TAIPEI (Taiwan News) — Taiwan’s financial institutions have cut their exposure to China by more than 20% year-on-year, reaching a historic low amid rising geopolitical tensions and China’s slowing economy.

As of June, total China exposure across Taiwan’s three major financial sectors stood at NT$807.95 billion (US$27.13 billion), down NT$212.72 billion, or 20.84%, from a year earlier, according to Financial Supervisory Commission data, per CNA. The decline reflects a broader shift toward risk aversion as institutions reassess their China strategies.

The banking sector accounted for the largest portion, with NT$749.38 billion in holdings — a 19.95% year-on-year decrease, per UDN. The sector’s China exposure-to-net-worth ratio dropped to a new low of 15.2%. FSC Banking Bureau Chief Secretary Chang Chia-kuei (張嘉魁) attributed the decline to China’s weakening economic momentum and growing risks in its real estate sector.

Taiwan’s credit exposure to China fell by NT$122.3 billion, interbank lending dropped NT$32.66 billion, and investment positions were reduced by NT$31.82 billion. CTBC Bank remained the most exposed domestic lender at NT$173.8 billion, followed by Taipei Fubon Bank, Taishin Bank, and Bank SinoPac.

Insurance firms also continued pulling back, with exposure to Chinese securities falling nearly 30% year-on-year to NT$49.9 billion — all held by life insurers. While unchanged from May, this now accounts for just 0.15% of the sector’s available funds, according to FSC Insurance Bureau Deputy Director-General Tsai Huo-yen (蔡火炎).

The securities and investment trust sector reported NT$8.67 billion in China exposure, down nearly 39% from last year. The FSC cited a sharp drop in proprietary investments by securities firms, driven by concerns over US tariffs and volatile interest rate trends.