AmCham 
Publications Topics Archive Topics Archive 2007 Vol.37- No.12 Taiwan Briefs
Publications Topics Archive Topics Archive 2007 Vol.37- No.12 Taiwan Briefs | Taiwan Briefs |
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MACROECONOMICS
DEBUNKING NOTION OF "DECOUPLING" "Decoupling" has become somewhat of a buzzword among analysts in Taiwan - but in bad news for the world economy, the idea now seems to be falling out of vogue. Supporters of the "decoupling" notion argue that the momentous economic growth in Asia and other emerging markets has caused them to become independent from the U.S. economy, blunting the global impact of a U.S. slowdown or recession. The argument has mainly been advanced by Goldman Sachs and Morgan Stanley. Recently, however, economists have been saying the United States matters after all. A New York-based Goldman analyst, in an interview with newswire Bloomberg in early December, said in an about-face that current U.S. developments are likely to influence the world economy. "2008 will be the year of `recoupling,'" said Goldman's Peter Berezin. "What began as a U.S.-specific shock is morphing into a global shock." Of the 38 countries they monitor, Goldman economists expect growth to slacken in 26 and strengthen in a dozen, the newswire reported. That will cause global growth to slow to 4% next year from 4.7% this year, with Europe and Japan fading faster than the United States, they say. Market lending rates have risen worldwide as US$70 billion of write-downs linked to defaults on U.S. subprime mortgages fan international concern about the strength of financial institutions. The higher cost of borrowing is making it more expensive for companies and consumers to fund new spending or investment. On the other hand, Alex Patelis, head of international economics at Merrill Lynch & Co., was quoted in the same Bloomberg report as expressing confidence that "the time has not yet come to call the end of this global upturn," citing demand in emerging markets such as China and Russia. Patelis predicts the world economy will grow 4.7% next year, and 5.6% outside the United States. In related reports, Taiwan's Central Bank governor Perng Fai-nan told the legislature that the bank will keep raising interest rates to control inflation. "Our monetary policy is (still) moving towards a neutral rate," he said, remarks analysts took to indicate that the Central Bank would raise interest rates again in March, most likely by 12.5 basis points. On December 20, the bank announced a hike, also of 12.5 basis points. CROSS-STRAIT PRC "CONCERNED" ABOUT U.S. CARRIER GROUP IN TAIWAN STRAIT China in early December said it had voiced "grave concern" to Washington after a U.S. aircraft carrier group consisting of the USS Kitty Hawk and eight accompanying vessels sailed through the Taiwan Strait, days after an aborted port visit to Hong Kong. Beijing had abruptly denied entry to the carrier and its flotilla for a stopover in the former British colony during November's Thanksgiving holiday, fueling speculation that China was irritated by American plans to help Taiwan upgrade its missile system or by a meeting between Bush and the exiled Tibetan spiritual leader, the Dalai Lama. Beijing did change its mind and say that the ships could dock in Hong Kong after all, but by then the Kitty Hawk group was heading back to its home port in Japan via the Taiwan Strait. The U.S. Navy said adverse weather caused selection of this route, as a typhoon was in the region at the time. Beijing also declined comment on a Pentagon report that China had turned down a request for another U.S. Navy ship to enter Hong Kong. Taiwan's Defense Ministry declined to give any comment. Taiwanese military officers who spoke to the local media on condition of anonymity said that Taiwanese waters are limited to 12 nautical miles (22 kilometers) off the coast, and that the area beyond is considered international waters. Taiwan respects the right of any foreign vessel to sail through the Taiwan Strait as long as they are in international waters and pose no threat to Taiwan, they said. DOMESTIC CHINESE CHARACTERS HONORING CHIANG REMOVED AT MEMORIAL Officials in mid-December removed five-foot-high Chinese characters referring to former President Chiang Kai-shek from a memorial formerly dedicated to the late dictator in the center of Taipei. The move followed a four-day standoff that saw angry and sometimes bloody protests and clashes with police. Education Ministry workers removed the words crowning the gate to the former Chiang Kai-shek Memorial Hall - recently renamed the National Taiwan Democracy Hall - and replaced them with Chinese characters meaning "Liberty Square." The issue of removing the original inscription dedicated to Chiang polarized Taiwan's already highly-politicized society, with supporters of Taiwan independence cheering on the move as a milestone in Taiwan's democratization and liberation from its authoritarian past, while supporters of the Kuomintang (KMT) denounced it as a manipulative act that sacrificed Taiwan's historical legacy for political gain. POLITICAL CAMPS FIGHT OVER VOTING FORMAT The views of Taiwan's contending political camps are so far apart they can't even decide on the proper voting procedure for upcoming elections. The island's relatively young democratic system was sorely tested in November and December, after opposition political parties strenuously opposed a decision by the Central Election Commission to hold two referendums alongside the legislative elections in a so-called "one-step" voting format. That means voters would receive ballots for the legislative elections and referendums at the same time when entering the voting stations. The KMT said the process was confusing and could cause chaos during the election, slated for January 12. After that, 18 towns and counties controlled by the opposition jointly defied the CEC to declare they would implement a "two-step" system in which voters receive the referendum ballots only after completing their voting for legislators. Tensions heightened further when Cabinet warned these local governments that defying the commission's voting format would be a criminal act, subject to prosecution. The KMT Mayor of Taipei, Hau Lung-bin, hotly insisted his government would follow the two-step format, saying that voters who refused to follow this procedure, including the president himself, would not be given ballots. Given the impasse, it seemed uncertain as of press time whether the entire election would proceed as scheduled or have to be postponed. One of the referendums, sponsored by the ruling Democratic Progressive Party (DPP), deals with whether the KMT should be required return assets to the state that it allegedly acquired illegally decades ago during the period of one-party rule. The DPP contends that the opposition's insistence on a two-step format has nothing to do with simplifying procedures, but is motivated by the desire to monitor which voters cast referendum ballots, with intent to intimidate them. LUST, CAUTION WINS 7 GOLDEN HORSE AWARDS World-renowned Taiwanese film director Ang Lee's latest offering, Lust, Caution, in early December was a big winner at the 2007 Golden Horse awards in Taipei - the world's most prestigious event for Chinese-language films - mustering seven honors, including best director and best film. The erotic drama, the tale of a young secret agent who masquerades as the mistress of a Chinese collaborator with the Japanese-backed puppet government of 1940s China, was a box office smash in Taiwan and won the Golden Lion at the Venice film festival. It has also been popular with audiences in China, despite some censorship of sex scenes and revision of dialogue to make the collaborator character less appealing. More affluent PRC film buffs have been flocking to Hong Kong to see the original version. INTERNATIONAL AIT CHAIRMAN makes TAIWAN visit On a visit to Taipei, Raymond Burghardt, the U.S.-based board chairman of the American Institute in Taiwan (AIT), met with President Chen Shui-bian, DPP presidential candidate Frank Hsieh, KMT presidential candidate Ma Ying-jeou, and other political and business figures, sharing with them the views of "people at the highest level in Washington." Echoing similar comments from other U.S. officials, Burghardt expressed opposition to Chen's plans for a referendum in March on whether the island should enter the United Nations under the name Taiwan. "We have the highest regard for Taiwan's democracy," he later told a group of international and local reporters. But "we've made clear on a number of occasions that we're concerned that the proposed referendum on U.N. membership under the name 'Taiwan' unnecessarily threatens stability in the Taiwan Strait and thus your security." Burghardt extracted a reassurance from Chen - of sorts - when Chen told him he does not see the referendum as breaking his existing commitments to the United States to maintain the status quo in the Taiwan Strait, that it does not represent a step towards de jure independence, and that if the referendum passes, it will have no broader significance beyond the words of the referendum itself. Burghardt told reporters that policy makers in Washington were also concerned that the referendum would "box in" the new president-elect after the March elections. "I think the referendum has the intention of trying to bind the hands of President Chen's successor, to define the agenda of cross-Strait relations," making it unfair to the new president, Burghardt said. He said Taiwanese legal experts he had spoken to across the political spectrum told him they were unsure how legally binding the referendum would be if passed. The U.S. diplomat expressed concern that passage of the measure would create a period of some anxiety. "Beijing has made a number of threats and made a number of statements about how upset its people are. We'll have to see how they deal with that," he said. "The period right after the election will be a period in which prudent statements and actions will be particularly important." The DPP's Hsieh, whose views on cross-Strait relations appear to be more moderate than Chen's, later thanked Burghardt for pointing out that the referendum could affect Taiwan's next leader. BUSINESS DOMESTIC BANK ACQUIREd by HSBC In the latest in a string of acquisitions in Taiwan's banking sector, the Hong Kong and Shanghai Banking Corp. (HSBC), Europe's biggest bank, has been named the successful bidder in a government auction for the ailing Chinese Bank Co. Ltd., formerly part of the troubled Rebar Group. The agreement calls for HSBC to assume the local bank's assets, liabilities, and operations, in return for a reported US$1.5 billion subsidy from the Central Deposit Insurance Corp., which took control of The Chinese Bank in January this year. As of September 30, The Chinese Bank's gross assets came to about US$3 billion. The acquisition will increase HSBC's branch network in Taiwan from eight to 47, including a presence in all the major cities in what is Asia's fourth largest banking market. HSBC said it would inject additional capital of "the Taiwanese dollar equivalent of US$300 million to US$400 million to ensure that the new enlarged operation maintains appropriate financial ratios." Alistair Currie, HSBC's CEO in Taiwan, said "The Chinese Bank will provide HSBC in Taiwan with significant opportunities in retail, commercial and corporate banking, while we believe HSBC's international network, global expertise and financial strength will benefit our new customers and employees in Taiwan." Over the past 15 months, Standard Chartered, Citigroup, and ABN AMRO have all made major acquisitions of Taiwan domestic banks. AIRBUS SAYS CAL TO BUY A350 AIRCRAFT Airbus said in mid-December that Taiwan's national carrier, China Airlines, had signed a letter of intent to acquire 14 A350XWB-900 wide-body aircraft, which are designed to rival Boeing's 787 Dreamliner. Airbus also said China Airlines had an option on six further aircraft. A350-900 aircraft are priced at around US$230 million apiece. European plane maker Airbus has so far received 149 firm orders for the A350XWB-900, according to data published on its Internet site. IBM FILES COMPLAINT AGAINST ASUSTEK IBM in early December urged the U.S. government to ban imports of some computers made by Taiwan's Asustek Computer, claiming that its products infringe three IBM patents. IBM formally filed a complaint with the U.S. Trade Commission against Asustek and its North American subsidiary, ASUS Computer International, alleging that the patent infringement occurs in Asustek's own-brand computers as well as in products the Taiwan manufacturer makes for other brands under contract. IBM did not name the other brands. Asustek's customers include large computer companies such as Apple. According to an IBM spokesman, Asustek continued to sell computers using IBM technology after a licensing agreement between the companies expired on December 31, 2004. Asustek has denied the allegations. PENSION FUNDS TO AWARD MANDATES OF US$1.86 BILLION Taiwan's Labor Pension Fund Supervisory Committee will award mandates worth US$1.86 billion to fund managers in the first quarter of 2008 to invest in Taiwan stocks as part of a move to seek higher returns, Reuters reported in late November. Committee Chairman Huang Chao-hsi said that 12 companies will be chosen in January to manage half the sum, adding that managers for the other half would be decided later in the first quarter. Reuters said the first-quarter mandates are expected to attract interest from major players, including the Taiwan fund units of Prudential Financial and ING Groep NV, both of which already manage money for the pension funds. AMCHAM NEWS TAI-CHIN TUNG ELECTED CHAIRMAN FOR 2008 Tai-Chin Tung, Country Head of Fidelity International Limited Taiwan, has been elected by the AmCham Board of Governors to head the Chamber in 2008. She succeeds Jane Hwang of State Street Bank, who had reached her term limit as a Board member. As her first act as chairman, Tung nominated - and the Board approved - the other standing officers for the coming year. First Vice Chairman is Christopher Fay of Saatchi & Saatchi, Second Vice Chairman is Jeffery Nemeth of Ford Lio Ho, Treasurer is Jenny Cheung of Lots Home Entertainment, and Secretary is Andy Liu of UCB (Taiwan). The Board also approved a change in nomenclature to bring AmCham Taipei in line with other American Chambers in the greater China area. The elected head will now be known in English as the chairman, and the professional administrator formerly called the executive director will have the title of president. For the past year, Tung has played an active role in the Chamber leadership, serving both as AmCham's Treasurer and as co-chair of the Capital Markets Committee. She holds an MBA degree from Simmons College in Boston and earned a post-graduate certificate in Business Administration from Harvard University. Before joining Fidelity in 2004, Tung was Chief Financial Officer and Head of Offshore Proprietary Product Development and Distribution with Charles Schwab Investment Management. Tung said she is "looking forward to working with the government to help improve Taiwan's standing on the world stage and to seek to enhance its economic competitiveness." She noted that AmCham wishes to contribute to a win-win situation that is beneficial both to the international business community and to the Taiwan public at large. "AmCham is very lucky to have a great staff, a very experienced Board of Governors, and a dedicated group of officers who devote time and energy to Chamber issues," Tung continued. "I will only be an organizer to synchronize and synergize their efforts." Members of the Board elected in November include 2008-2009 Governors William J, Farrell of Boyden global executive search, Douglas R. Klein of Swire Coca-Cola Beverages, Eunice Kuo of Deloitte & Touche, Andy Liu, Sarah McMullin of BRS Nike, Jeffery Nemeth, Max R. Rangel of Procter & Gamble, and Stephen Y. Tan of Baker & McKenzie, as well as 2008 Supervisors Alexander Duncan of China American Petrochemical, Steven Lee of McDonald's, Charles Wang of Watson Wyatt, Li Shin Wang of Johnson & Johnson Medical, and Deborah Yen of Intel. They join incumbent 2007-2008 Governors Jenny Cheung, Christopher J. Clark of Visa International, Christopher Fay, Gordon Stewart of The Nielsen Co., Dan L. Ting of New York Life Insurance, Tai-Chin Tung, and Gary Wu of UPS. |
