Concern is growing among China-based Taiwanese enterprises that new measures curbing credit to cool the high-flying Chinese economy will retard new investment projects there, industry leaders said yesterday.
Beijing hopes the measures will contain growth by preventing lenders offering excessive credit to key sectors including machinery, building materials, petrochemicals, light industry, textiles, pharmaceuticals and printing.
"I guess the effect [of China's squeeze on home loans] should be felt to a certain extent," said Earl Ho (侯貞雄), chairman of the Chinese National Federation of Industries (工總), which represents some 90,000 Taiwanese companies.
"It's hard to gauge how big the impact will be as those measures just took effect. We're monitoring developments closely now," he said.
The association is undertaking a survey on the impact of the changes, he added.
Chia Hsin Cement Corp (嘉新水泥), which is affected by the change in policy, said it is seeking some US$40 million -- half of the total US$80 million needed for a new plant -- in bank loans from multinational lenders in response to Beijing's clamp on credit growth, company spokesman Wei Yun-sun (魏雲孫) said.
"It is more efficient to borrow from foreign financial institutions," Wei said.
The Taiwanese cement supplier has already secured half of the necessary capital for a new factory in Jiangsu through its Hong Kong unit, Chia Hsin Cement Greater China Holding Corp (嘉新水泥中國控股), Wei said.
Compared to more directly affected industries such as steel and cement, Taiwanese high-tech companies were unlikely to suffer greatly, said Luo Huai-jia (羅懷家), executive director of the Taiwan Electrical and Electronic Manufacturers' Association (電電公會).
The association will keep a close eye on Beijing's direction, Luo said.
"What concerns us most now is whether Beijing will heighten credit control by restricting bank loans using machinery and letters of credit as collateral, which is a common way for Taiwanese exporters to get financial support from Chinese lenders," Luo said.
Some Taiwanese companies choose to borrow from offshore branches of local lenders, but this only accounts for a small portion of tech companies, he added.
"I'm quite optimistic. I don't think China's curbs will affect new investment by [Taiwanese] companies as long as there is demand," said Paul Hsu (許博惟), an analyst with Insight Pacific Investment Research (月涵投顧).
Demand for steel, for example, could fall, but Hsu said that the Chinese government would be unlikely to inhibit the construction of infrastructure in the hinterland.
However, Hsu said Beijing's move to slow down land requisition for industrial use could pose a threat to Taiwanese companies.
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