Exports fall in China's richest county.

Kunshan, a county 50km from Shanghai in China’s Jiangsu province, used to boast wages up to 30 per cent higher than in less-developed interior areas, thanks to the thousands of contract manufacturers that assembled critical components there. With almost 1mn people, Kunshan has 1,529 export-focused manufacturers from Taiwan alone and is known as China’s wealthiest county. Kunshan’s malaise reflects the challenges faced by China’s export-led economy as it emerges from three years of pandemic restrictions and as policymakers struggle to find another growth engine to offset a decline in foreign trade. The Biden administration has sought to secure supply chains of critical electronics, such as those assembled in Kunshan, on national security grounds, pressing American companies and those of its allies to reshore operations and restrict trade with China.

«Kunshan owes its rise to prominence to the influx of Taiwanese manufacturers,» said Dan Wang, chief China economist at Hang Seng Bank China. Wages at Taiwanese manufacturers in Kunshan have fallen to less than Rmb19 an hour from more than Rmb25 a year ago. In addition, Foxconn Kunshan, the leading Taiwanese Apple contract manufacturer, now requires applicants for entry-level positions to be under 40 years old, compared with 45 a year ago. «We don’t have enough positions for so many jobseekers,» said Chen Jian, a recruiter who works with contract manufacturers in Kunshan.

As demand for low-margin manufacturing dwindles, Kunshan has begun courting foreign investors with higher technological demands and focusing on local sales to spur growth. The strategy has attracted some companies thanks to Kunshan’s established supply chain and proximity to Shanghai, China’s largest high-end consumer market and hub for tech research and development. Bernd Reitmeier, the founder of Startup Factory, a Kunshan-based business incubator for European manufacturers, forecast membership to grow this year as companies sought to tap the world’s second-largest economy. « As a consequence, they stay in Kunshan,» said Reitmeier.

www.sba.tax

Comments

Cloud Bookkeeping

US FED rate rise.

The US Federal Reserve officials have indicated that they plan to resume increasing interest rates to control inflation in the world's biggest economy. During the June meeting, the Federal Open Market Committee reached a consensus to keep interest rates stable for the time being to evaluate whether further tightening of policy would be necessary. However, the majority of the committee anticipates that additional rate increases will be required in the future. The minutes of the meeting have recently been made public. According to the minutes, most participants believed maintaining the federal funds rate at 5 to 5.25 per cent was appropriate or acceptable, despite some individuals wanting to raise the acceleration due to slow progress in cooling inflation. Although Fed forecasts predicted a mild recession starting later in the year, policymakers faced challenges in interpreting data that showed a tight job market and only slight improvements in inflation. Additionally, officials gr...

US antitrust push

Private equity executives are among the directors who have stepped down, marking the first fallout in the industry since Jonathan Kanter, head of the DoJ’s antitrust unit, pledged to crack down on competition violations in the sector. The seven executives left five boards in response to concerns raised by the DoJ about breaches of section 8 in the 1914 Clayton Antitrust Act, which prohibits «interlocking directorates», where directors sit on boards of multiple competing companies. «Section 8 is important, but under-enforced, part of our antitrust laws,» Kanter said. Among the executives who stepped down was one from private equity firm Thoma Bravo who sat on the boards of two software groups, SolarWinds and Dynatrace. Since President Joe Biden appointed a new generation of watchdogs with a mandate to bolster existing competition rules, private equity has moved into the spotlight of antitrust enforcers and regulators. Kanter told the FT this year that his agency would take a stric...

India- UK trade deal.

According to India's top trade official, talks with the UK regarding a trade agreement are progressing well, despite obstacles related to temporary work visas and the opening up industries like automotive and spirits. The Commerce and Industry Minister, Piyush Goyal, explained that India is seeking transition periods or greater market access in specific sectors due to its economy, which is slightly larger than the UK's and expected to outgrow it in the coming decades. If a trade deal is reached, it would be one of the most significant agreements for Britain since leaving the EU, and it would also be necessary for India, which surpassed the UK as the fifth-largest economy last year. Goyal stated that India aims to increase its economy from $3.5tn to $35tn by 2047, the country's centenary of independence. According to officials and diplomats in India, talks about a proposed trade deal may be finished by early September, just in time for the G20 summit in New Delhi. Nigel Hu...

Search This Blog