service and traditional manufacturing wages behind.
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Chapter 2: Anatomy of the K-Shaped Economy
• Top of the "K" (Ascending): Semiconductors, IC design, and AI servers. This sector has decoupled from the business cycle and linked to the AI super-cycle. High wages and capital concentration are prevalent here. The US has surpassed China as Taiwan's largest export destination.
• Bottom of the "K" (Descending): Petrochemicals, steel, machinery, and textiles. These industries face a "China Shock 2.0"—suffering from China's economic slowdown, overcapacity dumping ("involution"), and the end of ECFA tariff benefits.
• Two-Speed Economy: A structural imbalance exists where high-tech creates GDP but limited jobs, while the labor-intensive traditional sectors face recession.
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Chapter 3: Taiwan and the Global Economy: Decoupling, Re-coupling, and Geopolitics
• Cyclical Decoupling: Taiwan "decoupled" from global mediocrity solely by betting on the right track: AI. The economy is now tied to Silicon Valley capital expenditure cycles rather than general global consumption.
• Structural Decoupling from China: Investment in China has collapsed from 83.8% (2010) to 2.7% (2025). Supply chains are reshuffling away from China.
• "Small Yard, High Fence": US restrictions on China have solidified Taiwan's role in the "Democratic Supply Chain," benefiting tech but exposing traditional industries to risks in the Chinese market.
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Chapter 4: The Dilemma of the Service Sector: Low Wage Trap
• Baumol's Cost Disease: The service sector employs 60% of the workforce but suffers from low productivity growth compared to manufacturing, leading to stagnant wages.
• Labor Paradox: There is a severe labor shortage (78% of employers report difficulties), yet wages aren't rising significantly. High rents and costs prevent small businesses from raising pay, causing workers to flee to the gig economy or tech sector.
• Migrant Worker Policy: Opening the service sector to migrant workers in 2026 may solve manpower issues but risks anchoring service wages at the minimum level, suppressing natural wage growth.
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Chapter 5: Roots of Perceived Poverty: Inflation and "Taiwanese Disease"
• "Bento Index" vs. CPI: Official CPI is low because tech goods get cheaper, but food and rent ("Bento Index") are skyrocketing. This creates a high "pain index" for daily life.
• Taiwanese Disease: A variant of "Dutch Disease." The central bank keeps the currency relatively undervalued to support exports. The side effect is "imported inflation" (high costs for energy/food) and diminished purchasing power for regular citizens compared to the country's GDP wealth.
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Chapter 6: Cruelty of the Asset Economy: Housing as the Great Divider
• Suffocating Housing Costs: Taipei's price-to-income ratio exceeds 16x, and the mortgage burden rate is over 70%. Housing is the primary driver of wealth inequality.
• Policy Backfire: The "New Youth" mortgage policy (40-year terms, grace periods) intended to help buyers actually fueled price hikes by lowering entry barriers, forcing young people into lifelong debt.
• Rent Crisis: Rent subsidies are largely absorbed by landlords raising prices, hitting the non-asset-owning class twice.
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Chapter 7: The Truth of Wealth Distribution: The 66.9x Gap
• 30-Year Reveal: New government data reveals the wealth gap between the top 20% and bottom 20% has widened from 16.8 times (1991) to 66.9 times (2024).
• Asset-Driven Inequality: The gap is driven by assets (stocks and real estate), not just wages. The top 20% enjoyed the tech stock boom and property inflation, while the bottom 20% missed out. Taiwan's Gini coefficient for wealth is a high 0.606.
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Chapter 8: Conclusion and Outlook
• Summary: The feeling of "decoupling" is real. Taiwan is split into two worlds: a "High-tech/Asset-rich Wealthy Island" and a "Traditional/Service/Asset-poor Stagnant Island".
• Future Challenge: The government must shift focus from GDP numbers to "tangible redistribution." This requires breaking the low-wage equilibrium in services, enforcing housing justice beyond subsidies, and helping traditional industries transform or exit the China-dependent model.

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