Latest news with #exportdriven
CNA
31-07-2025
- Business
- CNA
Taiwan Q2 GDP grew fastest in four years on strong tech demand
TAIPEI :Taiwan's export-driven economy grew in the second quarter of 2025 at its highest rate in four years as tech demand remained robust despite the looming threat of U.S. tariffs. The island is awaiting more clarity on the outcome of just-concluded trade negotiations with U.S. President Donald Trump's administration ahead of his August 1 deadline for a deal to avert heavy levies on imports from Taiwan. Taiwan's gross domestic product grow 7.96 per cent year on year in the April-June quarter, the Directorate General of Budget, Accounting and Statistics said on Thursday. That beat both the 5.7 per cent forecast in a Reuters poll and the 5.48 per cent in the first quarter. Taiwan's economy could be substantially affected this year if Trump follows through with his announced tariff policy. Taiwan was due to be hit with a 32 per cent U.S. tax on imports, until Trump paused the entire plan for 90 days in April. Earlier on Thursday, Taiwan's cabinet said the island and the U.S. had completed talks on tariff technicalities and reached consensus on issues including non-tariff trade barriers, with the fine print hinging on the U.S. decision-making process.
Yahoo
07-07-2025
- Business
- Yahoo
On China trade, interest rates, currency policy, and US government debt
The economic relationship between the United States and China is one of the most closely watched and influential financial dynamics in the world. It's not just about shipping containers full of electronics or soybeans – it's also about interest rates, currency policy, and the enormous scale of U.S. government debt. At the center of this dance is a fascinating loop: the U.S. buys more from China than it sells, sending dollars overseas. China, in turn, recycles many of those dollars back into U.S. Treasuries. The result? China helps keep U.S. interest rates lower, while supporting its own export-driven economy by holding down the value of the yuan. Let's break this down and explore what could happen if China changed course because the ripple effects would be felt far beyond Beijing and Washington. As of the most recent full-year data, U.S. goods and services trade with China totaled approximately $575 billion. The U.S. imported over $427 billion in goods from China and exported about $148 billion, creating a trade deficit of nearly $279 billion. This means China ends up holding a huge volume of U.S. dollars – dollars it doesn't necessarily want to flood into its domestic currency market, where they could drive up the yuan's value and hurt export competitiveness. Instead, it often uses those dollars to buy U.S. Treasury securities, making China one of the largest foreign holders of U.S. debt, owning around $775 billion in Treasuries as of early 2025, or roughly 10–12% of the total held by foreign investors. When China buys Treasuries, it does a few things all at once: • It recycles dollars into a safe, liquid asset. • It avoids converting too many dollars into yuan, which would strengthen the yuan. • It supports demand for U.S. government debt, helping to keep Treasury prices high and interest rates low. In effect, this stabilizes the yuan and keeps Chinese exports attractive to global buyers, especially the U.S. But what if China started doing something different? Let's examine three distinct situations: Scenario 1: China increases Treasury purchases • U.S. Impact: Treasury prices rise, yields fall. Lower interest rates benefit U.S. borrowers, from homeowners to Uncle Sam. • China Impact: Yuan stays weaker, exports remain competitive, and the trade imbalance persists. • Market View: Calming. A continued vote of confidence in U.S. debt markets and global financial stability. Scenario 2: China reduces Treasury purchases • U.S. Impact: Treasury demand falls. Prices drop, interest rates rise. Borrowing costs increase for consumers and the government. • China Impact: More dollars converted into yuan, strengthening its value. That could hurt Chinese exports. • Market View: Potentially disruptive. Could signal shifts in China's policy or concerns about U.S. fiscal discipline. Scenario 3: China sells Treasuries to defend the yuan In times of economic stress or capital flight, China may sell Treasuries to buy yuan on the open market. • U.S. Impact: Sudden sell-off could spike Treasury yields, hurt bond prices, and inject volatility into global markets. • China Impact: Yuan may stabilize short-term, but at the cost of reserves and market confidence. • Market View: Risk-off. Investors might flee to other safe havens or raise concern about a brewing financial crisis. For individual investors, this U.S.-China feedback loop affects more than just trade policy headlines. When China buys Treasuries, it helps keep borrowing costs low in the U.S., supporting consumer credit, mortgages, and even equity valuations. Conversely, a slowdown in Chinese Treasury buying – or worse, outright selling – could place upward pressure on interest rates, hurt bond portfolios, and increase the cost of capital for U.S. companies. Currency policy also matters. A stronger yuan could mark a major shift in global trade dynamics, possibly giving the U.S. manufacturing base a leg up. But it might also signal weakness in China's internal economy or rising geopolitical tensions. Trade and finance are tightly interwoven between the U.S. and China. The billions in goods traded annually form the visible part of the iceberg but underneath lies a complex world of capital flows, interest rate dynamics, and currency maneuvering. Evan R. Guido is the founder of Aksala Wealth Advisors LLC, a 2018 Forbes Next-Gen Advisors List Member, and Financial Professional at Avantax Investment ServicesSM. Evan heads a team of retirement transition strategists for clients who consider themselves the 'Millionaire Next Door.' He can be reached at 941-500-5122 or eguido@ Read more of his insights at Securities offered through Avantax Investment ServicesSM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory ServicesSM, insurance services offered through an Avantax-affiliated insurance agency. 6260 Lake Osprey Drive, Lakewood Ranch, FL 34240. This article originally appeared on Sarasota Herald-Tribune: EVAN GUIDO: Taking a closer look at US-China financial dance Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
28-05-2025
- Business
- Bloomberg
Taiwan Trims 2025 Growth Forecast as Tariff Concern Lingers
Taiwan lowered its economic growth outlook for this year, reflecting concern about the impact of potential US tariffs on the archipelago's export-driven economy. Gross domestic product is expected to expand 3.10% in 2025, the statistics bureau in Taipei said in a statement on Wednesday, down from a previous estimate of 3.14%.
