China’s central bank said it is too early to relax monetary policy, countering speculation it may cut the amount of cash the nation’s lenders must set aside as reserves.
“Domestic inflation expectations remain strong and the foundation for stabilizing prices is not solid,” the People’s Bank of China (PBOC) said in a statement on its Web site yesterday.
“Prices could rebound” if the bank’s prudent monetary policy stance is “relaxed,” it said.
Inflation accelerated to a three-year high of 6.4 percent in June driven by a 14.4 percent surge in food costs. Speculation the PBOC would reduce the reserve requirement from record levels spurred a surge of as much as 2 percent in a gauge of financial shares listed in China on July 29.
The fundamentals of economic growth are “still good,” the central bank said in the statement posted on its Web site after internal meetings to discuss its tasks for the second half. Stabilizing prices will be a priority, it said.
The central bank will “continue to implement prudent monetary policy with the necessary intensity,” according to the statement.
China has raised interest rates five times and increased the reserve requirement for banks nine times since starting in the third quarter to curb lending and rein in gains in prices. The adjustments to reserve ratios, which force banks to keep more of their deposits at the central bank, have withdrawn 3.3 trillion yuan (US$512.76 billion) of cash from the banking system, according to Barclays Capital Asia Ltd.
The central bank also said yesterday that China would allow market demand and supply, and the basket of currencies against which the yuan is measured, to play a bigger role in determining the currency’s exchange rate.
The PBOC reiterated that the government would improve the yuan’s exchange rate mechanism, without giving more details.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is