Taiwan's collapsing output has highlighted its vulnerability to outside events. If Asia is the world's factory, then Taiwan is the factory's factory, producing the chips and flat screens that go into the branded products no longer being sold by Chinese, South Korean and Japanese manufacturers.

There is a glimmer of hope. Taiwan's integration into China's manufacturing process cuts both ways. One reason for the frightening fourth-quarter contraction was plummeting exports to the mainland, which fell by half. Beijing has sought to slow an overheating economy by tightening credit and removing export incentives. Now the authorities have reversed, hosing the economy with funds to stimulate domestic demand.

In the longer term, closer integration with China is likely to benefit Taiwan economically. Ma Ying-jeou, Taiwan's president, has been busily mending relations with Beijing ruptured by his more pro-independence predecessor. If Mr Ma pursues more explicit economic integration – something that need not entail concessions to Beijing on Taipei's de facto independence – it could reap significant economic benefits.