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China In-Focus — Yuan slides; Asian giant unveils private pension plan; Apple supplier Unimicron resumes operation
BEIJING: China’s yuan slipped to a more than six-month low against the US dollar on Thursday, after the country’s central bank set a weaker daily midpoint, as corporate dollar buying and expectations of US policy tightening supported the greenback.
Traders said a sharp weakening in the yuan’s offshore counterpart, which also hit a more than six-month low, suggested growing expectations of yuan depreciation, which could drag the onshore yuan still lower.
Reflecting dollar strength, the People’s Bank of China set the yuan’s daily midpoint at 6.4098 per dollar early on Thursday, its weakest since Nov. 11. However, that level was stronger than market forecasts.
Spot yuan opened at 6.4150 per dollar before weakening to a low of 6.4449 per dollar, its weakest level since Oct. 13.
China launches private pension scheme
Meanwhile, China unveiled a private pension scheme on Thursday, allowing employees to save funds in pension accounts and invest in financial products, in the latest move by authorities to address challenges arising from an aging population.
Employees can contribute up to 12,000 yuan ($1,863) per year to their pension fund under the new scheme, compared with a fixed payment from both employees and employers under the state pension plan.
That would not be affordable for most people in the labor market.
In 2021, per capita disposable income nationwide was 35,128 yuan.
The government will adjust the maximum contribution allowed under the new plan according to economic conditions, the government said in a notice, unveiling the new scheme.
Tax deductions on personal pension contributions
Tax deductions would be available on personal pension contributions for the first time.
Funds held in private pension accounts can be invested in certain financial products, like banking wealth management products, deposits and public funds, the notice said.
Independent consultancies estimate the private pension market will grow to at least $1.7 trillion by 2025, from $300 billion currently.
Unimicron partially resumes operation
Taiwan’s Unimicron Technology Corp. said on Thursday that one of its two plants in eastern China’s Kunshan would remain closed to comply with COVID-19 curbs but the other would resume production.
Unimicron, a chip substrate and printed circuit board maker that supplies Apple Inc. and Intel Corp, said in a statement one plant had resumed some production under a “closed loop management” system that keeps workers isolated inside.
A company representative said it was difficult to estimate current production capacity but it was “not high.”
Unimicron plans to keep one plant closed and the other running under the closed-loop system until next Wednesday.
Most of Unimicron’s manufacturing capacity is located in Taiwan but it also has plants in other parts of China as well as in Germany and Japan.
China has put Shanghai under a tight lockdown since late March and neighboring Kunshan has also tightened curbs to control the country’s biggest COVID-19 outbreak since the coronavirus was discovered in late 2019 in the city of Wuhan.
That had caused dozens of Taiwanese firms, many making parts for the semiconductor and electronics industries, to suspend operations.
(With inputs from Reuters)
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