China's pulling on the reins of its fast expanding economy may not affect the nation's export performance in the second quarter but its long-term effect is yet to be determined, a Ministry of Finance official said yesterday.
"China's clampdown measures could affect the nation's exports ? but the influence may not appear as soon as in the second quarter," said Hsu Kuo-chung (
Hsu's comments came after the ministry reported the nation's exports increased 22.8 percent from a year earlier to US$14.07 billion, the second-highest level on record, due to increased overseas sales of electronic products, optical instruments, machinery and steel.
A record high for exports was set in March, when overseas sales totaled US$14.78 billion. Imports last month jumped 25.7 percent from a year ago to US$13.11 billion on surging demands for electronic components, steel, machinery and precision instruments, according to the ministry.
Concerns over China's plans to rein in its overheating economy have fueled worries over Taiwan's trade activity since China is its largest overseas market.
But Hsu said the government is still confident the nation will see a 20 percent rise in exports and a 23 percent increase in imports in the second quarter.
The long-term impact of Bei-jing's effort is yet to be determined and would depend on how long any limitations would last, he said.
"If China's economy sees a soft landing, an estimated 10 percent growth in this year's exports [for Taiwan] could remain intact."
In addition to concerns about the Chinese economy, the recent rise in world oil prices, a potential rise in US interest rates and the unstable situation in Iraq could all impact the global economic rebound and therefore, Taiwan's economy, Hsu said.
In an effort to direct investment to its strategic growth sectors such as coal, electricity, petroleum and other infrastructure, China is expected to adopt more stringent credit controls on sectors that are considered overly invested, such as iron and steel, aluminum, cement, real estate and automobiles.
Such moves therefore are likely to dent Taiwan's export growth rate to 7 percent this year, 3 percent less than the government's forecast, JP Morgan Chase Bank said in a research note released yesterday.
"The full-year forecast for Taiwan's export growth could be reduced by as much as 3 percent -- from 10 percent to 7 percent -- al though this would still be higher than the average 6.3 percent
increase achieved in the last five years," said Lian Chia-liang (連家良), JP Morgan's economist in Singapore, in the note.
"As long as the cycling upturns in industrial countries remain on track, the direct, first round impact on Taiwan's trade activity may not be as substantial as widely feared," Lian said.
Hong Kong and China remain Taiwan's largest export markets, accounting for 37.4 percent of exports, or US$5.26 billion, last month, the ministry said.
The Board of Foreign Trade forecast that exports would reach US$150 billion this year and imports total US$140 billion, supported by overseas and domestic economic prosperity.
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