Taiwan'S Exports Are Damaged, And Mainland Exports Are Declining.

* the export of Taiwan was severely damaged in December, and the mainland figures were not so bad.

* as a leading indicator of exports, the deterioration of Taiwan has shown that the decline of mainland exports may aggravate.

* the diversification of mainland exports makes them less serious than Taiwan.

The export performance of Taiwan in December is shaking, and the mainland is also cloudy. But it is not as bad as Taiwan. As an indicator of exports, Taiwan may slide to a worse position in the future. It shows that the mainland's subsequent export decline will intensify in the next few months.

Taiwan exports a large number of electronic semi-finished products to the mainland and then processes and exports. This special division of labor has led Taiwan to play a leading role in export to a certain extent. Taiwan's exports have been declining for four consecutive months since September, and the amount of exports to mainland China and Hongkong in December has been as high as 54%, reflecting that the mainland's export situation may decline sharply in the next few months.

"More than 70% of Taiwan's electronics products are exported to the mainland after exporting to the mainland, including IC, panels and electronic components. The export of mainland related products is basically behind Taiwan for 1-2 months," said Luo Wei, deputy director general of Taiwan electric and Electronics Industry Association.

The amount of Taiwan exported to mainland China and Hongkong in December was $4 billion 421 million, an annual decline of 54%, the biggest recession in the past year, and 41.9% more than the overall export decline in December. The mainland's export decline in December was 2.8%, the second consecutive month of decline since November.

Standard Chartered bank analyst Fu Mingcai also believes that Taiwan exports a large number of electronic semi-finished products, and then processed by the mainland to export. Therefore, to some extent, Taiwan's export value indeed reflects the mainland's export status.

　 The linkage between Taiwan and the mainland's exports

Analysts said that the export of Taiwan to some extent reflected the linkage with the mainland's exports. Under the sharp fall in Taiwan's exports, the mainland's exports would not be ruled out further. However, the mainland's export products were quite diverse. Unlike Taiwan's exports, which were highly concentrated in the electronic related industries, the decline would not be as serious as Taiwan's. The decline might fall between 10-20%.

Ma Tieying, an analyst with DBS bank, said, "looking at the export situation of Taiwan, we do not rule out that the decline in China's exports will expand. I predict that the most serious recession in China's exports will be less than 10%. "

This is somewhat in line with the view of Ma Xiaoping, an analyst at HSBC in Beijing. She pointed out: "the data in Europe and the United States will obviously deteriorate further, and exports in Taiwan and South Korea have all plummeted. The exports of the mainland still have some homogeneity with them. Obviously, they can not be alone. "

Ma Xiaoping predicted that the mainland's export figures in December would be lower than expected, but in the next few months it is believed that the drop will be about 20%.

The largest proportion of machinery and motor equipment products exported to mainland and Hongkong areas in Taiwan in December were 47.8% year-on-year decline in December. Among them, the leading indicators were that the amount of electronic products exported to mainland China was only 650 million US dollars, and that of electrical equipment fell by 67.7%.

This represents a sluggish capital expenditure on mainland enterprises, and thus reducing capital equipment imports is not conducive to the performance of industrial production and exports in the future.

　 Taiwan's own problems

Lu Ting, an economist at Merrill Lynch in Hongkong, thinks that the growth of mainland exports will deteriorate in the next two months, but it will not deteriorate too much, because mainland exports are more resilient than Taiwan or South Korea. Taiwan exports are concentrated in volatile electronic products. The mainland's export volatility is a little small, because many exports are low added value necessities, and consumers need such cheaper mainland products.

The mainland has launched a labor contract law and other policies last year, which has caused great impact on the operation of Taiwanese businesses. The spread of the financial turmoil in the second half of the year has made Taiwanese businessmen deeply involved, and the operation is even more difficult. The closure of factories and businesses has been unstoppable. What's more, in recent years, the depreciation of the Taiwan dollar has been smaller than that of the Korean won and other competitive currencies, which has also reduced the competitiveness of Taiwan's electronic products, making the deterioration of Taiwan's exports more severe in Asian countries and regions.

Zheng Zhenmao, chief economist of Citibank, predicted that Taiwan's 1-2 month exports will not be ruled out because of the Lunar New Year's effect (this year's Lunar New Year's Day falls on January and last year's February). The total value of exports in the 1-2 months will be 30% lower than the same period last year.

In December, Asia's important export economies deteriorated. In addition to the sharp decline in Taiwan, South Korea's fourth largest economy, South Korea's exports, fell sharply by 17.4% in December, forcing the Central Bank of Korea and Taiwan to cut interest rates by 0.5 percentage points last week.

Luo pointed out that Taiwan's largest competitor in the electronics industry is South Korea. The recent depreciation of the Korean won against the US dollar has also weakened the international competitiveness of Taiwan's products, especially the panel and the DRAM industry.

In the second half of last year, the Korean won depreciated by 20% against the US dollar. However, the exchange rate of the Taiwan dollar depreciated only in the same period. After the Taiwan government launched a bail-out for the dynamic random access memory (DRAM) industry, the chief executive, Liu Zhaoxuan, also publicly stated that it would help the LCD panel (TFT-LCD) industry overcome the difficulties. <