A rise in the yuan would be a disaster for labor-intensive Chinese exporters, a semi-official trade group said yesterday, as frictions grow with the US and other Western powers over Beijing’s stable currency policy.
The China Council for the Promotion of International Trade was checking with more than 1,000 exporters in 12 industries on whether they could cope with a stronger exchange rate, Zhang Wei (張偉), vice-chairman of the association, said.
Exporters in labor-intensive sectors such as garments and furniture worked on margins as small as 3 percent, he said.
“If the yuan rises, these companies will face the immediate risk of going bust as their profit margin is already very narrow,” Zhang told a news conference. “So for these companies, the consequences would be disastrous.”
China is under growing pressure from Washington to let the yuan appreciate. US lawmakers are threatening to slap duties on Chinese goods unless Beijing abandons its effective peg of 6.83 yuan per dollar instituted in mid-2008 to help its exporters ride out the global financial crisis.
While external pressure on China to push up the yuan is intense, domestic pressure to hold the currency down is even greater, said Zhang, whose members include the country’s biggest exporters.
China’s shipbuilders alone had US$150 billion of orders on hand, so a stronger yuan would result in immediate losses, he said. Only a minority of Chinese firms hedge exchange rate risk.
Exporters of telecommunications equipment and mechanical products would also be particularly vulnerable, he said.
Several branches of government, including the ministries of commerce and industry, conducted similar currency stress tests last month.
A government source familiar with one of the missions to China’s coastal exporting hubs said it came back unconvinced that the advantages of a stronger yuan would outweigh the drawbacks because of the razor-thin margins that Zhang mentioned.
“But having said that, we found that these companies are quite flexible in adapting to new market conditions,” he said.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
BULLY TACTICS: Beijing has continued its incursions into Taiwan’s airspace even as Xi Jinping talked about Taiwan being part of the Chinese family and nation China should stop its coercion of Taiwan and respect mainstream public opinion in Taiwan about sovereignty if its expression of goodwill is genuine, the Ministry of Foreign Affairs (MOFA) said yesterday. Ministry spokesman Jeff Liu (劉永健) made the comment in response to media queries about a meeting between former president Ma Ying-jeou (馬英九) and Chinese President Xi Jinping (習近平) the previous day. Ma voiced support for the so-called “1992 consensus,” while Xi said that although the two sides of the Taiwan Strait have “different systems,” this does not change the fact that they are “part of the same country,” and that “external
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source