Fears of a gradual slowdown in global trade triggered by the US credit crisis, compounded by concerns over an abrupt downturn in China after the Olympics, have recently caused most Asian economies to worry that export demand will dwindle in the second half of the year.
The latest reports of a sudden contraction in economic growth quarter-on-quarter for Japan, Singapore and Hong Kong, as well as slowing growth in Taiwan, India, Malaysia, Thailand and the Philippines, indicate that the slowdown is spreading across Asia.
What has especially come to haunt policymakers in this region are fears that lackluster domestic demand will fail to buffer weakening external trade in the months ahead.
It is under these circumstances that the governments of several Asian economies have recently introduced, or are considering, economic stimulus packages to help their people and businesses cope with the anticipated slowdown.
On Friday, the Japanese government unveiled an ¥11.7 trillion (US$107.03 billion) stimulus package, following similar developments in Singapore, Hong Kong and Thailand. Taiwan is considering a similar package after the index of leading indicators last month dropped to its lowest level this year, among signals of a further slowdown.
Japan’s package includes extra government spending, loan guarantees to small and medium-sized enterprises, tax cuts for low-income earners and people with housing loans, as well as discounts on expressway tolls. Its main goal is to lessen people’s financial burdens and strengthen consumer purchasing power as well as help domestic sectors affected by rising oil prices.
The details of Taiwan’s stimulus program are yet to be revealed. But based on information gathered from several government agencies, the planned program would mostly focus on how to boost domestic investment with tax holidays for the manufacturing industry, more housing and construction loans from banks and more foreign investment.
Taiwan’s stimulus package is not likely to succeed in boosting the economy and solving social problems in the short term, however.
Take the proposed measure to increase the housing loan ceiling extended by banks. This could only be wishful thinking on the part of the government to boost the real estate sector, because banks at this point are not likely to extend much credit after becoming bearish on the domestic housing market.
Last week, consumer confidence data for the housing sector showed that potential buyers are adopting a wait-and-see attitude. Even if buyers decide to cut a deal and take out a loan, banks will launch stricter checks on applicants and probably grant smaller loans than applicants expect in a bid to avoid loan defaults. Moreover, this measure will favor potential buyers, not those who already have housing loans.
Japan’s proposed tax cuts for people with housing loans, on the other hand, will reduce the credit problems financial institutions are facing while simultaneously safeguarding borrowers.
The implementation of the government’s domestic investment-oriented stimulus program is likely to ensure Taiwan’s economy will grow steadily in the long run. Before rolling out its detailed package, however, the government should learn from Japan’s efforts to support household finance, or learn from the US, Singapore and Hong Kong’s tax refund plans to revitalize consumer spending.
Trying to force a partnership between Taiwan Semiconductor Manufacturing Co (TSMC) and Intel Corp would be a wildly complex ordeal. Already, the reported request from the Trump administration for TSMC to take a controlling stake in Intel’s US factories is facing valid questions about feasibility from all sides. Washington would likely not support a foreign company operating Intel’s domestic factories, Reuters reported — just look at how that is going over in the steel sector. Meanwhile, many in Taiwan are concerned about the company being forced to transfer its bleeding-edge tech capabilities and give up its strategic advantage. This is especially
US President Donald Trump’s second administration has gotten off to a fast start with a blizzard of initiatives focused on domestic commitments made during his campaign. His tariff-based approach to re-ordering global trade in a manner more favorable to the United States appears to be in its infancy, but the significant scale and scope are undeniable. That said, while China looms largest on the list of national security challenges, to date we have heard little from the administration, bar the 10 percent tariffs directed at China, on specific priorities vis-a-vis China. The Congressional hearings for President Trump’s cabinet have, so far,
For years, the use of insecure smart home appliances and other Internet-connected devices has resulted in personal data leaks. Many smart devices require users’ location, contact details or access to cameras and microphones to set up, which expose people’s personal information, but are unnecessary to use the product. As a result, data breaches and security incidents continue to emerge worldwide through smartphone apps, smart speakers, TVs, air fryers and robot vacuums. Last week, another major data breach was added to the list: Mars Hydro, a Chinese company that makes Internet of Things (IoT) devices such as LED grow lights and the
The US Department of State has removed the phrase “we do not support Taiwan independence” in its updated Taiwan-US relations fact sheet, which instead iterates that “we expect cross-strait differences to be resolved by peaceful means, free from coercion, in a manner acceptable to the people on both sides of the Strait.” This shows a tougher stance rejecting China’s false claims of sovereignty over Taiwan. Since switching formal diplomatic recognition from the Republic of China to the People’s Republic of China in 1979, the US government has continually indicated that it “does not support Taiwan independence.” The phrase was removed in 2022
RSS