FocusTaiwan has the news:
Taiwan's industrial production index fell 3.18 percent to 106.71 in May from the previous year, ending 15 consecutive months of growth, according to data released Wednesday by the Ministry of Economic Affairs.Quarrying and mining -- essentially gravel digging in Taiwan -- and construction are two sectors tightly linked to local patronage networks that are critical supporters of the KMT. If these flows of money and work to that sector continue, it will help the KMT.
...........
In a breakdown of the production in the different sectors, the data showed that manufacturing dropped 2.57 percent year-on-year in May, mining and quarrying increased 4.71 percent, electricity and gas supply dropped 19.32 percent, water supply fell 4.21 percent, and buildings construction rose 2.45 percent.
Meanwhile, ECFA continues to drive massive
The value of export orders dropped 5.9 percent annually and 4.1 percent monthly to US$35.79 billion last month, dragged down mainly by declining orders from China and Hong Kong, the Ministry of Economic Affairs said yesterday.ECFA has had little positive effect. Our trade surplus with China is shrinking and will likely return to ~2007 levels this year. Of course, this is due in part to China's increasing ability to manufacture its own stuff, as the article notes.
The value of orders from China and Hong Kong fell by US$1.17 billion from a year earlier to US$8.98 billion last month, accounting for 52.7 percent of the US$2.22 billion annual drop in overall export orders last month, the ministry said.
UPDATE: A comment below notes:
This is a lot to drop in just a simple comment, but Taiwan will need to reckon with its longtime trade surplus eventually, not seek to achieve it across various trade relationships. Who does a cheap currency truly help? Exporters and the owners of those companies. Who's hurt? Regular households that are not employed by the export sector and being severely underpaid across decades. Taiwan's air, water, land, sweat, and blood have been sold too cheaply abroad for far too long. In the beginning, this was actually useful to develop nascent industries, but today's Taiwan is so far beyond that it is only an addiction that benefits the rich. It's madness that has to end, and if you are looking at China, what's important is that China has been copying the model of Taiwan and Japan before it, but now is being forced to reduce all surpluses and develop the domestic consumer market. Unfortunately, China is being forced to adjust prior to achieving the same level of wealth of Japan and Taiwan, but that's how it is, because the US consumer is out of money and can no longer get a poorly thought-out loan._______________________
Taiwan would do well to prepare for a much appreciated TWD. One bright spot: there's a ton of domestic demand opportunity in infrastructure investment that the government could do, as in that regard, Taiwan's government has been relatively conservative in spending money versus other developed countries.
[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums!
You need to temper this with the fact China itself is, as voiced by some fringe bloggers, in negative growth. So we are simply tied to the anchor that is China. Zerohedge is your friend in these matters, I think you've referenced it before.
ReplyDeleteAlas, I do not trust any China growth numbers.
ReplyDeleteThis is a lot to drop in just a simple comment, but Taiwan will need to reckon with its longtime trade surplus eventually, not seek to achieve it across various trade relationships. Who does a cheap currency truly help? Exporters and the owners of those companies. Who's hurt? Regular households that are not employed by the export sector and being severely underpaid across decades. Taiwan's air, water, land, sweat, and blood have been sold too cheaply abroad for far too long. In the beginning, this was actually useful to develop nascent industries, but today's Taiwan is so far beyond that it is only an addiction that benefits the rich. It's madness that has to end, and if you are looking at China, what's important is that China has been copying the model of Taiwan and Japan before it, but now is being forced to reduce all surpluses and develop the domestic consumer market. Unfortunately, China is being forced to adjust prior to achieving the same level of wealth of Japan and Taiwan, but that's how it is, because the US consumer is out of money and can no longer get a poorly thought-out loan.
ReplyDeleteTaiwan would do well to prepare for a much appreciated TWD. One bright spot: there's a ton of domestic demand opportunity in infrastructure investment that the government could do, as in that regard, Taiwan's government has been relatively conservative in spending money versus other developed countries.
Beautiful comment, and quite true.
ReplyDeleteMichael, your disdain towards ECFA is very understandable. In light of China's slowdown, shouldn't the bigger issue that Taiwan should not have almost 40% of its trade done with China. I'm guessing this significant dependency existed before ECFA. China might continue to grow but at lesser rates than now (the easy growth is gone) and the Chinese are not going to be any wealthier and I fear Taiwan will be tied to this sinking giant if it doesn't start diversifying its trade.
ReplyDeleteCP
One area for growth is renewable energy. Obviously the old guard protects Taipower zealously. Can you see a new regime smiling on it? The big question for it is, can the laws regarding renovation and retrofitting houses be changed to allow for existing homeowners to deploy solar or wind components on pre-existing structures? You have spoken before on this, but I forget exactly what you thought.
ReplyDeletelies are too many and too deep in taiwan business culture, which respects cheating and despises honesty. how can economy be sustained in such culture? Which private companies are not using pirate softwares?
ReplyDelete