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Taiwan sees upside from China power curbs if orders shifted

Taiwan sees upside from China power curbs if orders shifted

A man stands beside the Taiwanese Central Bank logo in Taipei, Taiwan, Feb 26, 2018. (File photo: REUTERS/Tyrone Siu)

TAIPEI: Taiwan may benefit from orders being shifted to the island if China's power curbs lead to the country's exports being impacted, Taiwan Central Bank Governor Yang Chin-long said on Thursday (Sep 30).

The world's second largest economy is grappling with power cuts and electricity rationing after a collision of tight coal supplies, tougher emissions standards and strong manufacturing demand has pushed the price of coal, the biggest source of China's electricity, to eye-watering records.

Yang, taking lawmaker questions in parliament, said that if China's power crunch caused its exports to do badly, there would be an "order transfer effect" for Taiwan, meaning manufacturers could shift production to the island.

The central bank is paying close attention to the impact of China's electricity problems on financial markets, Yang added.

Taiwan's export-dependent and tech-heavy economy has benefited during the COVID-19 pandemic due to demand for equipment like laptops and tablets to support the work-and-study-from-home trend around the world.

Yang said the economy may grow 6 per cent this year, depending on how trade and domestic consumption hold up for the rest of 2021.

The central bank last week raised its 2021 estimate for gross domestic product growth to 5.75 per cent from the 5.08 per cent forecast in June.

Taiwan has kept its benchmark interest rate at a record low since March of last year.

Whether to raise it will need to take into consideration the impact of tightening of monetary policies in advanced countries, like the United States, on Taiwan, as well as inflation and the COVID-19 pandemic, Yang said.

Source: Reuters/dv

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