China may have won only a short breathing space in its testy trade relations with the US after enacting a small but highly symbolic revaluation of its currency.
The yuan's move from a fixed peg against the US dollar to a "managed float" against a basket of unspecified currencies carries more political than economic weight, analysts said.
In itself, experts argue, it is unlikely to make a serious dent in the yawning US trade deficit with China, which in May hit nearly US$16 billion. And US pressure on other trade fronts has not disappeared.
Gary Hufbauer, senior fellow at the Institute for International Economics, noted that Congress will shortly break for its August recess and then will be consumed by hearings for a new Supreme Court judge, among other domestic issues.
"There's only a certain capacity for Washington to focus on [more than] one thing at a time. But I would be surprised if the China issue does not resurface later in the fall," he said.
"Other trade issues haven't gone away: We still have intellectual property rights [IPR] and textile imports. And most congressmen say this wasn't enough on the currency front, anyway," Hufbauer said.
China announced on Thursday that the yuan was being revalued at 8.11 to the dollar, compared with 8.28, a 2.1 percent revaluation.
The currency will be allowed to trade 0.3 percent either side of a daily fixed rate, and fluctuate in a managed float against a basket of trade-weighted currencies.
While welcoming the revaluation, Treasury Secretary John Snow said the United States would "monitor" China's new currency system.
US Manufacturers Alliance President Thomas Duesterberg said the yuan's "true value" is another 25 percent to 40 percent higher against the dollar.
"The appreciation of the yuan is a significant first step in addressing China's global trade imbalance, but it is so small that it will have little impact on the trade deficit with the United States," he said.
Economists are in no doubt that China will loosen the peg further in due course. Morgan Stanley chief economist Stephen Roach said the revaluation was "unambiguously positive" for the global economy.
He said it was good for China, as by moderately curbing export growth, it provides "the cushion to engineer a soft landing in the Chinese economy."
"It derails Washington's protectionists and the serious threat they posed to geopolitical stability," Roach added.
Such "protectionists" would include New York Democratic Senator Charles Schumer, who last month shelved a bill to slap heavy tariffs on Chinese imports.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts