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Nervousness in Taiwan over China economic outlook: Nobel laureate

2011/06/14 21:16:08

Taipei, June 14 (CNA) The winner of the Nobel Prize for economicsin 2006 said Tuesday that some Taiwanese investors might have becomenervous about China's economic prospects, resulting in weakperformance of Taiwanese share prices this year.

"I guess investors have become more nervous because there's aboom in share prices in many markets. But on the other hand, thestock markets in Shanghai and Hong Kong have a close relationshipwith Taiwan's share prices, " Edmund S. Phelps said in a keynoteaddress at a business forum titled "A Vision of Possible Developmentsin the Global Economy."

"At the present time, I think there is a nervousness aboutChina's short-term or mid-term performance," he said.

"In the U.S., we have had quite a reversal of share prices in thepast month. That reflects a kind of re-evaluation of theprofitability and the capital in the U.S. economy," he said.

Earlier in the day, Taiwan share prices closed up 116.26 points,or 1.33 percent at 8,829.21, after moving between 8,737.24 and8,836.51, on turnover of NT$85.73 billion (US$2.97 billion) . Theweighted index has slumped 1.6 percent during the past six months.

Phelps forecast, however, that China's economy will grow at amoderate pace in the mid-term, based on its improved innovation,which will continue to support the country's business investmentactivity.

The 78-year-old scholar said people can look forward to theChinese economy in 10 years from now becoming much more independentof the West and moving fast toward a higher level of productivity.

He added that the increase of capital goods resulting from suchstrong business investment activity will create many jobs in China,which will boost the overall economy and increase the average laborproductivity.

(By Jeffrey Wu)