Not every profit profits the nation

By Huang Tien-lin ???

Tuesday, May 04, 2004,Page 8

The closer summer gets, the more serious China's power shortage becomes. Guangzhou City is implementing a plan in which 4,000 companies are now allowed to operate only five days a week with a rotating two-day weekend. The situation is just as serious in eastern China, where there have been reports that the Kunshan area in Jiangsu Province is turning off the power supply two days each week. This affects many Taiwanese businesses that have set up operations in China, including high-tech industries.

Experts estimate that China's power-supply problem will be dealt with by next year at the earliest. It is hoped that this problem will to some degree slow down Taiwanese investment in China, which would be beneficial to Taiwan's domestic investment and consumption.

There is also a shortage of Chinese high-grade steel. Steel prices soared by 28.1 percent between the first half of last year and February this year, to the joy of large and small Taiwanese steel producers. China Steel earned almost NT$37 billion last year, and pre-tax profits for the first quarter this year reached NT$12.6 billion. In 18 months the corporation's share price has increased from NT$14.9 to almost NT$35, or 134 percent. The market value of China Steel (with equity capital of NT$94.5 billion) has seen an explosive increase of NT$126.6 billion, while the steel industry as a whole has seen an increase of NT$200 billion to NT$300 billion, a considerable jump.

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