UBS Group AG has cut its forecast for China’s GDP growth from 6.2 percent to 6 percent for next year after the US announced an extra 10 percent tariff on US$200 billion of Chinese goods.
The escalating trade war is unfavorable to Taiwan as China is its biggest export destination, accounting for 41 percent of its outbound shipments last month, when they increased slightly by 1.9 percent from a year earlier, the Ministry of Finance said, adding that exports might contract this month as sentiment weakens despite the advent of the high sales season.
“We estimate that additional tariffs of 25 percent on US$50 billion plus 10 percent on US$200 billion of Chinese exports will have a 0.5 percentage point drag on Chinese GDP growth in the following 12 months,” the Swiss company said.
The drag might weaken China’s economic growth by 0.8 percentage points next year, it said.
Over the longer term, sustained trade tension and tariffs from the US are likely to increase business uncertainty and hurt investment, although the impact is hard to quantify, UBS said.
The impact on export and related jobs might range from 0.5 million to 1.2 million, it estimated.
China might delay retaliatory tariffs on US$60 billion of US goods until January next year, it said.
US President Donald Trump has said he would impose additional tariffs on all Chinese exports if Beijing takes retaliatory measures.
Rather, China might opt to increase policy support with limited retaliation, UBS said.
“We expect China to support exports through increased cooperation with other trading partners, more export tax rebate and trade credit support,” it said.
More importantly, China is further easing domestic monetary, credit and fiscal policies to offset the negative shock with more infrastructure investment, UBS said.
Beijing might announce additional measures this fall or during the economic work conference in December, UBS said.
The People’s Bank of China might lower its reserve requirement ratio by least 100 basis points this year, but leave benchmark policy rates intact, UBS said.
Against this backdrop, the Chinese yuan might depreciate against the greenback to 7 yuan versus the US dollar toward the end of this year and to 7.3 yuan late next year, it said.
UBS also revised down China’s current account surplus, which it said could disappear due to slower export growth.
Taiwan’s currency and policy rate directions have tracked China’s rather than the US in recent years due to its heavy economic reliance on its neighbor across the Taiwan Strait.
Several Taiwanese electronics makers have indicated plans to relocate semi-finished products from China to facilities in ASEAN nations to avoid tariffs.
ASML Holding NV’s new advanced chip machines have a daunting price tag, said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), one of the Dutch company’s biggest clients. “The cost is very high,” TSMC senior vice president Kevin Zhang (張曉強) said at a technology symposium in Amsterdam on Tuesday, referring to ASML’s latest system known as high-NA extreme ultraviolet (EUV). “I like the high-NA EUV’s capability, but I don’t like the sticker price,” Zhang said. ASML’s new chip machine can imprint semiconductors with lines that are just 8 nanometers thick — 1.7 times smaller than the previous generation. The machines cost 350 million euros (US$378 million)
Apple Inc has closed in on an agreement with OpenAI to use the start-up’s technology on the iPhone, part of a broader push to bring artificial intelligence (AI) features to its devices, people familiar with the matter said. The two sides have been finalizing terms for a pact to use ChatGPT features in Apple’s iOS 18, the next iPhone operating system, said the people, who asked not to be identified because the situation is private. Apple also has held talks with Alphabet Inc’s Google about licensing its Gemini chatbot. Those discussions have not led to an agreement, but are ongoing. An OpenAI
EXPLOSION: A driver who was transporting waste material from the site was hit by a blunt object after an uncontrolled pressure release and thrown 6m from the truck Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) said yesterday there was no damage to its facilities after an incident at its Arizona factory construction site where a waste disposal truck driver was transported to hospital. Firefighters responded to an explosion on Wednesday afternoon at the TSMC plant in Phoenix, the Arizona Republic reported, citing the local fire department. Cesar Anguiano-Guitron, 41, was transporting waste material from the project site and stopped to inspect the tank when he was made aware of a potential problem, a police report seen by Bloomberg News showed. Following an “uncontrolled pressure release,” he was hit by a blunt
‘FULL SUPPORT’: Kumamoto Governor Takashi Kimura said he hopes more companies would settle in the prefecture to create an area similar to Taiwan’s Hsinchu Science Park The newly elected governor of Japan’s Kumamoto Prefecture said he is ready to ensure wide-ranging support to woo Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to build its third Japanese chip factory there. Concerns of groundwater shortages when TSMC’s two plants begin operations in the prefecture’s Kikuyo have spurred discussions about the possibility of tapping unused dam water, Kumamoto Governor Takashi Kimura said in an interview on Saturday. While Kimura said talks about a third plant have yet to occur, Bloomberg had reported TSMC is already considering its third Japanese fab — also in Kumamoto — which would make more advanced chips. “We are