While trade tensions between Washington and Beijing would dampen economic and trade growth across the globe, the greatest threat to Taiwan next year could be contagion risk from a financial crisis originating from China, Taiwan Research Institute (TRI, 台灣綜合研究院) founder Liu Tai-ying (劉泰英) said yesterday.
As a nation with an immense trade surplus, China should be flush with liquidity, but the opposite is true amid signs of a growing credit crunch as Beijing imposes increasingly stringent capital controls on overseas withdrawals, Liu told a forum in Taipei.
Default risks are expected to loom larger as the trade tensions add pressure on businesses and lead to a financial crisis in China, he said.
The Chinese Communist Party does not make a distinction between state coffers and funds held by state-run banks, Liu said, adding that the mentality has led to questionable loans across all levels of government, with many turning into bad debt and leading to the credit crunch.
“This could severely affect Taiwan’s equity and housing markets, and the TAIEX could tumble to as low as 6,000 points,” he added.
“The greatest challenge in China is whether its leaders can navigate the contradiction of opening the country’s economy while holding on to its brand of communist ideology, and the imposition of heavy-handed fiscal and financial controls,” Liu said.
As the trade tensions have dampened external demand and made Taiwanese businesses wary of expansion, the nation’s GDP growth might slow to 2.64 percent this year and 2.34 percent next year, the institute said.
The projected growth rates are not too bad and are within the average range of 2 percent among developed economies, Liu said.
With external demand facing uncertainties stemming from growing protectionism, Taiwan’s export-oriented economy is expected to be tested next year, the institute said.
Domestic investment, in particular the execution of government expenditures — which have been forecast to grow more than 10 percent this year and 20 percent next year, and have outperformed spending since 2011 — would become vital in Taiwan’s economic growth next year, it said.
The institute’s electric prosperity index, which gauges the growth rates of industrial sectors by their energy consumption, has detected waning momentum in electronics manufacturing in the past month, while chemical and materials have maintained robust growth, institute president Wu Tsai-yi (吳再益) said.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the