The Taiwan–US CPI Gap and CPC’s Absorbed Costs: The Price of Price Controls

Originally published 2022-04-13Robin’s commentary (as of April 2022; figures are from news reports at that time)

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English translation of the Chinese post originally published 2022-04-13. Translated 2026-10-31 with AI assistance. Historical figures and claims have not been updated or independently verified. 中文原文

Reading guide

Robin compares US March CPI inflation of 8.5% year on year with Taiwan’s 2.47%. He argues that Taiwan’s low inflation reflects deliberate government price controls, with the Fair Trade Commission and Ministry of Economic Affairs intervening when companies announce increases. He cites CPC: frozen natural gas prices meant it absorbed 104.8 billion in costs in 2021 and another 51.7 billion in the first quarter of 2022, losing roughly half its capital. He speculates that with free-market pricing, imported energy and food, and wage increases amid labor shortages, Taiwan’s year-on-year CPI inflation might exceed 10%—Robin’s hypothetical scenario.

Key points

March CPI inflation was 8.5% in the US and 2.47% in Taiwan, as stated in April 2022.
Taiwan relies heavily on imported energy and food.
CPC’s absorbed natural gas costs had consumed roughly half its capital; these reported figures have not been independently verified.
CPI inflation might exceed 10% with free-market adjustments—Robin’s hypothetical scenario.

Columns and beams in an open building are connected by central rods and balanced weights, suggesting structure and checks in governance. — Capital markets & governanceThematic illustration · AI generated

Full text — English translation

The US announced March CPI inflation of 8.5% year on year. February was 7.9%, and January was 7.5%. Taiwan’s March CPI inflation was 2.47% year on year. What does that tell us? The government is working hard to control prices. The US is one of the few countries self-sufficient in both energy and food. Only a few, such as Russia and Australia, are comparable: they can export energy and food as well as supply themselves. But US prices operate in a fully free market. Oil and electricity prices fluctuate through market mechanisms, so its CPI inflation more accurately reflects reality. I want to emphasize again that the US exports energy and food, yet still has such high inflation. Taiwan imports most of its energy and some food, including commodities such as soybeans, wheat, and corn. Yet its CPI inflation is only 30% of the US rate. That is because the government deliberately controls price fluctuations: whenever a company announces an increase, the Fair Trade Commission and Ministry of Economic Affairs investigate. Take CPC’s first quarter and the freeze on natural gas prices. CPC absorbed 104.8 billion in natural gas costs in 2021 and another 51.7 billion in the first quarter of 2022, already losing half its capital. If Taiwan also adjusted prices through free-market mechanisms, with imported energy—oil, natural gas, and coal—along with imported food and large employers raising wages amid labor shortages, year-on-year CPI inflation could very well exceed 10%.

These articles are personal notes, book excerpts, and collected reprints. Figures and events reflect the time of the original publication, are not current information, and do not constitute investment advice.

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