Roundup of Articles on Taiwan, China and US Economies

This site has forecast that China’s currency will strengthen substantially versus the US dollar and China will re-establish strong economic growth and pass the overall size of the US economy in 2016.

Taiwan is opening its economy to Mainland Chinese investment.

On May 1, China formally approved Taiwan-bound investment by qualified domestic institutional investors. Four days later, it announced a plan to step up development of a cross-strait economic zone in Fujian Province. Taiwanese auto, banking and other companies added to the euphoria by announcing investment tie-up plans with mainland companies.

The response to all this has been a stock market frenzy, especially by foreign institutional investors. JPMorgan Chase announced a target of 8,000 for the Taiex by year-end (the Taiex closed at 6,485 on Wednesday).

Goldman Sachs upgraded Taiwan shares in general to “overweight” this month. “The rapidity and scope of recent cross-strait initiatives,” it said in a note, “are welcome signals that Taiwan may finally reap the economic benefits from a warmer relationship with China.”

Kevin Yang, chief investment officer at Paradigm Asset Management, added that for now, Beijing was capping Taiwan-bound investment at about 7.2 billion Taiwan dollars, or about $219 million.

“That’s very little,” he said. “I think the market’s overreacting.”

Phil Chu of Grand Cathay Securities and other analysts say foreign investors are betting that Taiwan will be another Hong Kong, where the stock market boomed following its opening to mainland investment. “I think it’s possible Taiwan’s stock market could double by 2012,” Mr. Chu said. “But it won’t go up as much as Hong Kong’s did.”

Time Magazine has the “Argument Over China’s Economic Prospects Intensifies”

Time feels that China’s consumer is not ready to take the place of the US consumer.

China’s economy cannot stand on its own without the U.S. economy recovering its foundation, which is consumer spending. That means that the prospects of rapid GDP growth in the world’s most populous nation remain doubtful.

Seeking Alpha has an article that the US debt levels will cause the US dollar to devalue and for the Chinese yuan to emerge as the new reserve currency.

Morgan Stanley and Goldman Sachs have raised China’s growth estimates.

Morgan Stanley raised its forecast for China economic growth to 7-8 percent from 5 percent for 2009 but warned the pace will slow next year as a protracted global slowdown deals a blow to the export-led economy. (a W shaped recovery)

Goldman Sachs raised its China growth forecast to 8.3 percent for 2009 and 10.9 percent for 2010, citing strong expansion in both fixed-asset and private sector investment.

Morgan Stanley Asia Chairman Stephen Roach suggested that China should strengthen its social safety net so that people will become more willing to spend.

China should double the size of the country’s social security fund to $160 billion immediately and boost the private consumption share of the Chinese economy to 50 percent from currently 36 percent in five years, he said.

“China needs to stop depending on the over-extended American consumer and needs to rely more on the untapped potential of its own consumers,” Roach said.

China is revamping its economic statistic tracking and reporting.

During the current downturn, China’s National Bureau of Statistics has tried to provide more and better information. It is publishing data on food prices more frequently, and promises more detailed figures on output, jobs and wages. New penalties for falsifying statistical reports are also now in force.

There are signs the government is more open about bad economic news. As factories started to close last year, officials ordered special surveys of migrants in January, and publicized the shocking tally: around 20 million lost jobs.

The economic census has been commended as a serious effort to grasp the contours of China’s economy. But it’s not clear how the census results are reconciled with existing figures based on less-comprehensive surveys, and the statistics bureau publishes little information about its calculations. Among outside analysts, confusion persists over internal inconsistencies in the numbers.

“China is becoming such a big country that we expect some normalcy and some international standards,” said Carsten Holz, an economist at the Hong Kong University of Science and Technology who has written about Chinese statistics. “I would describe it as a rather professional bureaucracy, but the final stage is political.”

0 thoughts on “Roundup of Articles on Taiwan, China and US Economies”

  1. There’s quite a bit of variance in nuclear levelized cost estimates for the latest projects in the US. Most are in the 9-15 cents/kWh range. Learning curve analysis suggests 2020-2030 costs to be 8-30 cents in the US.

    This increase in uncertainty is a real problem for investors, who want to know what they’re up against. IMHO this is one of the key reasons why there’s so little private investment in new nuclear projects.

  2. 10ksnooker asked: Why can’t the U.S. build a production line for new nuclear reactors?

    From what I understand, this was tried by Combustion-Engineering in the early seventies. It was a great idea, but suffered from bad timing. First, the Nuclear Industry went more or less belly up after Three Mile Island, and second, C-E was hit by crushing asbestos lawsuits. The company went more or less bankrupt, with other companies buying their assets.

  3. What I would like to know is why can’t the U.S. build a production line for new nuclear reactors? Wouldn’t this solve a whole lot of problems with delays? While at the same time reducing costs? Make the U.S. into France, which gets about 80% of their electricity from nuclear power.

    An assembly line, as your article states is one of the best ways to get costs down. Wouldn’t it also produce safer units, since it is far easier to maintain the quality of work on an assembly line than in the field where everything is more or less custom built — By varying skill level teams I might add. Why not go safe and chaep, like China? Just do it …

    If we did this, we could then use the coal for coal to liquids manufacturing plants which would produce transport fuels.

  4. The nuclear industry wants security from government-induced construction delays. Everyone wants to get off oil and stop burning coal. Solution?

    The government pays the interest on construction loans until electricity starts flowing. From there it’s a purely commercial enterprise.

    It’s a bit of a subsidy to the nuclear industry, for sure, but a good idea overall, I think. Unless we get some really good news from a Polywell or Blacklight Power type company, nuclear is the only long term solution. Subsidizing a quick and painless transition to sustainable energy is no bad thing in my book.


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