Dell Inc, the second-biggest maker of personal computers, isn't convinced the Chinese yuan's appreciation, sought by US Secretary of Treasury John Snow at the behest of American manufacturers, would be in its best interests.
"We do US$4 billion in local purchases and we have a major manufacturing facility that serves all of North Asia," said Bill Amelio, president of Dell's Asia-Pacific unit.
For Dell and other US companies that imported US$70 billion worth of Chinese-made components and goods last year, a stronger yuan would mean having to spend more dollars to buy the same products. That undermines the advantage of using China, where labor costs are low, as a base for manufacturing.
China said yesterday it may consider scrapping the yuan's decade-old peg to the dollar in favor of a link to the currencies of its major trade partners, a concession to Snow, who was visiting Beijing. Snow is scheduled to arrive in Phuket, Thailand, today for a meeting of finance ministers from 21 member-nations of the APEC group.
Pressure for China to break its peg with the dollar is coming from companies such as steelmaker Nucor Corp, which say an artificially weak yuan gives Chinese competitors an unfair advantage. Goldman Sachs Group Inc estimates the Chinese yuan, which has been fixed at about 8.3 per US dollar since 1995, is 15 percent undervalued.
Economists aren't convinced that China will allow its currency to strengthen. The weak yuan is propelling exports, which account for about a third of Asia's second-largest economy.
China says it needs economic growth of 7 percent a year to provide jobs for the 20 million people who enter the labor force each year.
The peg has also helped attract US$308 billion in FDI from manu-facturers such as Bridgestone Corp, the world's biggest tire maker, and Infineon Technologies AG, Europe's second-largest semiconductor maker.
A rise in the Chinese currency may not be welcome news for Intel Corp, the world's biggest computer chipmaker, which last month said it planned to invest US$375 million to build a second factory in China.
A stronger yuan may cause economic growth to slow in China, damping demand there for everything from cars and computers to insurance at a time when the economies of Germany and Italy are in recession.
"Anything which reduces China's competitiveness may mean that they have to slow down some of their domestic projects or some of their growth plans," said Derek Williams, Oracle Corp's executive vice president for Asia-Pacific. "That could have a knock-on effect."
The yuan appreciation sought by the US, Japan and others may slow economic growth in China, hurting South Korean exports, a Korean official said.
"When it comes to the yuan, if it appreciates it has many implications for the Korean economy," South Korean Deputy Finance Minister Kwon Tae Shin told reporters in Phuket, Thailand, where he is attending an APEC meeting. "If the Chinese economy becomes sluggish and their demand for Korean exports falls then it also has an effect."
Investment is another reason Asian finance ministers meeting in Phuket this week may want China to keep its currency system.
Asian companies, which once fretted about competition from Chinese goods, are now setting up factories there to take advantage of lower manufacturing costs and a growing domestic market.
"Customers want us to be in China," said Daniel Yeong, the managing director of Singapore-based GES International Ltd, which makes electronic cash registers for customers such as NCR Corp and opened a factory in Shanghai in July. "They always have this perception that as long as it's built in China, costs will be low."
DISCONTENT: The CCP finds positive content about the lives of the Chinese living in Taiwan threatening, as such video could upset people in China, an expert said Chinese spouses of Taiwanese who make videos about their lives in Taiwan have been facing online threats from people in China, a source said yesterday. Some young Chinese spouses of Taiwanese make videos about their lives in Taiwan, often speaking favorably about their living conditions in the nation compared with those in China, the source said. However, the videos have caught the attention of Chinese officials, causing the spouses to come under attack by Beijing’s cyberarmy, they said. “People have been messing with the YouTube channels of these Chinese spouses and have been harassing their family members back in China,”
The Central Weather Administration (CWA) yesterday said there are four weather systems in the western Pacific, with one likely to strengthen into a tropical storm and pose a threat to Taiwan. The nascent tropical storm would be named Usagi and would be the fourth storm in the western Pacific at the moment, along with Typhoon Yinxing and tropical storms Toraji and Manyi, the CWA said. It would be the first time that four tropical cyclones exist simultaneously in November, it added. Records from the meteorology agency showed that three tropical cyclones existed concurrently in January in 1968, 1991 and 1992.
GEOPOLITICAL CONCERNS: Foreign companies such as Nissan, Volkswagen and Konica Minolta have pulled back their operations in China this year Foreign companies pulled more money from China last quarter, a sign that some investors are still pessimistic even as Beijing rolls out stimulus measures aimed at stabilizing growth. China’s direct investment liabilities in its balance of payments dropped US$8.1 billion in the third quarter, data released by the Chinese State Administration of Foreign Exchange showed on Friday. The gauge, which measures foreign direct investment (FDI) in China, was down almost US$13 billion for the first nine months of the year. Foreign investment into China has slumped in the past three years after hitting a record in 2021, a casualty of geopolitical tensions,
‘SOMETHING SPECIAL’: Donald Trump vowed to reward his supporters, while President William Lai said he was confident the Taiwan-US partnership would continue Donald Trump was elected the 47th president of the US early yesterday morning, an extraordinary comeback for a former president who was convicted of felony charges and survived two assassination attempts. With a win in Wisconsin, Trump cleared the 270 electoral votes needed to clinch the presidency. As of press time last night, The Associated Press had Trump on 277 electoral college votes to 224 for US Vice President Kamala Harris, the Democratic Party’s nominee, with Alaska, Arizona, Maine, Michigan and Nevada yet to finalize results. He had 71,289,216 votes nationwide, or 51 percent, while Harris had 66,360,324 (47.5 percent). “We’ve been through so
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