Edmund Phelps, winner of the 2006 Nobel Prize in Economics, yesterday said the Chinese economy will grow more independent from the West over the next 10 years, driven by enterprise innovations and domestic consumption.
“China is surely moving toward less export-dependent and [is becoming] more dependent on domestic investment activities,” he told a Taipei forum titled “A vision of possible developments in the global economy.”
By then, its economic prowess — in terms of unemployment rate and workers’ productivity — will mirror the US in its best days, he said.
The Columbia University academic also pointed out that China will not fail in efforts to step up domestic innovations — a pivotal element he said US enterprises have been lacking, and that this will propel its investment activities to a greater height.
One of the reasons was rising Asian currencies against the greenback because of the sluggish US economy, which has seen enterprises investing less in commercial activities and productivity slumping in the past decade, Phelps said.
In Phelps’ view, the US is far from seeing a full recovery to pre-financial crisis levels, with unemployment hovering between 7 percent and 8 percent as the best case scenario.
This compares with a 4.6 percent US jobless rate during former US president George H.W. Bush’s administration and 5.6 percent in the mid-1990s, he said.
In contrast, Asia, especially China, and other emerging markets like Brazil will catch up with the US in economic growth.
This is because the US is in “the midst of a long structural slump,” obvious from the fact that more investors are shortsighted instead of looking far ahead with their investment portfolios, he added.
The Nobel laureate said US stocks are now closely linked to company quarterly -earnings, which strays from the fact that share prices should reflect investors’ anticipation of a company’s worth over the next five years.
“CEOs are now more concerned with hiding their quarterly earnings targets, rather than thinking about the company’s innovations for the next five years,” the 78-year-old Phelps said.
Phelps last year took up the position of president-dean of the New Huadu Business School at Minjiang University in Fuzhou, China.
He said this position offers him the proximity to study the impact of the Chinese economy.
Phelps yesterday also witnessed the signing of a memorandum of understanding between New Huadu and Taiwan’s National Chengchi University, which co-launched a program to develop entrepreneurship among their students.
A total of 60 students will be selected from both schools and sent for courses in Singapore.
They will be offered employment at New Huadu Industrial Group Co (新華都集團), a conglomerate based in Fujian Province that is engaged in the property, retail, tourism, mining and machinery sectors.
Semiconductor stocks on Friday took a beating after a grim profit warning from Idaho-based Micron Technology Inc sparked fresh worries about the US’ earnings power as the country is potentially heading for a recession. Despite a broader stock market rally, the Philadelphia Stock Exchange Semiconductor Index dropped 3.8 percent after Micron, the largest maker of memory semiconductors in the US, flagged that demand was cooling for chips used in computers and smartphones. The index — which is home to US chip giants Advanced Micro Devices Inc and Nvidia Corp, as well as Micron — is down 38 percent this year. Historically, semiconductor
WHOLLY OWNED SUBSIDIARY: Costco Wholesale said it expected the purchase of the remaining 45 percent stake to add 1 to 1.5 percent to its earnings per share US-based Costco Wholesale Corp on Thursday said that it had purchased the remaining 45 percent stake in Costco President Taiwan Inc (台灣好市多) for US$1.05 billion, making the local company a fully-owned unit. “We estimate that the purchase would add about 1 to 1.5 percent to [our] earnings per share,” Costco said in a statement. Costco President Taiwan was established as a joint venture with Kaohsiung-based President Group (大統集團), which held a 45 percent stake. Since the first Costco store opened in Kaohsiung in 1997, 14 outlets have been set up in Taiwan, company data showed. PROFITABLE Three Costco stores in Taiwan — in Taipei’s Neihu
EXPANSION: The airline will offer two flights per week to Milan from Oct. 25, and four flights per week to Munich from Nov. 3 using its Boeing 777-300ER aircraft EVA Airways Corp (長榮航空) yesterday announced that it would begin nonstop flights from Taoyuan to Milan and Munich later this year, marking its first expansion in the European market in 25 years. Starting on Oct. 25, the airline will operate two flights per week between Taoyuan and Milan, implementing a plan that was scheduled for February 2020, but was suspended due to the COVID-19 pandemic and the consequent lockdowns across the world. The airline will also launch four weekly flights to Munich, Germany, on Nov. 3, it said. The schedules for the two flights will cater to in-transit passengers, as they will arrive
A giant aviation deal from China on Friday underscored how trade tensions between Washington and Beijing can impact individual companies, with Boeing Co left looking on as rival Airbus SE scooped up orders worth at least US$37 billion. China’s top three airlines ordered almost 300 Airbus jets — one of the European plane maker’s biggest ever single-day deals — in the first major acquisitions since COVID-19 pandemic restrictions isolated the world’s second-largest economy. “It is disappointing that geopolitical differences continue to constrain US aircraft exports,” a Boeing spokesperson said, adding that sales to China historically support tens of thousands of US