Taiwan’s Business Environment as Related to Risk Factors There are several risk factors that affect Taiwan’s business environment, including economic/financial, environmental and, most importantly, political risks.
Economic/Financial Risk The main economic risk relates to the Chinese economic growth falling in 2015. Growth is expected to increase in 2016, but economic activity will continue to be inhibited. The US economy’s recovery after the recession in 2008 should help to mitigate the effects of a weaker demand in China. Personal disposable income is expected to be the main economic activity driver, thought it will only moderately grow due to a stagnation of wages. The Taiwanese government is trying to stimulate the economy by offering subsidies supporting household purchasing power, in addition to tax benefits to companies that increased their staff wages (Coface, n.d.).
Despite the economic slowdown, the budget deficit and public debt of Taiwan is expected to continue to decline, as well as help the development of infrastructure, for transport in particular. The trade and service surplus that the country has enjoyed because of resuming their relationship with China may be affected by the expected economic slowdown in China. However, the Taiwanese dollar is expected to remain stable against the US dollar due to the current account surplus in the country (Coface, n.d.). All of these economic and financial aspects affect the business environment in Taiwan, especially
• China is set to overtake the United States as the world’s largest economy by 2016—a date that is fast approaching. How do you think this monumental economic shift will affect your life in the short term? How will it affect
It is this that has sparked China’s vulnerability to external shocks. In 2011, China’s exports amassed almost $2 trillion, however in Feb 2012, China recorded a $31.5 billion trade deficit as a result of the European sovereign debt crisis in which China’s main trading partners plunged into recession. China’s severe BOGS decrease is an attempt to control growth and a sustained level of 7.5%. Investment policies are also critical for China to achieve economic growth and development. Foreign Direct Investment (FDI) in China is being sought primarily in the redesign of State Owned Enterprises (SOE’s) and in the development of interior provinces. Between 75-80% of World Bank loans to China in 2008 were directed to the central and western regions, the most economically disadvantaged. This promotes increased wealth within China, leading to higher levels of development due to a more positive Human Development Index (HDI), which currently sits at 0.687, up from 0.677 in 2010. Thus, trade and investment are critical factors in ensuring that China’s growth remains sustained at 7.5% whilst still encouraging increases in development.
The Chinese president is looking to boost consumption and import as part of efforts to restructure its economy (Hu Looks to Boost China's Consumption, Imports, (April 15, 2011). The Chinese energy consumption has been predicted to soar to 68% higher than that of the USA by the year 2035(China, India to lead energy consumption, (September 20, 2011). Investment spending is also set to increase from $12,633 billion (2011, 48% of GDP) to $29,628 billion by 2030 (38% of GDP) (CHINA - Gross fixed investment (% of GDP) from 2011 to 2030, EIU Country Data). In 2006 China had a rating of 5.00 and was seen ranked at 101st in terms of the degree of economic freedom as measured
These effective strategies helped Hong Kong overcome the financial crisis. All these facts fully demonstrated that China is a responsible big country. After the Asia financial crisis, the importance of China's economy has been brought into focus; China's neighboring countries have begun to recognize the influence of the Renminbi.
The United States is the leading economy across the globe and experienced several tribulations in the recent past following the 2008 global recession. Despite these recent challenges, there are expectations among policymakers and financial experts that the country will experience solid economic growth. Actually, financial analysts have stated that the U.S. economy will be characterized by increased consumer spending, increased investments by businesses, reduced rate of unemployment, and reduction in government cut. Some analysts have also stated that the country’s economy will strengthen in 2014 with an average of 2.7 percent or more. However, these predictions can only be understood through an analysis of the current macroeconomic
In this paper, you will read about the current standing of the U.S. economy as of spring and summer for 2015. Gross Domestic Product (GDP), unemployment rate, inflation rate, foreign trade, consumer spending, business investment, and government spending will all be analyzed. This analysis will then lead to the projection of the U.S. economy for the first two quarters of 2016.
Over the past couple of years we have seen a huge surge in stock markets (Chart#1). The main reason for such moves is Quantitative Easing monetary policy provided by Federal Reserve System since late 2008. Purchases were halted on 29 October 2014 after accumulating $4.5 trillion in assets or 26% of GDP. The key outlook is tend to be consumer behavior, because households’ spending represents two thirds of GDP, which is broadest measure of economic activity. The job market is considerably stronger right now. Since June last year, payroll employments expanded by $2.2 million jobs (Chart#2), which represents 2.4 percent annual rate of increase. As a result, incomes are rising rapidly. For the same period real
High government intervention has also had positive effects on China’s economy. Since the Global Financial Crisis of 2007-08, China has become increasingly
The global economy is cooling. Demand for natural resources in China has peaked, and commodity markets are starting a painful structural decline.
In order to prevent the current crisis from deepening, immediate actions are required from the major industrial countries and from the international community. There is evidence that the world economy is experiencing a major slowdown, which may deepen if inadequately managed. For example, Japan is in its worst recession since the war, much of East and South-East Asia is in depression, Russia is experiencing a major downturn, growth has stalled in Latin America, and the prices of primary commodities and a number of manufactures are falling in international markets. Authorities in the industrial countries must nonetheless continue to be alert. Several downside risks still remain, and current policies may prove insufficient to prevent the world economy from slipping into recession. Expansionary fiscal policies may be required in other industrial economies, in addition to Japan. It is also crucial that the rules of an open international trading system should operate smoothly, allowing the economies that face adjustment to reduce their deficits or generate trade surpluses with the more vigorous industrial economies.
Since the financial tsunami and the bankruptcy of Lehman’s Brother in September 2008, the world’s economy took a deep plunge and the Chinese economy is no exception. In the wake of the global financial crisis, The Economist (2008) reported that China’s real GDP growth slowed to 9 percent in the third quarter of 2008 and export growth slowed to 21.1%. It was, in fact, well below analyst expectations and recent
Today globalization has an impact on all nations. China is a nation that many rely heavily on. This shows an importance with the economical welfare of China. If China has a downturn in its economy other nations are impacted as well. China contributed “19% of the world's economic growth in 2010, and that's expected to increase to 24% this year” (Miller, What If the China Bubble Bursts?). This depicts the impact that china could have on the economical growth of the world. Due to the economical situations within the United States and Europe, China's growing strength is essential for the recovery of U.S. and Europe. A major issue is "if Chinese land prices plummet, there will be less demand for raw materials and a steep decline in world commodity markets and
With China's deepening Opening Up and economic restructure adjustment and the continuous appreciation of RMB in recent years, the
As you can see, this Chinese economic rise is slowly creating important changes here at home. No matter if the changes are seen as good or bad, they can still take their toll on the American citizens. China’s economy is getting better, in fact they are even seen to possibly
THE POLITICAL ENVIRONMENT: The critical concern Political environment has a very important impact on every business operation no matter what its size, its area of operation. Whether the company is domestic, national, international, large or small political factors of the country it is located in will have an impact on it. And the most crucial & unavoidable realities of international business are that both host and home governments are integral partners. Reflected in its policies and attitudes toward business are a governments idea of how best to promote the national interest, considering its own resources and political philosophy. A government control's and restricts a company's