Foxconn Chairman Terry Gou, who is also a candidate in the Kuomintang (KMT) primary election, warned of a possible financial tsunami during an interview on June 2. In response to Gou’s comments, Gordon Sun, director of the Taiwan Institute of Economic Research (TIER), said on June 3 that the consequences of a financial downfall could have complex consequences. Based on TIER’s predictions in early May, Sun said that a case scenario for a major financial crisis was already being considered, warning that the ongoing trade war between the U.S. and China could become a “global trade war.”
In recent months, the United States and China have mutually challenged each other. China recently held a press conference on the trade war during which authorities dared the United States to further retaliate. Gou, while visiting the Nanmen market on June 2, said that the world economy would undergo drastic changes over the next few months, or even days, that will have an effect on the manufacturing industry, impacting stock prices, exchange rates, and small to medium enterprises.
“If I were President Tsai Ing-wen, I would be sitting in the Presidential Office requesting to hold a national economic security report,” Gou said. According to the senior business leader, Taiwan cannot hide from this issue, as many small and medium enterprises haven’t received any orders yet. He asked President Tsai Ing-wen to take concrete actions regarding this issue, especially due to the recent economic forecasts that predict an economic downfall. Gou warns that the economic downfall may occur in a short period of time, which will immensely impact domestic consumption, and lead to economic collapse.
As such, in an interview given to NOWnews on June 3, Sun echoed Gou’s statements about small and medium enterprises, stressing that they are very worried about the industry. Sun remarked that before Gou discovered this trend about these enterprises not receiving any orders, a TIER report in May had already predicted that the upward trend of the economy would be interrupted. In addition, in recent shareholder meetings of China Steel and Formosa Plastic Corporation, the companies indicated that the economy would be uncertain in the second half of the year, adding that pessimistic sentiments are high.
Sun also found that big manufacturers have been affected. Asked whether a financial downfall was to occur, he believes that it is still too difficult to say. Based on previous trade wars, Sun found that many of them lead to financial downfall. However, he was not conclusive on whether a downfall was to occur, as this question has many complicated aspects.
Sun said: “We can only say that the trade war will cause economic fluctuations, even though the trade war cannot completely explain the primary cause of the economic downfall”. Sun also notes that the trade war has expanded rapidly to places including India, Europe, and Japan. Since this war is becoming a “global trade war,” Sun expressed hopes that everybody would be aware of these significant issues. •