Mars and FAW-Volkswagen inject fresh investment in Tianjin

A glance at a production line of FAW-Volkswagen in Tianjin. [Photo provided to chinadaily.com.cn]

A substantial surge in foreign investment in the coastal city of Tianjin reflects the confidence of multinational corporations in investing in China.

On May 15, US-based pet food company Mars and the Sino-German joint venture FAW-Volkswagen announced new capital injections of up to 3.3 billion yuan ($456.3 million), flocking to the Tianjin Economic-Technological Development Area, a pivotal zone within the Binhai New Area.

On that day, Mars, the global pet care giant, inaugurated operations at its new Tianjin pet food factory, which involved an investment of $137 million.

Besides, FAW-Volkswagen signed an agreement with the administrative committee of TEDA to invest over 2.3 billion yuan to introduce three SUV models at the FAW-Volkswagen Tianjin Plant.

The production line for these models is expected to be operational by 2026.

Automation adds new flavors to catering biz

A robot serves tea to visitors during a tea expo in Beijing in April. [WU CHANGQING/FOR CHINA DAILY]

China’s pursuit of new quality productive forces, which are characterized by innovation, digitalization and high-end technology, is injecting new momentum into the country’s catering industry.

Evidence of this was found on a recent morning at the entrance/exit of Niujie subway station in Beijing, where a pancake vending machine busily made and served jianbing (savory pancakes). Passengers, passersby and local residents lined up to place orders using the machine’s screen and scanned the QR code to pay.

After payment was done, a pancake-making robot at the back of the vending machine automatically spread the pancake, added a fried egg, turned the pancake over, dabbed the sauce using a brush and added the seasoning. Some three minutes later, the hot pancake was packed into a bag and delivered to the consumer. The entire process is automated.

“The jianbing tastes fine, almost like the handmade ones,” said a consumer. “But there are places where the sauce is not evenly spread.”

By 11 am, the pancakes were all sold out and a staff member appeared on the scene to carry out maintenance work on the machine.

“The pancake vending machine is still in trial operations, and the daily yield rate is limited. The pancake-making robot can analyze and learn from existing data after work every day. When the vending machine is officially put into full-fledged use, it should be capable of making 400 pancakes a day,” said the staff member.

GT Voice: Weakening yen sends signal of danger to central banks

The rate of the yen against the US dollar was displayed in the trading room at foreign exchange brokerage
Gaitame.com Co. in Tokyo, Japan, on April 25, 2024. The yen weakened beyond 155 per dollar for the first time in
more than three decades, fueling the risk that the key level may prompt Japan to step into the market. Photo: VCG

The rate of the yen against the US dollar was displayed in the trading room at foreign exchange brokerage Gaitame.com Co. in Tokyo, Japan, on April 25, 2024.  Photo: VCG

Many Asian currencies have been hit this year by the strength of the US dollar, and it seems especially so for the Japanese currency. The yen hit a fresh 34-year low against the dollar on Thursday. This added to market pessimism, which had already been exacerbated by the recent depreciation of the currency.

A day earlier, the yen weakened to the 155 range against the US dollar, marking the first time since June 1990 that the yen had crossed the psychologically important 155 level. Although a depreciation of the yen is likely to make Japanese exports more competitive, the disadvantages outweigh the advantages, because Japan relies heavily on imports for energy, food and raw materials.

In general, the yen’s depreciation will increase the import costs of these items, exacerbate already-high imported inflation and force enterprises to cut production capacity.

The decline in the yen comes after stronger-than-expected US inflation data reinforced expectations that the Federal Reserve may be not in a rush to cut interest rates and the US dollar will remain strong over the coming months. In addition to the yen, some other Asian currencies are under pressure.

For instance, the South Korean won recently breached a key psychological mark of 1,400 versus the dollar, the weakest since late 2022. The stronger dollar has also weighed on other Asian currencies such as the Thai baht and Malaysian ringgit.

Depreciation pressure limits central banks’ room to maneuver on monetary policy, forcing them to consider interest rate hikes, although the tightening of monetary policy will have a negative impact on these economies.

In 2023, GDP growth in many developing countries in Asia rebounded from the impact of COVID-19. Many economists believe that this trend will continue. The Asian economy was forecast to grow by about 4.5 percent in 2024, faster than in 2023, and to remain the largest contributor to global economic growth. 

We hope that growth of 4.5 percent can be achieved, but at a time when Asian currencies are being hit by a delayed Federal Reserve easing cycle and sustained strength in the dollar, depreciation pressures add uncertainty to the recovery of the Asian economy.

Some economists believe that raising interest rates to increase government intervention in the foreign exchange market is not a fundamental solution. The region’s tumbling currencies suggest that it’s crucial to strengthen industry and supply chains in Asia to withstand external shocks such as a strong dollar. 

There is no need to deny that the risk of a financial crisis has risen in some Asian countries, especially those with small economies. The question is, can they afford a stronger greenback, accelerated capital outflows and higher borrowing costs? 

Faced with uncertainties, Asian economies also need to consider enhancing financial cooperation and diversifying the currency composition of their reserves.

In Asia, the yuan has become one of the alternatives to the US dollar in trade settlements. China’s relatively steady economic development and robust trade with Asian countries have laid a solid foundation for the yuan to be accepted by those countries. 

The yuan is facing renewed depreciation pressure after stronger-than-expected US inflation bolstered the dollar, but China is fully capable of stabilizing the market and keeping the yuan steady at a reasonable and balanced level. Other Asian countries should consider expanding currency swaps between the yuan and their currencies.

There is a solid foundation for a stable and improving Chinese economy throughout this year. China is anticipated to make more contributions to safeguard regional financial stability amid recent currency depreciation in some Asian countries.