However, the question remains: Why must Taiwan pursue a New Southbound Policy? China’s International Pressure Over Taiwan As a regional hegemon, China has used its economic superiority over Taiwan and pushed other countries within the region to abide by the “One-China Principle.”, First is the global importance of Taiwan’s semiconductor manufacturing base, second is the impact on trade and the shipping industry running through the Taiwan Strait and Luzon Strait, and third is China’s own less-than-favorable economic conditions., Now China is using its economic clout to isolate Taiwan. In 2010 Taiwan signed the Economic Co-operation Framework Agreement (ECFA), a deal with China that allowed cross-strait trade to grow., The China-Taiwan relationship that is treading on thin ice, and any upset in this will be a political and economic disaster for the world. Recently, Bloomberg Economics released a model on the financial consequences a Chinese invasion would bring to Taiwan., Surprisingly, Taiwan has China’s dwindling economy to thank, instead of government-led trade diversification efforts, such as Tsai’s flagship New Southbound Policy, or Beijing’s economic, .