Taiwanese companies with operations in China are expected to continue moving out of that country, as a US-China trade truce is likely to be short-lived, Taishin Securities Investment Advisory Co (台新投顧) general manager Mason Li (李鎮宇) said yesterday.
A meeting on Saturday between US President Donald Trump and Chinese President Xi Jinping (習近平) on the sidelines of the G20 summit in Osaka, Japan, delivered better results than Taishin’s expectations, Li told a conference in Taipei.
Trump eased a ban on Huawei Technologies Co (華為), allowing US firms to resume selling some components to it under certain conditions, while Beijing agreed to buy more US agricultural products to reduce the US’ trade deficit with China.
While the eased ban on Huawei will likely benefit Taiwanese companies supplying 5G components, such as the power amplifier industry, Trump’s decision to keep tariffs on US$200 billion of Chinese goods was not so pleasing for investors, even though the US leader said that he would not impose new tariffs on US$300 billion of Chinese imports, Li said.
“The fact that the existing tariffs were not canceled and Huawei was not removed from the Washington’s entity list indicated that there would still be uncertainty surrounding the development of the trade war during further rounds of negotiations,” Li said.
“Although many investors interpreted the ceasefire as a signal that the world’s two largest economies are to end their disputes soon, this will not be the case, as neither Trump nor Xi made any compromise during their meeting,” he said.
The two countries still have a long way to go before finding common ground, Li said.
That Trump held a post-meeting news conference in Japan alone instead of appearing alongside Xi also sent a message, he said.
As the existing tariffs remain unchanged and tensions are not likely to ease soon, Taiwanese firms are likely continue moving their production base from China, either to Taiwan or Southeast Asia, Li said.
With more foreign companies moving to Vietnam, firms operating there have seen rents and labor costs rise, Chan Vu International Co (振羽) general manager Andy Chiu (邱臣遠) told reporters on the sidelines of the conference.
However, Vietnam continues to be one of the safest options for businesses that want to avoid US tariffs, Chiu said.
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