Kaohsiung Mayor Chen Chi-mai suggested reducing the reserve requirement ratio in response to the US-China trade war. Premier Su Tseng-chang will initiate anti-dumping measures and discuss the matter with the central bank.

Mayor of Kaohsiung, Chen Chi-mai, suggested at an industry forum on April 13 that the central government reduce the bank deposit reserve ratio to support industries affected by the US-China trade war. Premier Su Tseng-chang stated that he would discuss this suggestion with the central bank and emphasized that Taiwan needs to guard against China's low-price dumping and "country of origin masking" issues. The government will initiate a three-tiered defense strategy to strengthen anti-dumping measures and export controls to safeguard industrial security.

Chen Chi-mai Suggests Lowering Reserve Requirement Ratio to Release Capital Flow

At an industry forum in Kaohsiung, Chen Chi-mai pointed out that Taiwanese companies are facing financial pressure and market uncertainty due to the U.S. imposing reciprocal tariffs ranging from 10% to 32% on Taiwan. He suggested that the central government consider lowering the bank reserve requirement ratio to provide banks with more financial momentum to help businesses cope with the impact.

Chen Chi-mai stated that the central bank has raised the reserve requirement ratio by four percentage points over the past three years, and it is now time to "turn on the tap" to allow funds to flow into industries. He also mentioned that during the pandemic, the central bank provided NT$400 billion in relief loans for small and medium-sized enterprises, demonstrating the flexibility and precedent of policy tools. He emphasized that traditional industries such as steel and metals currently need financial support the most.

Cho Jung-tai Responds: Will Discuss with Central Bank, Financial Support is a Current Priority

In response to Chen Chi-mai's suggestion, Premier Cho Jung-tai noted that this is the third time recently he has heard the industry and local governments call for a reduction in the reserve requirement ratio, indicating a high level of concern about liquidity in the industry. He stated that although adjusting the reserve requirement ratio is a move that affects the whole system, if the industry truly needs it, the government should positively consider how to address it and will engage in in-depth discussions with the central bank.

Cho Jung-tai also pointed out that the government has launched an NT$88 billion industry support program, covering financial subsidies, tax incentives, and administrative cost reductions, and plans to submit it to the Legislative Yuan for review in the form of a special act, hoping for swift passage to address current challenges.

Strictly Preventing Chinese Dumping and Country of Origin Manipulation: Government Initiates Three-Tiered Defense

In addition to financial support, Cho Jung-tai emphasized that Taiwan must strictly adhere to the principle of "Made in Taiwan means Made in Taiwan" in the international trade order to prevent Chinese products from entering the U.S. market through Taiwan as "country of origin manipulation." He noted that the U.S. is particularly concerned about this issue in tariff negotiations, and if Taiwan becomes a loophole, it will affect international trust and bargaining power.

To this end, the government will initiate "prevention, inspection, and punishment" as a three-tiered defense to strictly control product origin and export processes. Cho Jung-tai stated that the government has listed 19 products for anti-dumping investigations, with one more under investigation, and will expand the scope of investigations based on regulations to prevent low-priced Chinese products from impacting the Taiwanese market.

Export Controls and Non-Tariff Barriers: Key Points in Negotiations

Cho Jung-tai further pointed out that in addition to tariffs, the U.S. is also concerned about non-tariff trade barriers and high-tech product export controls. He emphasized that as a leading high-tech country, Taiwan must ensure that sensitive technologies are not illegally transferred to China. The government will strengthen export controls and discuss with Congress which items can be relaxed and which must be upheld to ensure food safety and market order for the people.

Minister of Economic Affairs Kung Ming-hsin also added that the issue of Chinese steel entering Taiwan through country of origin manipulation is severe, and the Ministry of Economic Affairs and the Ministry of Finance will jointly investigate to ensure fair competition and industrial safety.

Ministry of Finance's Supporting Measures: Providing Interest Subsidies and Simplifying Customs Clearance

The Ministry of Finance has simultaneously launched three major financial support measures, including trade financing interest rate reductions, export insurance premium discounts, simplified customs clearance in bonded areas, and tax incentives. For exporters affected by U.S. tariffs, the government will provide loan subsidies with an annual interest rate reduction of 1% to 1.5%, allowing each company to reduce interest expenses by NT$5 million to NT$6 million annually, with a budget of NT$12 billion allocated for this purpose.

Industry Concerns About Financial Environment: Hoping to Avoid Credit Crunch

Industry participants generally expressed that while they can coordinate with customers to share tariff costs, their biggest concern is a credit crunch by banks. If orders decrease, banks may tighten loan conditions based on risk assessments from financial statements, which would have a significant impact on small and medium-sized enterprises. Industry representatives urged the government to provide clearer support in financial policies to prevent a break in the cash flow.

References

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