Aurelia Butler

Taiwanese national security officials want to force Apple supplier Foxconn to unwind an $800mn investment in Chinese chip company Tsinghua Unigroup, as Taipei seeks to align itself more closely with the US in the face of escalating threats from Beijing.The investment by Foxconn, the world’s largest contract electronics manufacturer and the biggest private-sector employer in China, was announced last month and made the group the second-largest shareholder in Tsinghua. But the deal put one of Taiwan’s biggest companies at the centre of Beijing’s growing technology competition with the west. “This will definitely not go through,” said a senior Taiwanese government official involved in national security issues. The cabinet’s investment commission has yet to formally review the case, but officials from the president’s National Security Council and the Mainland Affairs Council, which implements China policy, believe the deal needs to be blocked, according to another person briefed on the matter.Hon Hai, Foxconn’s Taiwan-listed entity, said on July 14 that it had acquired an indirect stake in Beijing Zhiguangxin Holding, the controlling shareholder of Tsinghua Unigroup. The deal triggered warnings from the Taiwanese economy ministry’s investment commission that Foxconn could be fined up to NT$25mn ($832,000) because it had not submitted the transaction for prior approval.Officials said the group was not believed to have violated other regulations, as the deal was below the ceiling for China investments that Taipei set for Foxconn Industrial Internet, the company’s mainland-based subsidiary.But national security officials have been brought in to review the case, according to officials familiar with the matter and people close to Foxconn — a procedure applied only to controversial investments with political or security implications. “It is clear that now they have elevated this to the national security level, prospects are getting dim,” said one person close to the company. “With the soaring tension in the Taiwan Strait, this is looking even more difficult.”Foxconn did not respond to a request for comment.China claims Taiwan as its territory and has threatened to take it by force if Taipei resists unification indefinitely. Beijing has driven home this threat over the past week with a series of unprecedented military exercises.Analysts said the investment in Tsinghua Unigroup made sense for Foxconn, which has traditionally focused on the low-margin, labour-intensive assembly of electronics products such as smartphones and manufacturing, but is trying to strengthen its semiconductor business.Young Liu, head of the semiconductor division who took over as Foxconn chair three years ago, has pledged to expand the unit to increase profit margins and secure chip supplies, especially for the group’s electronic vehicle business.Although Tsinghua Unigroup had to let go of some manufacturing assets in a year-long debt restructuring process, the group is seen as a crucial asset in Beijing’s plan to wean itself off its dependency on chip imports. “I think Tsinghua Unigroup is still very important,” said Douglas Fuller, an expert on Chinese industrial policy in the chip sector.Unisoc, Tsinghua Unigroup’s chip design arm, is a crucial part of that endeavour. “Obviously, this asset would bring to the table for Hon Hai some of the incremental capabilities that they do not possess,” said Patrick Chen, head of Taiwan research at CLSA, the brokerage.But Taipei is concerned that the deal could lead to Foxconn bankrolling an acceleration in Beijing’s tech ambitions. Although the group is gradually diversifying its production lines beyond China, 75 per cent of its capacity is on the mainland and analysts said it would be extremely difficult for the company to divest.

“The solution is, therefore, that their China-based affiliates localise more and put the money they can’t get out into new assets on the mainland,” said a Taiwanese technology industry executive in China.Officials believe such a development could weaken Taiwan economically and give China more leverage to pressure it into submitting to Beijing’s control. “How can we have one of our largest enterprises become a key backer of a policy which aims to reduce our position in global markets?” said one official. The Taiwanese government is particularly concerned that Foxconn’s partner in the deal, the Chinese investment firm WiseRoad Capital, has close links to the government in Beijing. Moreover, officials said Taiwan must be particularly careful not to be seen as helping China in its technology rivalry with the US.“Especially now, as the Chips Act has been adopted, Washington is stepping up initiatives to strengthen semiconductor manufacturing onshore, and working with allies and partners to control the flow of technology to China, we have to be careful about where we stand,” one said, referring to a move by the Biden administration to boost the US’s chipmaking industry. More

BENGALURU (Reuters) – Malaysia’s economy grew at its fastest pace in a year last quarter, thanks to a strong rebound in private consumption and buoyant exports, but a global economic slowdown poses a significant risk to the outlook, a Reuters poll found.The Aug. 3-9 poll of 18 economists predicted southeast Asia’s third-largest economy expanded 6.7% in the April-June quarter compared with the same period a year earlier.That would be the fastest growth since the same quarter last year.Forecasts for annual gross domestic product (GDP) growth, due to be released on Aug. 12, ranged from 5.2% to 9.2%, higher than the 5.0% increase in the preceding quarter. “Private consumption was likely the main growth driver … Furthermore, a sharp jump of 30% YoY (year-on-year) in Q2 export growth would have contributed to the faster Q2 GDP print,” said Vincent Loo of KAF Investment Bank. Export growth was 22% in the first quarter, Loo said.”We expect GDP growth to accelerate further in Q3, mainly due to base effects (nationwide lockdown in Q3 2021) before normalising in Q4 and into next year on the back of slowing global trade, rising inflationary pressure and tighter monetary conditions.”Malaysia’s economic recovery from the pandemic has been strong since reopening its borders in April, but an expected global economic slowdown is likely to have an impact on the economy. [ECILT/WRAP]”While overall export growth performed well … its open economy is exposed to growing global economic headwinds and slowdown driven by U.S. Fed tightening and European energy insecurity from the Russia-Ukraine war, even as China tries to recover from the pandemic lockdown-induced weakness,” said Chua Han Teng of DBS.A separate Reuters poll showed Malaysia’s economic growth for this year would be 6.5%, higher than Bank Negara Malaysia’s (BNM) forecast of 5.3%-6.3%, though then slow to 4.6% in 2023.But Malaysia’s central bank was expected to follow its global peers and continue on its rate hiking path to tame rising inflation.Last month, BNM raised its benchmark interest rate for a second straight meeting by 25 basis points to 2.25%. More

Liz Truss, frontrunner in the Conservative leadership contest, has rejected business pleas for her to meet prime minister Boris Johnson and rival Rishi Sunak to “agree a common pledge” on tackling the cost of living crisis. Speaking in Darlington on Tuesday during the latest hustings in front of party members, the foreign secretary pushed back against the suggestion this week from Tony Danker, CBI director-general, that the severity of the economic crisis required “all hands at the pump”. The head of the UK employers’ group warned that the public and businesses across the country could not face a “summer of government inactivity” while the Conservative party choses its new leader. But Truss argued that Johnson and current chancellor Nadhim Zahawi were “capable people, capable of making these decisions” on the economy.“I think it would be constitutionally deeply undesirable to try and over-rule them with a sort of made-up committee of the CBI, me and Rishi Sunak,” she said, adding: “This kangaroo committee you’re proposing sounds bizarre.”Her comments were made as figures published by the consultancy Cornwall Insight revealed that the UK’s energy price cap on household bills is expected to increase from £1,971 a year on average to £4,266 in January and £4,427 in April, a move set to exacerbate the cost of living crisis for millions. In recent days, business and political leaders have called on the government to introduce emergency financial measures before the autumn. The CBI has urged Johnson to bring together both Truss and Sunak ahead of the Ofgem price cap announcement due on August 26 in order to find a consensus on how to tackle rising fuel bills. It called on the government to put the Office for Budget Responsibility on notice that an emergency Budget is likely.

And in a rare intervention over the weekend, former prime minister Gordon Brown called on Truss, Johnson and Sunak to convene to agree on an emergency Budget this week, arguing in the Observer newspaper that looming energy price hikes would be a “financial time-bomb” for families in October.However, Downing Street has argued that any “major fiscal interventions” would be for a future prime minister to make in the coming weeks. Speaking on Tuesday, Johnson said he was “absolutely confident” his successor would have “fiscal firepower and the headroom” to support the public through the cost of living crisis. Truss, who according to the latest YouGov polling leads the former chancellor by 38 percentage points, has rejected the notion of tax rises and additional government grants, describing it as “Gordon Brown economics”. “I understand people are struggling with their bills on fuel and food but the first thing we should do as Conservatives is help people have more of their own money,” she told Tory party members on Tuesday evening. “What I don’t support is taking money off people in tax and then giving it back to them in handouts.” However, when questioned on whether she was prepared to issue grants or handouts at “any stage” in her premiership, she refused to fully rule it out: “I am not going to say in the middle of August what is going to be in the Budget later this year, but what I am saying philosophically is I always favour people keeping more of their own money first.”Sunak argued that government packages would be the most effective way of giving assistance to society’s most vulnerable. “The only way to help them is with direct support because tax cuts alone are not much good if you’re a pensioner who is not earning any extra money,” he told the audience members in Darlington. More

WASHINGTON (Reuters) -Surging inflation will prompt the U.S. Postal Service to seek higher prices for stamps and other services in January, just five months after its recent hike, as it continues to lose money.USPS raised prices in July by about 6.5%, including increasing the price of a first-class stamp from 58 cents to 60 cents after hiking stamps by 3 cents in August 2021.U.S. Postmaster General Louis DeJoy said Tuesday inflation would cause costs to exceed its 2022 budget plan “by well over $1 billion.” DeJoy said he plans to recommend to the Postal Board of Governors that USPS raise prices again in January.DeJoy has said USPS for years had failed to charge enough for package and mail delivery.USPS on Tuesday booked a onetime, non-cash benefit of $59.6 billion after President Joe Biden signed financial relief legislation into law. It reported an adjusted loss of $459 million for the quarter, compared to an adjusted loss of $41 million for the same quarter last year. DeJoy said the Postal Service is working to address some hiring issues but is having success in most areas as it has boosted full-time permanent staff.”This will enable us to rely less on seasonal employees, which we believe will prove difficult to hire this season,” DeJoy said. “We are still having trouble in hiring new letter carriers, especially in rural communities. We are employing new recruiting tactics.”Struggling with diminishing mail volumes despite having to deliver to a growing number of addresses, the USPS before Tuesday had reported net losses of more than $90 billion since 2007. The bill Biden signed in April repealed the USPS’s requirement that it annually prepay future retiree health benefits and canceled all past due prefunding obligations.DeJoy released a March 2021 reform plan that aims to eliminate $160 billion in predicted losses over the next decade.DeJoy said despite reforms losses would still reach $60 billion to $70 billion over the next 10 years — and USPS must address those losses.USPS is also set to receive $3 billion from Congress to boost electric vehicle and charging purchases. Last month, USPS said it plans to buy at least 25,000 EVs – more than twice its prior estimate. More