One day after minister-designate of economic affairs Yiin Chii-ming (尹啟銘) vowed to lift the 40 percent capital cap on China-bound investment immediately after he takes office next month, an HSBC economist said yesterday that the policy may not affect the local economy at all.
China-bound businesses “won’t increase their investments there even if the capital cap is lifted,” Wang Wanli (王萬里), head of research at HSBC Securities (Taiwan) Co (匯豐證券), told an European Chamber of Commerce Taipei (ECCT) gathering yesterday.
“As a matter of fact, they are already thinking of an exit plan [to leave China] … because of surging production costs there,” he said.
The economist said the local economy is facing two swing factors, one being climbing production costs in China that would further squeeze Taiwanese exporters’ future profit margins.
The other impact would be a ripple effect from deteriorating US and global economic performance.
HSBC said that after a 1 percent drop in GDP growth this year, the local economy would likely take an additional hit from a slowdown in China, which could lead to a decline of 0.8 percent of GDP in Taiwan, Wang said.
A drop of 1 percent in US GDP growth would take away 0.3 percent of GDP from Taiwan and another percentage of GDP growth from China, which would have an additional “ripple” impact on Taiwan of another 0.5 percent of GDP, he said.
The bank has cut its GDP forecast for both the US and Taiwan, but Wang did not provide figures.
The economist also said that the New Taiwan dollar had substantial room to appreciate if the central bank allowed it.
He said that Taiwan has enjoyed robust export growth over the past two years amid deteriorating terms of trade and national incomes because of a relatively weak currency compared with other Asian markets.
“The world has enjoyed Taiwanese products at better prices in the past,” Wang said.
Despite a more than 10 percent appreciation against the US greenback recently, the NT dollar “needs to strengthen further to match some 30 percent to 40 percent gain by other Asian currencies and a huge flow of capital will enter [Taiwan],” Wang said.
As a stronger NT dollar could hurt the high-tech sector, which accounts for about 60 percent of the nation’s exports, Wang said high-tech companies will have to find ways to mitigate their foreign exchange losses.
Another speaker, Wang Lee-rong (王儷容), director of the Chung-Hua Institution for Economic Research’s (CIER, 中經院) Center for Economic Forecasting, was more optimistic about future performance in Taiwan and China.
She said the biggest challenge to the nation’s economy was inflationary pressures triggered by the local currency’s gains.
The best solution, she said, would be to give a salary raise to civil servants, with private companies likely to follow suit, she said.
Chizuko Kimura has become the first female sushi chef in the world to win a Michelin star, fulfilling a promise she made to her dying husband to continue his legacy. The 54-year-old Japanese chef regained the Michelin star her late husband, Shunei Kimura, won three years ago for their Sushi Shunei restaurant in Paris. For Shunei Kimura, the star was a dream come true. However, the joy was short-lived. He died from cancer just three months later in June 2022. He was 65. The following year, the restaurant in the heart of Montmartre lost its star rating. Chizuko Kimura insisted that the new star is still down
While China’s leaders use their economic and political might to fight US President Donald Trump’s trade war “to the end,” its army of social media soldiers are embarking on a more humorous campaign online. Trump’s tariff blitz has seen Washington and Beijing impose eye-watering duties on imports from the other, fanning a standoff between the economic superpowers that has sparked global recession fears and sent markets into a tailspin. Trump says his policy is a response to years of being “ripped off” by other countries and aims to bring manufacturing to the US, forcing companies to employ US workers. However, China’s online warriors
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) listed the challenges of ensuring export control compliance by its customers, months after the company’s artificial intelligence (AI) silicon was found to have flowed to US-sanctioned Huawei Technologies Co (華為) via intermediaries. “TSMC’s role in the semiconductor supply chain inherently limits its visibility and information available to it regarding the downstream use or user of final products that incorporate semiconductors manufactured by it,” the Hsinchu-based company said in its latest annual report released on Friday. The world’s largest contract chipmaker said the constraint impedes its ability to prevent unintended end-uses of its semiconductors, as well
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) expects steady growth this year despite global economic uncertainty due to continued momentum from tech trends such as 5G, artificial intelligence (AI) and high-performance computing (HPC) applications. In the company’s annual shareholders’ report released on Thursday, TSMC chairman and CEO C.C. Wei (魏哲家) said the company is well-positioned to meet market demand with its differentiated technology platforms. The company’s 2-nanometer process is on track for volume production in the second half of this year, while its next-generation nanosheet-based A16 process, aimed at HPC applications, is scheduled for mass production late next year, Wei said. Advanced technologies —