Tuesday, July 26, 2011

Changing socioeconomic circumstances in cross-Strait relations

l  China recently released the GDP growth rate for the second quarter, which came in at 9.3%. Compared with the 9.7% GDP growth in the first quarter, this slowdown will inevitably limit Beijing’s policy options as it tries to contain the amounting inflationary pressure.

l  At the same time, as the main gauge of inflation, China’s Consumer Price Index (CPI) came in at 6.4% in June, which was the biggest jump in three years and far exceeded government’s control target of 4% inflation rate this year.

l  Against such a backdrop, Beijing may pursue a tougher position in cross-Strait economic negotiations. We also expect the number of Chinese procurement delegations to Taiwan will decrease in the second half of the year.

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