Chinese Premier Wen Jiabao (溫家寶) pledged to US President Barack Obama that China would increase the flexibility of fluctuations in its currency, the official China Central Television (CCTV) reported.
China will push forward yuan reform in an active, gradual and controllable manner, the TV station cited Wen as telling Obama on Saturday in Bali, Indonesia. China is closely monitoring changes in the yuan’s exchange rate, the report said.
Policymakers in the world’s second-largest economy have pledged to adjust the nation’s growth toward domestic demand and narrow its external surplus to help address lopsided flows of trade and investment that contributed to the global financial crisis of 2008. Unbalanced trade flows have triggered calls from the US and other G20 nations for China to allow its currency to trade more flexibly.
PHOTO: EPA
Chinese President Hu Jintao (胡錦濤) told Obama at a Nov. 12 meeting that a large appreciation would not solve US problems. During a trip that began on Nov. 11 in Hawaii, Obama announced steps to expand trade and military cooperation with Asia-Pacific nations that share US concerns over China’s currency and intellectual property policies and territorial claims.
The yuan is allowed to fluctuate 0.5 percent on either side of the daily fixing rate set by the central bank. China’s yuan has appreciated 4.13 percent against the US dollar this year, according to Bloomberg data, the best performance of 10 Asian currencies tracked by Bloomberg.
Obama’s meeting on Saturday with Wen was on the final leg of his Asia-Pacific journey, which also included a stop in Australia.
The non-deliverable forwards market reflected expectations of a depreciation since the end of September, which is the market’s reaction to the yuan’s exchange rate rather than an artificial move, Wen told Obama, according to the report.
The Chinese currency will climb 4.3 percent to 6.08 per US dollar in Shanghai by the end of next year, according to the median estimate of 18 analysts surveyed by Bloomberg.
Separately, a long-term global recession is certain to happen and China must focus on domestic problems, Chinese Vice Premier Wang Qishan (王岐山) said.
“The one thing that we can be certain of, among all the uncertainties, is that the global economic recession caused by the international financial crisis will be chronic,” Wang was quoted by Xinhua news agency as saying on Saturday.
Wang’s comments were the most bearish forecast ever by a top Chinese decisionmaker about the world economy, and Beijing’s worry about a worsening global environment could translate into an impetus for pro-growth policies at home.
China launched a massive fiscal stimulus package with a price tag of 4 trillion yuan (US$650 billion) in late 2008 to avert a big impact from the global financial turmoil.
According to Xinhua, Wang did not speak this time about any major policy change, but reiterated that banks should be more flexible lending to the agricultural sector and small firms.
“As for our country, which relies highly on external demands, we must see the situation clearly and get our own business done,” Xinhua quoted Wang as saying, referring to exports.
China’s central bank, which sometimes has to report to Wang, who is in charge of China’s financial sector, said last week that it was ready to fine-tune monetary policy if needed.
At a meeting of local government officials and financial executives in Hubei Province, Wang said local financial institutions such as city commercial banks and credit cooperatives should not seek to expand their business beyond their regions.
Wang also urged banks to pay close attention to the international financial situation. Xinhua did not give further details.
IN THE AIR: While most companies said they were committed to North American operations, some added that production and costs would depend on the outcome of a US trade probe Leading local contract electronics makers Wistron Corp (緯創), Quanta Computer Inc (廣達), Inventec Corp (英業達) and Compal Electronics Inc (仁寶) are to maintain their North American expansion plans, despite Washington’s 20 percent tariff on Taiwanese goods. Wistron said it has long maintained a presence in the US, while distributing production across Taiwan, North America, Southeast Asia and Europe. The company is in talks with customers to align capacity with their site preferences, a company official told the Taipei Times by telephone on Friday. The company is still in talks with clients over who would bear the tariff costs, with the outcome pending further
NEGOTIATIONS: Semiconductors play an outsized role in Taiwan’s industrial and economic development and are a major driver of the Taiwan-US trade imbalance With US President Donald Trump threatening to impose tariffs on semiconductors, Taiwan is expected to face a significant challenge, as information and communications technology (ICT) products account for more than 70 percent of its exports to the US, Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) president Lien Hsien-ming (連賢明) said on Friday. Compared with other countries, semiconductors play a disproportionately large role in Taiwan’s industrial and economic development, Lien said. As the sixth-largest contributor to the US trade deficit, Taiwan recorded a US$73.9 billion trade surplus with the US last year — up from US$47.8 billion in 2023 — driven by strong
A proposed 100 percent tariff on chip imports announced by US President Donald Trump could shift more of Taiwan’s semiconductor production overseas, a Taiwan Institute of Economic Research (TIER) researcher said yesterday. Trump’s tariff policy will accelerate the global semiconductor industry’s pace to establish roots in the US, leading to higher supply chain costs and ultimately raising prices of consumer electronics and creating uncertainty for future market demand, Arisa Liu (劉佩真) at the institute’s Taiwan Industry Economics Database said in a telephone interview. Trump’s move signals his intention to "restore the glory of the US semiconductor industry," Liu noted, saying that
AI: Softbank’s stake increases in Nvidia and TSMC reflect Masayoshi Son’s effort to gain a foothold in key nodes of the AI value chain, from chip design to data infrastructure Softbank Group Corp is building up stakes in Nvidia Corp and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the latest reflection of founder Masayoshi Son’s focus on the tools and hardware underpinning artificial intelligence (AI). The Japanese technology investor raised its stake in Nvidia to about US$3 billion by the end of March, up from US$1 billion in the prior quarter, regulatory filings showed. It bought about US$330 million worth of TSMC shares and US$170 million in Oracle Corp, they showed. Softbank’s signature Vision Fund has also monetized almost US$2 billion of public and private assets in the first half of this year,
RSS