Despite the ripple effect on Taiwanese businesses, local academics and industry leaders have applauded China's belt-tightening measures announced earlier this year.
They pointed out, however, the risks facing China and warned Taiwanese companies to watch out for the impact of a potential increase in interest rates in the near future, driven by China's soaring consumer price index (CPI).
"I greatly applaud China's preventive steps to rein in its runway economy before an economic bubble materializes," said Chen Lee-in (
The step to suspend the establishment of new development zones could help farmers to keep lands for farming and thus have more stable economies, Chen said.
This is widely expected to moderate the rural problems that have been a headache to Beijing for decades, she added.
Tsai Horng-ming (
The measures are expected to cause industrial restructuring by eliminating ill and outmoded businesses, which are beneficial to competitive Taiwanese companies in the long run, he said.
In late April Chinese Premier Wen Jiabao (
China should carefully segment and identify overproducing industries when implementing belt-tightening measures, Chen said.
For example, parts of the aluminum industry still enjoy a gross margin as high as 9 percent, which indicates no overproduction and thus should not be added to the curb list, she added.
Echoing Chen, Tsai said that as unemployment could amount to 228 million people, Beijing should keep a fine balance in undertaking such artificial controls of the economy.
"If China's annual growth rate falls below 8 percent or 9 percent, then unemployment and bad loans problems could deteriorate and cause social instability," he added.
An increasingly likely rise in interest rates in China could more bad news for China-based Taiwanese companies, experts said.
Zhou Xiaochuan (
China's CPI growth rate last month reached 4.4 percent from a year ago, according to the figures released by National Bureau of Statistics of China earlier this month.
"Taiwanese companies should watch out for their receivables from their Chinese counterparts if the interest rate increases," Tsai warned.
Considering the administrative curbs and worsening power shortages in China -- which may last for the next year or two -- Taiwanese companies could put off their plans to set up plants in China in the near future, said Luo Huai-jia (
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by