China - Current economic position and prospects

TO F RE-TURT 11 TOTICE REPORTS DESK UReport No. FE-28a WITHIN DZ W11 s HmV 10 AKIEVES DIVISION This report was prepared for use within the Bank and its affiliated organizations. vThey do not cent r.nnn6hility for i1e r arsic p nes. Thm not be published nor may it be quoted as representing their views. TNTrRNATTONAL BANK FOR RECONSTRUCTION AND TVPTPMVNPr INTFRNATIONAL DPVELOPMINT A q)CT A TTON CURRENT ECONOMIC POSITION AND PROSPECTS OF 'LT- T*L 1nLT"TTTIT T/*f lT* 1 rvav February 7, 1963 Department of Operations CURRENCY EQUIVALENTS 1 US dollar = 40 New Taiwan dollars NT$l = US $0. 025 NT1l. 000. 000 = US $25. 000 TABLE OF CONTENTS BASIC DAT Stql'jiARY AND CONL USION .C .d .... .... .... ....... . . . . .. Tm ir ntrnduc4 n- Trends in Output and Expenditure . . . . 2 Agriculture, Forestry and Fisheries . 3 Industry . . . . . . . . . .4 Transportation . . . . . .. Electric Power . . . . . . . . . . . . 6 Internal Finance . . . . . . . . . . . . . . 7 The Public Sector . . . . .. . . Private Sector and Overall Monetary Development . . . . . . . . . . . . . . 9 Recent Price Trends . . . . . . . . . . 10 IV. External Finance . . . . . . .. . . . . . . 12 Foreign Trade . . . . . . . . . . . . . 12 V. Economic Planning ... ...... .... 15 The Third Four-Year Plan , . . . . . . . 15 VI. Econonic Prospects . . . . . . . . . . . . . 17 Export Prospects and Creditworthiness . 18 STATISTICAL TABLES (see following page) kMP STATISTICAL TABLES Ta. Estimated Pxternal Publi Debt Outstanding ncluding Undisrsed as of June 30, 1962 Ib. External Pihlic DebttoU. GoveTrmen Payanlp in U.S. Dlla-rs or Local Currency Outstanding including Undisbursed as of June 30, 1962 II. Estimated Contractual Service Payments on E:xternal Public Debt C)utstadn inldn-Udsuse Po Jun~ 30, IO92 III. Expenditure on Gross National Product .J I nd stria 3r igin-J. of C ro s s IDome st Jic Produ, ct at Ftor Cos V. Employment ITTL JTIe. TT-_I_ ~Xi -Pj D 4. 4. .U~UO. -L. Inde .ubr oProducio VII. Area and Output of Agricultural Crops VIII. Output of Selected Mining and Industrial Products IX. Transportation X. Consolidated Budget of the Central, Provincial and Lucal Guover Inents XI. Special Budget - may 1, 1962 to June 30, 1963 XII. Consolidated Statement of Condition of the monetary System XIII. Factors Affecting the Mloney Supply in Hands of Public XIV. Interest R,ates XV. Price Indices XVI. Volume of Foreign Trade XVII. Value of Principal Exports XVIII. Value of Principal liports XIX. International Transactions XX. Gold and Foreign Exchange MA Q TrI ~~l fira, -L3v0 sq. males uross- ational Product (1961 estxnate) Gross national product NT0,661656 million Total available product (GNP + import surplus) NT$71,908 million Per capita GNP NT4j5,696 or US, 12 Per capita TAP NT$6,144 or US153 Production Indexes (1953 - 100) I.griculture 1961 ILL Industry July 1962 234 Eudget: Central and local. governmen+a consolidated, 1962/63, est., (IT$ millions) (excluding SpDecial Budget) Receipts 14,000 Expenditures 15,7-0 of which, defense (7,400) Excess of expenditure over receipts 1.750 Transfers from counterpart fund 1,060 Dericit after transfers from counterpart fund 690 I'oney Supply (October, 1962) NT$7,485 million Outstanding Loans of All Banke (Aig. 31, 1962) NT$13,,3 million Taipei Uholesale Frice Index (Sept 1962; 1956 = 100) 150 Balance of Fayments Estimate, 1961 (US$ millions) Exports 214.0 iports 323.6 I- IT /-0 -\ Trade balance -109 * 6 .aMce: Goods ana services -133.0 U.S. grants and loans 214.1 Other donations and capital movements 29.0 Net increase (-) in short-term assets -14.6 Official Gold and Foreign Exchange Holdings (net) US095 million equiv. (Noveiber 30, 1962) growth rate of the previous decade despite the continued burden of large defe SE'A Otlay.J Thus., even~1 th u +14nAJL -1 ati ULLiA U UI V over 3% annually, per capita national product now stands at around $140 or 50o higher than ten yeas ago. u.S. eumuad averaced run %lC0 million per year.in 1961 and 1962. This'corresponded to about 6/ % of uivr anu around nalf of defense expenditurea 11. Recent monetary and iiscal developments have been somewnat less favorable. In 1961, the money supply rose by 20% due partly to increased foreign assets, but mainly to increases in Government, salaries and in public sector investment. Moreover, in early 1962, the Government. decided to build up stocks of food, fuel and military equipment for use in the event a return to the Mainland could be attempted. As a result, defense outlays in 1962 will exceed the 1960 level by around 257, in real terms. However, this increase has been financed by a shar boost in taxes. A large part of the continued private credit expansion has been offset by a drop in exchange reserves, so that the money supply rose much more slowly in 1962 (about 7%). iii. The 7.5% growth in real output during the last decade has been based mainly on the intensive exploitation of the limited agricultural resources and the development of manufacturing industry. For most of the period the main emphasis has been on import substitution rather than promo- tion of exports. However, since 1960, the performance of Taiwan's exports has been very impressive. They increased by 26% in 1961 and a further 10 or 151% increase is indicated for 1962. This rapid growth has been achieved in spite of a decline in sugar and rice exports, by the emergence of a number of industrial products led by cotton textiles-, plywood and plastics, and processed agricultural products. Industrial products constituted about LtSo of total ex-orts in 1962 compared with 12% in 1956. iv. Probably the two most important conditions of continuing economic growth and progress toward economic viability in Taiwan are financial stabil- ity which is necessary for the required increase in savings, and further expansion of industrial exports. Financial stability will probably depend largely on the trend of military expenditure and how it is financed. This obviously is a matter of uncertainty. It is significant, however, that the 1962 additionq to military ontias were more than covered by increases :in taxation. Furthermore, these additions were largely for stockpiling purposes nnd- barring chnan.q in th nnlit.innl zituation vis-vis t.h Mainland defense expenditure will probably stabilize next year and may even decline. v. The other condition - industrial export growth - is also uncertain. T+. is nr y +.nn r miin- +i nn + +Inn+ +hk v r irn A -,.+q Of nd11r - - s c h exports since 1960 can be maintained. This advance has been paced by cormod- 4.t44~4 C', U,.~ - - C 0.C0I[J.< 1LL C X.L 0.. _L .L U y I LU11. Iie ±b LIjV 61C..I~ .L U.L. ficulties abroad. Such difficulties will undoubtedly limit the rate of eUoI. pattern wi LLeneeded' t mintin CLex pit.L.L6Y U±V 01 U _L L Lg h U Uth f of ts .e export pattern will be needed to maintain export growth in the face of' -these 4-II - L. - 13 4 AUJ .0 is - 11 - vi. The economic outlook dernnds. then- to i lnrrr P-tpnt on nntl view of possibilities in Taiwan for the transition to a more varied line of comnetitivc industrial exPnorts. Tmnressive evidennt of nrogress in -his direction during the last three years suggests that an optimistic view is -inqt,ifi rrl Thie-)i- nm f ancmh n +.rncni+.i nn oannnn+ a nobefvc f' i -- --- - -.f I---h -- r'no of co r e be fore ast In any case, Taiwan will still depend for some time on foreign financial ---, -;O - . ;IUL-- - so abl to assum e t-hat SU L 4 support will continue to the extent needed. Given this, the prospects of e coLvoum; aLjj't. LCLvuItL'-I Z;iUUt-I U o Lu LU UnRU la[I waiu UUOLu ZevIV-LUU conventional loans for some part of its foreign financing requirements. Debt Ot u soU p enu is quite moderaUe - about 7 o1 current export earnings- and will decline sharply in the next few years. Hence a mixture of loans with easier-erm creudis would seem appropriate for Bank/IDA financing in Taiwan, CURRENT ECONOMIC .OSITION AND PROSPECTS O THE REPUBLIC OF CHINA I. Introduction The last economic report on the Republic of Chinal/ covered develo.- ments through 1960. The main conclusions of that report were: A. despite a very heavy defense burden, Taiwan had made substant- ial progress during the 'last decade in reducing inflationary pressures and expanding national out-ut: B. GNP should continue to increase at a rate well in excess of population growth; C., total exports might reasonably be expected to increase at hj to 5 nPr vqr on thp avernae with rising xpnorts of manufactured goods as the spearhead; and, D. the report also noted the stated policy of the Government to maintninar+ni n efoneo inn+1 n g+ n rnn+ lnn in real terms so that the defense burden would gradually decline as G,NP increascd. NT'hil" -idctn a n,_,m Ue1 o' unetinte. which might prevent strict adherance to this policy, the r_L, U, L±AIC Possi iliu LLiJ, U ,1%5 ±~L,j L)U1W. 1 would gradually decline with the result that more doestic resOurces wU,l UUUm dValidUL for i[nVebUUU d[ te dependence on external aid to maintain an adequate rate of growth would gradually diminish. 2. So far as economic growth is concerned, developments during 19o1 and the first three quarters of 1962 do not indicate need for any substantial alteration of the above conclusions. The economy continued to grow at a high rate and foreign trade developed favorably with a greater diversificaticn of exports and a sharp increase in export receipts. However, in early 1:92, an increase in the defense budget took place, and expenditure for the year i111 probably amount to around 1270 of GUN as against ma.h% in 96u and P),l. Nevertheless, the fiscal and monetary position was considerably improved in 1962 because a special budget financed by new taxes was passed to cover the increased outlays. 3. While recent economic developments have been generally favorable, there is no room for complacency, for the country is still faced with serious problems. Great political and military uncertainties remain and the possibility of any appreciable decline in the defense burden has been postponed by the recent decision to increase military preparedness. The population continues to grow at well over 3% per year. And there are signs that it will become increasingly difficult to maintain the high economic growth rates of the last decade. 1/ FE(IDA)la, "The Economy of Taiwan, The Republic of China", August 18., 1S(1. - 2 - II. National Income and Production Trends in Output and Expenditure 4. During the 1950ts, the Taiwan economy grew at 7% to 8, per year; in the last five years the average growth rate has been 7.5% or twice the rate of population increase. By 1961, GNP per capita amounted to about US$140 equivalent (converted at the official exchange rate of NT$40 = U.S.$1); total available product per capita, including net imports of goods and services financed mainly by U.S. aid, was just over US$150. 5. Between 1956 and 1961. significant progress was made in the direction of economic viability, i.e. toward a position where Taiwan can ultimately finance an adeauate level of investment from its own resources and a normal inflow of foreign capital. While defense expenditures and foreign aid held fairIv stabl as n nP.rnentq of' GNP during this neriod, civilian consumnti-n declined from 80% to 75%. At the same time, national savings grew from 9% to over Ihc- This hPlnPr to financ a sharn Prnanion of aro.- nnnital formation, which grew as a. share of GNP from 15% to nearly 22%. And while imnort.. inor-n.H as a nprnEna of +.h ntiornal nrnr1Im+. _rnorts have increased even more. As a result the share of imports financed by foreign irl -rnne nhc+nti&ily -fPrrm nnmrlu CA0 +n Ic-z +.han a third. n 1962 thi pttrn rn'-A ) 'crac+ defenye outlays were increased from around 10.5% of GN4P to an estimated /.1 Th s L I-I,aS t~ Le recult of a ud-c sso n~t L.1 ear, > -C U' Jj44~ stocks of food, fuel and equipment for use in the event a return to the ilIlilad-U were te UUinpl U. 11JI I.Tv r, UL1±- ± _L 1I b in financed by an( d.incease in taxes on consumption goods levied specially for this purpose. Judging from te icrease in imports u caUptLU gUos durIUg the fAIr seven months of 1962, it appears that the investment rate has not been cut back. no ostl[e curret de± on freign accounb in tie Iirsu ten mrionOn 01 y remained about the same as the corresponding period of 1961, this suggests that natils avings in 1962 probably remained at around lh%/our 15% of 1/ This is based on direct defense outlays reflected in the budget. In addition, there are substantial hidden subsidies for defense in the form of supplies sold to the military by Government Agencies at less than cost. These may amount to as much as another 2 or 3% of the national product. However, there is no indication that these have increased recently. - 3 - National Expenditure 1956-1961 (expressed as percentage of GNP) 1956 1957 1958 1959 1960 1961 est. Defense 9.9 10.1 11.5 11.6 10.4 10.5 Civilian Consumption 80.k 79.7 77.6 77.2 75.6 74.9 Savings (A) 9.7 10.2 10.9 11,2 14.0 1.6 GIP 100.0 100.0 100.0 100.0 100.0 100.0 Net Imports (B) 5.3 6.3 7.3 8. 7.7 7.0 Gross Capital Fnr-rqtion (A+P) 1_0 16.5 182 ?00 ?1_7 ?I J 7. A gradual shift in the structure of production has accompanied the ranid cronoric growth of theo n opast Tdecae ndustry hs ome to nlanr a more important role, and the economy has become sonewhat less dependent flon Y~ (1 nnj iYl-h L Pn+I,TnM-L 1 nrl, 10I1 +k,! - - -1 -r +I -~ I ,, population working in agriculture dropped from 61% to 56%, while the - 1 0- JnC~~ nnc3 otk taL U~ II Z) _LU ( ik., I - CA1 t: I L _L _L WL L1 L L U 0 L Y (from 9% to 11%), commerce, transportation and personal services. The ,,ontrjLb-,IULo o L. agicutre LIo grs UC1-netic prouc (WU l NUJE decline[1u IrOrl 35% in 1952 to 30% in 1959, while the contribution of manufacturing rose il 4 d - --- 1 _ - - trom l/ Lu neULy cu/. nowever, u[iese Lrends in uD-r were reversed in 1960 and 1961; in the latter year the contribution of agriculture rose to % and the counribution of manuiacturing declined to 10,47. This reversal was due largely to price factors; i.e. agricultural prices rose sharply, )jPLUreu by a rice b[uIa'Ude in late iy ) and 1yo0, while prices of most industrial goods were either stable or declined. Agriculture, Forestry and Fisheries 8. Taiwants agriculture is characterized by small-sized farms - average holdings of 1.15 hectares per family of seven persons - and intensive use of the limited land resources by intelligent and hard working farmers. Although the area of cultivated land has remained virtually stable, agricultural production increased 47% between 1952 and 1961, an average of about 4.5% per year. Irrigation, multi-cropping, improved seeds, and increased use of fertilizer have contributed to the increased productivity. Yields are well above pre-war levels and are higher than in other Asian countries except Japan. 9. With few exceptions - notably sugar - total production of all important crops is also well above pre-war peaks. Particularly large increases have been registered in sweet potatoes, sojoears, peanuts, and citronella. Output of rice, the nost important crop, has grown som3chat morp F ryAvepraging szlightly v +.hr-in npr year !since- 1952. Yhp~:o.'~ in rice production has thus been less than population growth (3.5% per year), and Tnitann t modest Ynort surnIu of rice has craduall dwindlr1 Tn f:1ft Taiwan became a net importer of rice in 196U when production fell as a --uclt of floodsz 1, thes fall n{' 10[ O nnA~ rnllo+ in +Th, c--ic rf' I QOnC However, favorable weather conditions brought bumper crops in 1961 and the 4' .. ~11 nC - Ao -104" 1 -A ir, , Cr -v,r 0 n, n ,n 1 n i Cf-n position. 10. Production of sugar - the main cash crop and traditionally Taiwan's LargeU export - [as 11utuateu arouunau yUVuuy bw la Le1 r amounted to 885,000 tons in 1961. This level of output, although still ubStantially below the pre-war peaK, has been ample to meet domesuic requirements and supply Taiwan's share of the world market as determined by the international Sugar Agreement and United States quotas. 11. Timber production increased by 9%o in 19bl, which compares with an average rate of 8% per year since 1952. About 65% of the total timbE.r production consists of soft wood, much of it of low economic value. Since about 55% of the land area of Taiwan is covered with forests, it is important that forest resources are utilized efficiently, and there is need to improve forest administration and to develop a long range forestry plan to re-afforeist with suitable types of trees that will yielda higher return to the economy. 12. Fish production increased by 20% to 312,000 tons in 1961, compared to an average increase of 9% since 1952. Current prcduction is now more than 2- times the peak production reached before World War II. As a result of this rapid increase, Taiwan's inland and coastal fishery resources are now very intensively exploited. The nearby coastal waters are in fact being over- fished. Deep-sea fishing has so far been done only on a small scale, but a program is under way to expand this activity substantially. Industry 13. Industrial production increased at an average rate of 12% from 1952 to 1961. Recently the rate has slackened. In 1.960 the increase was nearly 14%; in 1961 it was 11.6% and in the first eight months of 1962 production. was 8.0% above the comparable period of 1961. However, this recent decline is entirely the result of a decline in sugar processing associated with excess stocks built un in recpnt years. Excuding suar industrial output rose by 14% in the first eight months, as compared with 12.5% in 1961 and 1% in '1960. 1. This is an impressive renrc nf inrdustrial develoNment. T+ h1 been based largely on private enterprise, with the Government providing adequate infrastructure farilitip- and generaly fllinTg plis + as-S+ and encourage industry. It has also involved a considerable range of industrial nrnduets (see Table VITTT) althnh mo+ o +ese con+ine to b e in processing or light manufacturing categories. This industrial growth hA., hOITrpyr ±j,m c fllrr) T i nl4,n n ni ~ 4 1 + "sr + 1-., - - f - plc in4 a45 clim- .5 - L inflin and)U ha been U larely for supplying the highly protected domestic market which is quite small. iftJ 11in-ster bi I ed -ndsnalJ 1 cnrow4t4h ar -com_i evdt. Som L-1.1~5 _11 )444).C. UCJL U __U_UIIj OU O OWltz Uj- ullt- UuLIluqU nueb w- aif in.flation-fostered industrial growth are becoming ev-.dent. Some lines are operating well1 below capacity, uha etls ae,io n tej Parts of the industrial structure also suffer from such weaknesses as ci,tall inefficient firms, obsolete equipment, excessive indebtedness on _-ifavorable terms, and inadequate marketinv facilities. 1. Nevertheless, in spite of these weaknesses, the unusually rapid growth of Taiwan's industrial exports in recent years is encouraging evidenc- of international comoetitiveness in a number of industrial lines. Industr.La exports increased from $19 million in 1958 to $83 million in 1961 and probahly over 1OO million in 1962. The lr st inerP.P was in textile nrodunct hui there were also very large contributions to additional export earnings from nlIastics and other rhemnal nroduct.- liryht machinery and varous kinds of electrical and metal products, plywood and other timber manufactures, paper and especially this export expansion reflect an ample supply of intelligent, educated, 1 r-01-4-A 1ed labo J- -4i,A -P labor, and a fairly large number of experienced and capable entrepreneurs who are tackling the- indutria problem wit -igor T. the-rfre see-ms reasonable, to expect that the competitive position of Taiwants industr" wil cntnu t iprve TI-s is not to Say, hoUwefVer1, Uta theU recentUIgU rate of industrial export expansion can be expected to continue. Resistance -nfein markets to con,JtiU expansion Uil Vb a -rLbEI in3sme lns such as textiles. And Taiwan faces heavy competition in most markets from such well etbihdsplrsasJapaii and Hong iog VO. faiwan nas a well developed internal transportation network consisting of railways, highways and airways. Coastal shipping plays a minor role mainly because of the short distances involved and the cost of transhipments. Large investments have been sufficient to meet both rehabil- itation needs and increased traffic demand. 17. Traffic by all nodes of transport has increased rapidly in the last decade, although this trend was reversed with respect to rail traffic in the first half 1962. From 1952 to 1961, freight traffic (ton-kilometers) increased at an average rate of about 6%, per year on the railways and more than 20% per year on the highways. Thus while railways are still by far the most important freight carrier (with about 85% of the combined rail and highway freight traffic in 1961), the importance of highway transport has increased considerably. Passenger traffic has also increased rapidly, at nearly 8% per year on the railways and about 15% on highways. In numbers, many more passengers move by highway than railways, but due to the longer average trip on the railways the latter still carry slightly more traff:)c than the highways when measured in passenger-kilometers. It is probable that the relative importance of highways will continue to increase in the foreseeable future. This trend was accentuated in the first half of 1962 when highway traffic continued to rise but railway traffic declined somewhat. 13. The Republic of China now has a merchant fleet of 475,000 tons the majority of which is of World -,ar II vintage or older. Some officia1,q wish to expand and modernize the fleet so that fast, efficient, and dependable liner services could be onerated in order to facilit--its noening un and expanding markets for Taiwan's experts6 On the other hand other circles are ag, n nst. 1,qYrrr imnrp ,+.r iyt-. i +11- fl- b -a- n(' th, fall between the above two views is going forward. A few new ships are being added and soMe seeondThand tonnage of fairlyi eetvinae-i 0i; purchased. During the first half of 1962, there were large prepaymentE on Ul,)C LJJi ~CL a±Se sh i; -ar rePLL4c'd ina 'a S'Llar p 'J LW ± Ui. ttal JJII1JUI UkJYIL I . (See Appendix, Table XVIII). Electric Power 19. Since 1952, electric power production has increased at an average rate of 12.5/ per year, reaching a,IUU million K.w.n. in 1-l. Sales nave increased at an average rate of about 13.5, during the last five years to 3,528 million k.w.h. in 161. At the end of 1961 the integrated hydro and thermal system had an installed capacity of 924,000 k.w. (almost triple 1952 capacity) with a peak load of 719,000 k.w. The rapid expansion of generating capacity has enabled the Tai Power Company to meet mcst essential needs. The completion of a large thermal power plant in December 1961 enabled the Company for the first time to pass the winter dry season without appreciable in&errur- tion of service. In 1962, production rose by 15, abcve 1961. Hmwever, there are still the problems of maintaining a constant voltage and continuin7c to expand capnacity to keep up with future demand4 - 7' - III. Internal Finance The Public Sector .20. The public sector plays an important role in Taiwan's economy. In addition to defense which accounts for half of the budget, the public sector still undertakes about half of total fixed investment (it was higher than that in 1956-59). It also plays a large role in inventory movements, as the result of the oprrations of public enterprises engaged in sugar and rice purchasing. Expenditures covered by the consolidated budget, which exclude both these purchasing operations and development outlays financed by US aid, have averaged about 22% of GNP in the past five years. Development, expenditures financed directly by aid have avera/ed another 3%. In addition, the "hidden" subsidies provided for defense in the form of goods and services supplied below cost by public enterprises may amount to between 2 and 3 of GNP., Thus, broadly defined, public expenditures constitute around 28% of the national croduct. Thif ratio had been declining moderately between 1956 and 1960. B3ut in fiscal 1960/61, there were large increases in Government. qnritn + make n for the loss of purchasing power caused by inflation, and a substantial jump in budgetary development exnenditures and in qtocknilinr purchqas Then in 1962, expenditures went up by an equal amount as the result of increased defense outlayS. 21. Government. tA-r rneint. have averaged around I of the nat-ional prcduct in recent years. Other revenue - including net income from nuici enterprise -iTaverage LL T-P +, "hdeoubsdUy paymentsu b y these enterprises were included in net revenue, the latter r:tio would hep r7 The gap b etwTen total expenditures -averaging 28 of" GiP and revenues (broadly defined) of 21 or 22% has been financed mainly by -1. - -3 - 6 Lu4 I. U_L t,-i_L, .3 , U-L Z die u ly to f ~iance develorment expenditures. Most of the remainder is provided in the form commodities. In addition, during three years out of the last six there has a lo bn a significant auountof 1UnanLue by bank credit to the public sector. The first of these occasions was 1958 when. defense outlays and ~~~~~i Lim L J LL-QbU UI U L, VU U± Uit, :,uemoy crises. The next two occurred in 1960 and 1961 when Government sa~lanries an devell r-n--,r 4- - f- -1 - - -- _ __-_ QZU .o v cu Z:) u jltgo wmie moulreasuo alnu invetories of sugar and rice also went up. In 1960, increased counterpart balances offset C LWie iL_La. .LU11a.LV _UU.paUT- 22. An the SpeciaL LudgeT 01 April 1962, additional defense outlays of NTO2.h billion were authorized for expenditure in the fiscal years wyucn an f /wuU. it appears that some of this was for expenditures incurred prior to April. As already noted, most of' these funds are being used for financing increased stocks of food, fuel and equipment. Some scaling down of the original expenditure plans has taken olace and it now appears that only about NT1.8 billion will be spent out of this special authorization - around NT 0.6 billion prior to July 1962 and the remainder in the fiscal year 1962/63. These increments correspond to 8% and 18% respectively of the amounts originally budgeted for those two fiscal years. - 8 - 23. The Special Budget also provided for increases 'n taxes ard ir rg-ires l uhlc utilities uhich are expected to yield NT:2.h billion ovec a 14 month period from the date of enactnent. It appears that the ful nmmun+ will be relied. Tf so., it will result in an 18 increase in total revenues during 1962/63, as compared to an estimated increase in total expendi triie 13 . TIoge'/- crthepr with expc sep of ounterpart funds at the same rate as 1961/62, this will eliminate the need for any inflationary financing. The consolidated budget for 1962/63 is shon below, along with results for the previous five years. This table excludes fiJnancial* operations Of- p'UblIc nepie n eeomn uly financed directly by US aid. Stumary of Consolidated Budget ( llio n of -- NT7,-5)7 195/ k UL9 U19 u.L 196/6 1 1 (Estiinated) Taxes & Monopoly Profits 6.39 7.06 7.87 u098 10.0 10.4 Other Revenue 1.59 2.32 2.98 3.hO 3.5 5.6 Total Revenue 7.98 9.38 10.85 12.38 13.5 16.o Defense Expenditure 4.26 5.38 5.96 6.79 7.7 8.6 Development Outlays 1.38 1.61 1.87 2.18 2.9 3.1 Other Expenditure 2.84 3.38 4.12 4.90 4.6 5.3 Total Expenditure 8,h8 10.37 11.95 13.87 15.2 17.0 Eook Deficit .,0 .99 1.10 1.49 1.7 1.0 Lags(-) or leads, _.13 - .h5 .oh .55 - .4 _ Cash Deficit .63 .54 1.14 2.Oh 1.3 1.0 Financing: Transfers from Counterpart Funds .39 .37 .97 1.29 1.1 1.0 Net Bank Borrowing .24 .17 .17 .85 0.2 - 1/ Includes Special Budget of NTO'2.4 billion in revenues, and assumes under-expenditure in Special Defense Budget. 2/ This is derived as a residual (difference between book deficit and recorded data on financing). 2å. For a more corprehensive picture of the impact of public sector operations on the money supply, account also needs to be taken of tki hnne c,red(it, extencled tn publin enternrises (for stockniling and fixed investment) and of changes in counterpart balances. As may be seen from the table below, jhich is prented on a calendar year Hai5, the net impact of these transactions added significantly to the over-all expansion of credit in 1956 9nd '.61. Taking the eric 1957/1 as - 9 - whole tte net expansion totalled NTS2.5 billion, or 63% of the govtV- in total money supply in that period. However, in 1962 the not effect was small despite a sharply reduced rate of accurrilation in counterDart balances. Monetary Ih-pact of Public Sector Operations (billions of NT) 1957 1958 1959 1960 1961 1962 (10 months) Net Bank borrowi,ng 0.18 0.56 o15 0.69 .66) by (onvernmTnn+/ by Public ) n i n on n 1 n N, 1 n, part Balances -0.17 0,10 -0.28 -0.79 -0.78 -0.15 Net impact 0.11 1.16 0.05 0.30 0.91 0.20 1/ Net of increase in cash balances. Private Sector and Overall 1one tary Development 25. In the last ten years bank credit to the private sector has expanded much faster than credit to public institutions. Gross private credil increased lourfold between 1952 and 1957, ana alost that much between 1957 and 1962. In absolute terms, the expansion has averaged ;Tel,.b bi:.ion in the past five years. The peak year was 1961 when there was an expansion of nearly i4T03.0 billion as the result of an easing of credit restrictions. In the first ten months oi' 1962, the increase was NT.,2.0 billion. However, on the average this increase in private credit has been more than offset since 1957 b1y the growth in time and savings deposits which has averaged NT'1.7 billion (after deducting net changes in the miscellaneous accounts). During 1961, the increase in these deposits jumped spectacularly to NT,3.2 billion as the result of higher interest rates available. In the first ten months of 1962, the increase fell back to NT,,1.3 billion. Thus on balance, the private sector had a significant expansionary impact in 1962 for the first time since 1959. 26. From 1957 through 1961, the gro-th of foreign assets added to the rise in the money supply in every year except 1959. The aggregate increase in the five years was Q51 million, or NT,1.76 billion. However, during 1962 (through October) reserves fell by 19 million or NT'4780 million, which offset mo.st of the impact of the net private credit expansion in the period.! 7 Tndic.ations are, hoaw2Ter, that reserves remained stctle in tih altr par- cf the r w'te there wais a fither L'=:'KEd icCEC _ in net priv.te credit froi lhe L,rke. 1-ence for 19U, _r a ihole +ho money sannir crobably ro3e nv ebu T, - i0 - 27. Thus, as already noted, most of the growth in money supply an the past six years can be attributed to the expansion of credit to zhe public sector. From the end of 1956 through October 1962, the money supply expanded by NTOL.3 billion. Of this NTi2..7 billion arose from public sector operations, while NTy1.0 billion reflected the increase in foreign assets, with the remainder being the difference between private credit and the growth in time and savings deposits. The expansion of the money supply at an average rate of 16.5% since 1956 represents a considerable slow down from the 1950-56 -priod when it averaged nearly 30% annually. The recent growth rate is moderately faster than that of the GNP in current prices, indicating a continued monetization of the economy. It is worth noting that despite the rapid growth of money Surly in the past decade, the ratio of money supply to GNP in Taiwan is still only 10%, as compared with 16 - 18% in other countries at a similar level of real income (Thailand, Philippines). Summary of Factors Affecting the Money Supply (billion of NT) 1 97 1QCR 1QCQ iAn lOl 1oA, (10 m--ionths) Net Credit to Public Sector 0.11 1.16 0.05 0.30 0.91 0.20 Private Sector Grns- rlnit 0.99 1. 7 1. 6 10 9n 2 . nn Less: Offsets -0.65 -1.46 -1.10 -1.57 -3.22 -1.32 Tnrni an Rv--hnranp xeserves 0.13 0.36 -0.18 0.82 0.62 -0.78 Total Money Supply 0.5' 1.33 0.44 0.54 1.23 0.25 /o Increase 18% 35% 9% 10% 20% Lg Recent P-rie T-re-nds smaller than increases in the money supply. This was a .Ietection of both the increse in e uppiy u guous and services Uit is estimated that total available product more than doubled during the 1950s) and a gradual Slouing u i the n VeotUUy 01 circulation from the nigh level prevailing at the beginning of the decade. However, 1959 and 1960 proved to be an exception tU USb trend, since prices went up more raplLy Tnan the money Supply. Part of the price increase, particularly in 1959, was doubtless a result oI tne large rise kfl7) in money supply wncn occurred in 1958; part was also due to the increased local currency cost of imported goods resulting from the 50% devaluation of the New Taiwan dollar in 1958. But in late 1959 and in 1960 a food shortage became the most important factor exerting upward price pressure. A serious flood in August 1959 caused a temporary shortage of most foodstuffs and damaged the fall rice crop. his was followed by drought and another poor rice crop in the spring of 1960. Consequently, the wholesale and consumer price indexes which are heavily weighted by food prices, increased. sharoly. 1-1 Ly. inu suppLy oI IU imriproveu greatLy in I.yU.L 1o.10lwing some impcrts in 1960, a bumper rice crop in the fall of 1960 and two good harvests in 1961. Supplies of most other goods were also ample as a result of adequate imports and a level of manufacturing output more than adequate to meet the needs of the domestic market. In these circumstancos a decline in the Price level was to have been expected when the rice snortage was corrected. However such a decline was prevented by the sharp increase in money supply in 1:.61. Consequently instead of a price decline, the wholesale price index went up by 3%0 and the consumer price index by B. Moreover, mainly because of the sustained increases in the price of rice, wage increases averaging 22% were granted to workers in manufacturing industry in 1961. 30. In 1962 both agricultural and industrial production have continued at high levels and sipplies of essential imported goods have continued to be adequate. With these favorable supply conditions and the slower increase in money supply, the rise in prices was onlJy moderate during most of 1962, but wholesale prices swung upward in the latter months of the year. 31. The following table compares the increase i.n money supply and wholesale and consumer prices from 1959 to 1962. Money Sunoly Tholesale Prices Consumer Prices General Food General Food Index Index Tnrlpy Tnrl 1959 + 9 11 11 12 1960 +10 1) 21 1_ 23 +96 ±0 3 11 R 1611mos) + )1 6 -n.a.3 na -A~ nh ni i .i n fo"eigc,n +.-.n r, - P,mm rI in o following table: Taiwan's Foreign Trade f - -1 1 4 --4 - T T 0 1952 1956 1958 1959 1960 1961 1st half Total Exports 120 130 164 160 ) .70 214 12 a/ Total Imports 207 22o 23o 2LI 252 324 202- Balance -87 -90 -73 -OQ -.82 -110 [G U.S. aid imports 89 96 87 73 91 108 49 % of total imports 43 42 39 30 36 33 2t a7 Includes around $30 million prepayments for ships. 33- During the 1950's exports grew at an average rate of about 1.5% per year and imports at 4.07. The trade deficit averaged about $80 million but U.S. aid more than covered the deficit. On the average U.S. aid has financed about 40% of total imports but this proportion has gradually declined to 33% in 1961, and dropped below a third in 1962. In 1961 and the first half of 1962 the g:ow of foreitn trade accelerated sharply. Exprts increased by 26% in 1961 and imports by 23%. U.S. aid imports of $108 million were virtually sufficient to cover the trade deficit. 734 The trend of exports continued toward greater diversification and less dependence on the two traditional main export items, sugar and rice. Sugar declined due to poor world market conditions while rice, which had fallen into a net import position in 1960, recovered to a small net export position. Most other exports increased substantially including cotton textiles, metals and metal products, electric fans, chemicals and plassics. cement, canned pineapple, canned mushrooms, bananas and timber. Many of these increases reflect the fact that capacity and output in many industries have recently outstripped domestic demand, and manufacturers are being forced to seek markets abroad. Thp shift in the nattPrn of P.xnorts in favor of industrial products and away from sugar and rice is indicated in the following table - 13- C!nmnnP.i tA~ nn nf FY-nrtq (in per cent) Sugar Rice Industrial Products Others 1958 52 17 11 20 ). C-O .1 rf01 : 1960 44 2 31 23 1962 (first eight months) 24 4 ... 72 36. The composition of imports, which is influenced considerably by import and exchange controls, has been fairly stable in recent years as among the three main categories - capital goods, raw materials and consumer goods. However, in 1961 the share of capital goods increasea,brom 2o% to 3u% of total imports and went up to around 35% in the first half of 1962 partly as the result of large ship purchases. The raw materials category has remained at about 47%, while the share of consumer goods imports has declined. 37. About 70o of Taiwan's imports originated from Japan and the U.S., while these two countries took over 50% of Taiwan's exports in 1961. Of the two, the U.S. has become an increasingly important trading partner in recent years, accounting for about 62% of Taiwan's total foreign trade in 1961, as against 43% in 1958. Manufactured products such as textiles and ply.ood, and canned pineapples and other processed agricultural products have figured largely in the sharp increase of exports to the U.S. - from 6% of Taiwan's total export earnings in 1958 to 2h% in 1961. On the import side, about 80% of aid-financed goods have originated in the U.S., and this proportion is likely to increase because of U.S. policy to limit off-shore purchases under U.S. aid programs. However, U.S. policies toward textile and plywood imports and the effects of the new Sugar Act may slowdown the rate of expansion of exports to the U.S. For this reason, Taiwan is striving hard to diversify her markets and find new outlets in the Middle East and African countries. A number of trade missions were sent to and received from Africa recently.. A bilateral contract for the sale of sugar to Japan was concluded recently which should help to stabilise Taiwan's earnings from sugar at least for the immediate future. 38. Taiwan's trade deficit is typically increased by a deficit on invisibles. The total deficit on roods and servicps has ranged from around $100 million to $130 million in recent years. Since 1957 there has been a sizeable inflow of nrivate canital. which has offspt to n sigificant degre the deficit on goods and services. The private capital inflow is largely a rp.flection of the succes of the nvernments.t vigorus effort.s t. attrant. foreign and overseas Chinese capital. As indicated in the following table thp rprni ni ng depfici. thas- bee n mre t.hann overaredj by-i T.S. aidl in mos yers - I)I - lurmary Da'ance 01 rayments (-millions of U.S. dollars) 1962 1952 1956o 1957 1958 l9O 1 960J /) IYO±-- 1-1. half Goods and Services -100 -108 -96 -125 -123 -132 -134 -53 iIsc. donations & capital 5 3 6 52 38 51 29 5 Balance -92 -112 -92 -67 -84 -80 -103 48 U.S. Loans and Grants 94 97 97 86 75 98 114 45 Net Monetary Movements (increase -) -2 15 -5 -21 9 -18 -11 3 a/ Preliminary E/ Including errors and omissions 39. As a result of U.S. aid financing in excess of the remaining deficit. Taiwan has been able in most years to make nodest additions to foreign exchange reserves. At the end of 1961 official gold and net foreign exchange reserves amounted to $119 million. eauivalent to about L months imports at the 1961 rate. Howcver, in 1962, U.S. aid. arrivals were running net official foreign assets dropped to about $100 million, E 3co,n omic Plar± nnLg and ±- A"J)-osp V4_e l 1 MC U U JLJU1J'_tU L1i_J jlaOZ ai'eoe &i b Le UNQU UL,2.5 in the three main sectors of agriculture, industry and transportation. These plans have been, however, of rather Lmitd sUpe, a..U coUrdinaton among tne sectors has been accomplished mainly through informal discussions among the variUs vUL cUUcLelC. Uomparatively little effort has been devoted to planning from the overall point of view. Broadly speaking the approach appears to have been to push anead as rapidly as possible in each sector; the overall allocation of resources and the rate of economic growth were essen- tially the results of tne progress achieved in the individual sectors rather than the starting point from which to begin planning in each sector. i-ever- theless, in view of the satisfactory rate of growth in UNP during the l)50's it may be concluded that the above planning procedures and methods were adequate for the conditions then prevailing. 4L. From 1949 to 1953 the Central Government stressed agricultural reform, with the Sino-American Joint Commission for Rural Reconstruction leacing a vigorous and comprehensive program to increase agricultural produc-- tion, including the all important land reform. Concurrently rehabilitation of existing industry was also undertaken. The stage was thus set for the first and second Four-Year Plans, 1953-56, and 1957-60, the declared purposes of ihich were to maintain a high rate of growth while improving the budgetary situation and decreasing dependence on U.S. aid mainly through important substitution. The primary emphasis was on industry. 42, Comparison of actual results with the plan targets is not too meaningful, since the targets are changed annually, usually after the budget for the fiscal year has been passed. The targets as revised thus tend to be little more than statement of short-run expectations. The Third Four-Year Plan [3. The tarpet for eonori growth du1rinc th( third nlan pniol of 1961-64 is 36%, or an average of 8% per year. The projected rate of growth for agriculture of 5.L, is somewhat higher than the growth during the last plan period. It is based upon the success of recent experimentation with new and the continued develonrrnnt of othpr nomm1rrnial crops-.- t or ttion of "marginal" foothill land especially for livestock, and a more rapid d(vP1nnmnnt of water rpcnrnce about the same achieved during the second plan. Emphasis is again given to manufactring, which has been alloted 55% of the+otal invetment in industry. In manufacturing, emphasis is placed on development of textiles basic metal Vand mLI Ia 4LZ1JiantJ u n h L~db I oniIduLi VtllL: _ using local raw materials such as sugar, pineapple and petrochemicals. 65. On the whole the Third Four-Year Plan appears well suited to the ne-us i LIte eU-1-w01 e -1nmy, particularly the emphasis given to the develop- ment of industry. However, the growth targets may be difficult to reach. As noted, the rate in 1961 was about 8% out preliminary indications are that growth in 1962 was around 6%. For the future, the key problem will - 16 - be maintaining industrial export g,rowTh and fi-dinF. Cound %.ell prepared pro'ects in the domestic sectors. An inprover:ient in economic planning cG116. assist in finding new investment opportunities, it preparing sound projects, and in ensuring that the best use is made of av-ilable resources. 46. It is likely that even given improved planning, that there will Le a tendency for the capital-output ratio to rise in the future, as greater reliance is placed on more capital intensive types of activity. Thus, to maintain a growth rate of even 6% will probably require the maintenance of an investment rate at least as high as the 22% achieved in the past few years. - 17 - VI. Economic Prospects 47. The rapid growth of the Taiwan economy during the last decade has been based mainly on the intensive exploitation of the island's agricultural resources and the development of manufacturing industry. The main emphasis has been on increasing production as rapidly as possible, largely for the domestic market; i.e., import substitution rather than promotion of exports. This policy has been quite successful: total national output has risen rapidly, per capita incomes have risen appreciably and available data indicate that since 1956 employment has increased at approximately the same rate as the population of working age. However, there are a number of indications that the recent rate ofi projress will become increasingly difficult to maintain. 48. For practical purposes it can be said that the total cultivable land is beine utilized at nresRnt. The bpst that can be honed for is to carry out land reclamation (most of which is very ecensive) and develop mirginal (hilly) ln-ri fact Pnmnirh to cornsnnate for th- Pn-roachmr,nt of urban areas, factories, etc. on existing farrm lands. Although yields are alrav high in onmnarion -mith many ntir1 there s+.ill reuin irhi, scope for increasing fani prodiction through increased and improved irriga- control, increased application of fertilizer, and development of animal husbkAdr -~, Parms bitherto -1- +-I -ns*n) are all under constant study by the very capable staff of the Joint Commission advantage will be taken of whatever opportunities may exist. Nevertheless, _LU -1 'AJL) UJ. LA. ULIC. U ULIC' Uc'Vtz -)- .4/0 8I.UvJ uLL -LLI cL6J-LCU.L UU.LC4_L UUUj?' U ~'L±jLL be realized. 49. In forestry there appear to be promising long-run development pcssibLitiLUes,- utU Pprgress ist beLig hindetzred by shrcoigsi adm:inListr- tion and management. The authorities are aware that the best use is not heing made (I forest resources but are uncertain as to which would be the best policies and practices to follow. It appears that outside advice is neede to hel solvez tisL PrLem.U1L DU. in fiseries Una wishes to expandu Ueep-sea fsLing activity substantially. This is a logical move, particularly in view of the fact that Taiwan's land resources and coastal fishery resources are already being intensively utilized. There appears to be considerable scope in the first instance for increasing exports of tuna. hereafter it should be possible to increase the supply of deep-sea fish in the domestic market and gradually reduce the amount of fishing in coastal waters. 51. Nhile there are significant possibilities for further development in agriculture, forestry and fisheries, these possibilities alone are far from sufficient to maintain a high rate of overall economic growth and provide the employment opportunities required by the rapidly growing labor force. To accomplish these objectives industry must also continue to expand rapidly. As previously noted the rapid expansion of the past has been based mainly on supplying the domestic market which has now become saturated in most lines. As a resu3t, Taiwan industry has entered a difficult transition requiring a. shift from a position ba.ed in large part on the dor.estic market to one producing increasing quantities for export. Export iroscects and Creditworthiness 52,, The outlook for Taiwan's two traditional exports, sugar and rice, is not bright. In view of the unsettled conditions in the world sugar market, it is extremely difficult to forecast future earnings from sugar exports. Taiwan's sugar earnings have declined fairly steadily in the last. several years to a low of $6l million in 1961. Earnings would have been even lower but for a large non-quota sale of 170,000 tons at the U.S. premium price. It does not appear prudent for Taiwan to count on sales of this magnitude in the United States in the future. Considering this and other uncertainties, a further decline of $10 million in annual receipts to $0 million per year is assumed for purposes of making a conservative estimate of Taiwan's future sugar earnings. As noted previously, domestic consumption of rice has risen slightly faster than production. At present the position is approximately balanced, with small export surpluses in good crop years and small import requirements in poor crop years. For the future it is assumed that there will be no rice export. $3. The outlook for exports of the other agricultural products ard processed agricultural products is more favorable. 'he prospects for canned pineapple and canned mushrooms appear particularly encouraging. On balance, it might reasonablv b exnectnr3 that totnl qarinltiirnl P.Ynorts will rena n for some time at the 1961-1962 level of $125-135 million. 54, In recent years, the most dynamic element in export growth has been 1958 to an annual rate of over $1CO million in the first half of 1962, or an - t - 5 's t . ~ -_- - ar. 5'- pe± jear. uu O ci 4a>t J L a.au ..5kC very small base and could not in any event be sustained. Moreover, the u-US . .± La ..L QU -. ~L I V L I L 6 I± _LY t- U11L 1U_L -. V C L '.U CL 0 L c V _LY LI.5 J - Taiwan must compete with well established suppliers such as Japan and Hong 'Il L~ 1 j ~ ~ -Lkl uLLI; 'ulip.seUWLLVt= j)O.U±LLA V-1. ICILAVCLi _L1LOU .L U l IIdVt also been noted such as weak financial structure, obsolete equipment, etc. 1:"-_ U Vci UL1C ; L ~ SL UUdUZ rate O L exports U. U U o WitUa) U .1. IiIC1Y weIll Ue, rekAlIued sharply as the result of U.S. efforts to hold down i-s total imports of Ij _L _L_L ULI4 L :.c c Ll kU111jJcU U V%Z _LL11.4UI L_ PI i UU U _-L AJL_U L-LL to be well enough along in Taiwan to justify an optimistic view of future tre-ids in manufactured exports. And there is enough evidence of daiversiiea development in recent years to indicate that Taiwan has the managerial capacity uo enuer new industrial fields as older fields are increasingly confronted with marketing difficulties. A forecast of the rate of further industrial export development is, of course, difficult but it would not seem unreasonable to expect another increase of $100 million during the next five years or so. This would be more than sufficient, even iath stagnation in the traditional export lines, for the export growth needed to sustain the progress of the Taiwan economy toward a viable future. 56. Even with a continuing and more varied industrial export development, however, Taiwan will still have to depend for some time on external financial support. A declining level of such support seems a reasonable longer run expectation. But an early sharp curtailment of aid ,would undoubtedly bring Taiwan's development to a btandstill and leave the eu.oucy ian severe fiscal - 19 - and exchange difficulties. Such a curtailment is not, however, regard:d as likely and it is assumed here that aid will decline only as Taiwan's real need for such aid declines. 57. Vith this assumption and with the expectation that industrial exports will continue to sustain an adequate export growth, it may be concluded that Taiwan has reached a position of sufficient economic strength to service conventional loans for some part of its foreign financing requirements. For most of such requirements, however, Taiwan will need grants or easy-term credits if it is to avoid the accumulation of an excessive burden of external debt in attempting to achieve economic viability. A mixture of loans with easier-term credits would. therefore. seem appropriate for Bank/IDA financing in Taiwan. 58. At present Taiwan's burden of debt service is quite moderate. 'Ihile Chinals total external debt amnnts to norlv 1;6nn million. nlv about q,63 million of this was being serviced at June 30, 1962. This renresents ;Al of the fibt inmurred si ne the overnmPnt moved to Taiwan in 1949 and pre-1949 debt incurred for purchase of equipment which was rou Taiar. The service nreqis daeb an ec in I nra.pilntna to 5% of 19,62 exports, Service requirements are now declining rapidly and wallbe eglgibe baanc ofpayentsEmprtace n thelatr96' STATISTICAL TABLES Table la CP-74 - ESMATED LXTE 2:AL PU31..IC D-B2 CUTSTUUDN l'ICAD]EG (in +housnds of U.S. ,1r1 equivalent Debt outstanding Item as of .. ... .. ._ .._ June 30, 1962 IOTÄL EXTRNAI PUBLIC DE3T 595,409 loans not being serviced h43,213 Pre-ikorld War II debt 248,503 Publiuly -issued bonds 2143, 183 Privately-placed debt 5,320 'lorld iar II debt intergovernental 61,307 it,000,000 Sino-Soviet loan, 1939 h,128 10.,659,000 Sino-British loans, 1939 and 191 15,179 Post-.or1d Var II debt 133,403 U.S.. -overurent loans Export-Import Bank loans 2 26,387 3ther .S. Goverrnent loans 91,071 Loans frm Canadian Goverrnent 55,965 loans with repayient terms not settled 938 forld 'Jar II debt 22,859 £50,C&00,>000 Sina-British loan, 19h4 22,859 Post--orld War II debts 66, 079 7U5.000,21 .. Government Surplus Property Credits 66,C79 Loans currently'being serviced 63.268 Privatzl.y-placed debt 38.750 International Development Association l oans 15,300 U.S. Goverrnment loans 9,208 Exnort-Iruort ark loans 92713 Igency for International Devel-opment 5,200 Other U-S. Gvernment lnL2 1,295 71 Excludes debts thich are payabls in local currency and those where debtor hans o-ptuion to pay in lo-,al c-~~: (nB lu gt ed I. 'Ui)n- of the' LpOrt-JInP Ba:n loans now neing se nriced. MåLu - Economic Staff: 'Octobcr 29, 1y62 InTr'-;A rnTh T ThTrr)T 7' r, t 7)-Q1r Mn 77 0 D(In T t ) A VA DT U T-M IT Q n,,-iT T A DQ ro) T rfl r' .2~L2,UVi'_LUL,140.431 _'ij± 'J U.L. J ViI, i . DU U . ) 1-1t~J~ 1L CURRENCY OUTSTANDING INCLUDING UNDIS-)"RSED AS OF JUNE 30, 1962 (In thousands of U.S. dollar equivalents) Debt outstanding Item as of June 30. 1962 TOTAL 163,408 Payable in U.S. dollars or in local currency at debtor option 66,035 020,000,000 ICA loan 3 or 4%, 1955-1995 /1 19,892 r'20,000,000 ICA loan 3 or 4%, 1956-1980 71 19,949 ,.20,000,000 ICA loan 3 or 4%, 1957-1997 T 19,692 NT'P;37,92,636 ICA loan 4', 1959-2000 /2 937 NT"77,658,200 ICA loan 4%, 1961-2001 72 1,941 NT1,4,948,630 ICA loan 1,, 1961-200172 3,624 Payable in local currency (Development Loan Fund) 97,373 ';21,5o0,00 to Republic of China 31., 1958-1993 21,350 ,3,200,000 to Republic of China 3}:, 19568-1969 2,604 1686.ooo to Land Bank 55, 1959-1961 383 .l,350,000 to Taiwan Aluminum Corp. 51 , 1959-1964 1,320 0.900.000 to Republic of China 3V, 1960-1971 5.875 '."2,000,000 to Taiwan Telecommunications Admin- istration 17'. 1960-1970 2.000 "20,500,000 to Taiwan Povi-er Co. 3 -5, 1960-1980 20,129 JL000000 to Taiwn Power Co - 1 60-1 990 LO.000 1)2,50C,000 to four Taiwan Banks 51%, 1959-1964 2,112 ,.1 -00o0 +. Hqinchn indon Glass Jorks 5(5 1961-1973 1,600 /1 Interest is payable at the lower of the two rates shown if paid in U.S. dollars. /2 These loans are denominated in local currency without maintenance of value clause. Conversion rate used is inr 4ou,o u.o.; 1.00. Statistics Division IBRED-Economic Staff Lovemnber 9, 1962 Table II cinINA - ESTIATED 00ùNTPBACTUAL, SE1RVI0E PAYM oNI EXTERJAL PUIBLIo DET OTSTA\D ING INL UDING Ui\DIS ,URSED AS O F 1902 Debts in Service as of June 30, 1962 and Payable in Foreign Currencies (In thousands of U.S. dollar equivalents) Debt out- Debt out- standing Payments during year standing Payments during year Year plus un- Year plus un- disbursed Aorti- In- Total disbursed Amorti- January i zation terest Jw uzation terest Total Total debt Privately-placed debt 1962 63,258 /j 12,743 409 13,152 1962 38,70/I 11,408 2>1 11,669 1963 76,244 9,935 62o 10,555 1963 32.877~ 9,054 231 9,285 1964 66,509 6,482 542 7,024 1964 23,823 6,1[6 166 6,312 1965 60,027 5,329 470 5,799 1965 17,677 4,993 105 5,098 1966 54,698 4,592 403 4,995 1966 12,684 4,256 49 4,305 1967 50, 106 2,370 343 2,713 1967 ,28 2,034 1 2,035 1972 40,500 154 3o4 458 1968 6,394 878 - 88 1976 37,697 99 280 1,274 1969 5,516 10 - 16 1970 5,376 5,376 - 5,37 IDA credit-s U.S. OdWëfTtment loans 1962 15,300 /i - 228 1962 9,208/1 1,335 100 1, 4 1963 15,300 - 1I 114 1963 28,267~ 881 275 1,156 1964 15,300 - 114 114 1964 27,386 336 262 598 1965 15,300 - 11 n1 1963 27,050 336 251 $87 1966 15,300 - 114 1-1 1966 26,714 336 240 576 1967 15,300 - 114 114 1967 26,378 336 228 564 1972 15,300 - 11 268 1972 25,200 - 9ý 10 1976 14,684 154 108 262 1976 23,013 84) 1(2 1,C12 /1 Amount outstanding is as of June 30, 1962; payments are for the full year 1962. - Ec0oomi1C Staff October 29, 1962 Table III EXPENDITURE O1T GROSS NATIONAL PRODUT I. At Current Prices Unit: iillion N.T.$ 1952 1956 1958 1959 1960 A. Consumption Expenditure 13,6h7 29,16h 37,11h 43ý23h 51,5U 1. Frivate 10,954 23,032 28,818 33,436 Ö,688 2. Governrment 2,693 6,132 8,296 9,798 10,856 B. Gross Canital Formation 2,887 .858 7.571 9.718 12.,99 (Fercent of GNP)% (18.3 (15.0) (18.2) (19.9) (21.7) (Percent of TAP)< (17-5) ().3 (16.9) (18.3 (20.1) l Fixed Capital Formation 2,019 4,007 6,381 8,478 10,598 a. P (1,107) (1,777) (2,531) (,733) ( b. Government Enterprise (532) (1,581) (2,578) (2,793) (2,93?) c. General Government (380) (60,9) (1,272) (1,952) (2,226) 2. Inventory Accumulation 868 851 1,193 1,240 2,391 C. Expenditure on Total Avail- auLe ProduC-t (k+DJ 46,43 3,022 ,92,UUU9 ED. Net Imports of Goods & Services 773 1,667 3,074 h,451 h,693 E. Het Factor Incore Paid t.o Abroad 3 5 23 22 5 F. Expenditure on GNP(C-D-E)> - 15,77 32,297 41,650 h8,675 59,929 G. Per capita TAP (N.T.9) 1,896 3,381 4,171 h,792 5,695 H. Per capita GNP (N.T,) 1,810 3,209 3,888 4,04 5,289 i. Total Population (1,000) 8,695 10,064 10,713 11,051 .11,333 II. At Constant (1952) Prices 1952 1956 1958 1959 1960 1961Y A. Gross Mational Product 15,747 21,129 24,074 25,86h 27,876 30,044 B.. Per Capita GNP 1,810 2,117 2,269 2,356 2,460 2,567 a/ Including statistical discrepancy b/ Estimated for 1961 Source: Directorate General )f Eudset and Statistics "DGBA2) Table IV INDUSTRIAL ORIGIN OF GROSS DOESTIC PRODUCT AT FACTOR COST (Millions of NT Dollars) (Per cent of Total) 1952 1956 1,958 199 196o 1.961 1952 19c1i815 96 ~1 Agriculture, forestry huriting ard fishing h,878 9,100 10,950 12,460 17,387 19,800 35.1 32.7 30.9 30.0 33.h 34,n Mining and quarrying 289 608 927 971 1,126 1,213 2.1 2.2 2.6 2.3 2.2 2,1 Manufacturing 2, 106 5,084 6,510 8,231 9,522 10,728 15.2 18.3 18.h 19.7 18.3 18.4 onructon 1, 1, 6 1.M37 2,7 2,369 !.6 h48 .3 h4 1 ;tr1~LIuc~ VJ..L~ .ý,+ -7 - 7 - -,-) Electricity, gas, water and sanitary services 159 431 631 72 1,069 1,192 1.1 1.6 1.8 1.8 2.0 2,o Transportation, storage and co,:munication 804 1,363 2,175 2,3332 2,884 3,205 5.8 h.9 6.1 5,6 5.5 5.5 Whlolesale and retail trade 2,231 1,380 5,363 6,551 7,755 8,99 16.1 15.7 15.1 15.7 14 .9 14,,6 Banking, insurance and real estate 177 50l 756 839 867 991 1.3 1.8 2.1 2.0 1.7 1,7 Public admniriistration an. defense 1,489 3,202 1,026 h,713 5,671 6,327 10.7 11.5 11.4 11.3 10.9 10,9 Other services 1,113 1,796 2,561 2,991 3,51, 3,927 8.0 6.5 7.2 7.2 6.8 6,7 Gross Domestic Product 13,881 27,813 35,463 41,667 52,052 58,251 100.0 100.0 l00. o 100.0 100.0 100,0 alt Factor Cost Source: DGBAS Ta5.e V EMiP LoYRiNT Percentage Distribution of Employed Persons by Sectors Personal Liberal Governnent Agriculture Industry romierce Traisportation Services Professions Ser-vices the 1952 61.o 9.3 8.5 2.2 7.7 2.5 6.o 2,8 1953 61.3 9.2 8.5 2,3 7.6 2.5 6.1 2,5 1954 6o. 9.6 8.4 2.6 8.4 2.7 6.o 19 1955 59.6 9.8 8.4 2.6 8.9 2.8 5.9 L,7 1956 5999 .9 8.h 2.6 8.9 2.9 5.9 1.5 1957 58.2 10.4 8.4 2,8 9.4 3.0 6.2 1.6 1958 57.1 10.9 8.7 2.8 9.5 3.1 6.4 1.5 1959 56.6 11.1 8.8 2.9 9.4 3.3 6.5 1.4 1960 56.1 11.3 8.9 3.0 9.3 3.4 6.7 1.3 1961 55.8 11,3 9,0 2,9 9,2 3.5 6.9 1.4 Source: IHousehold Registration" of Provincial Departnent of Civil Affairs Table VI INDEX \TUB7S OF PRODUCTION (19537= 100) A. Agriculture General Inder Agriculture Forestry Fishery Livestock 1952 91 88 97 92 103 3 pin i nnO inn i0 ln inn~ 195 101 99 103 116 102 19 n), 98 lo, 137 10) 1956 111 105 111 146 113 1957 121 115 125 158 123 1958 129 121 155 174 125 1959 131 123 171 185 119 1960 132 122 172 195 118 1961 lhh 132 187 235 121 B. _Industry Ueneral Building Public Indlex -anufacturin iin i-onstruction Utilityý,- Total Ex, Sugar Total Ex. Sugar 1952 81 83 75 77 105 - 93 -,n'- 1n I C - 1 -1, - --m 195-3 Luu -UV UU -00 10 100 1-UU 1954 107 li1 107 117 100 106 115 1955 119 125 120 128 11h 145 123 1956 125 133 125 136 120 105 135 1.957 l2 150 143 155 13h 118 1h9 1958 153 165 153 169 1h 177 162 1959 173 188 175 197 155 118 182 1960 197 218 200 230 17h 134 207 1961 220 2h5 225 261 18 128 230 1962 (ist 7 months) 241 269 2h7 289 201 129 250 1961 (ist 7 months) 220 239 226 25h 185 131 222 Source: Hinistry of Econormic Affairs. Table V7. AREA AND OUTPU OF AGRIoTjTURAL CROPS (area in t'lousand heetares, output in tiousanid metric tons) Year Rice Sugar Canea__/ Sweet potatoes Soybeans Tea Tobacco Area Output Area Output Area Output Area Oitput Area ouu Area Ou Pre-war peak 625 1,402 162 1,419 139 1,770 17.7 10,8 45.2 17.2 5.5 9.8 19 52 786 1,570 98 528 234 2,090 24.3 1L.6 44.1 11.6 5.5 9.0 1953 778 1,642 113 901 238 2,27 28.2 17.h >4.7 11.9 5.5 9,.9 19h 777 1,695 96 713 248 2,557 30.0 20.3 46.2 13.0 5.6 9,7 1955 751 1,615 78 7h8 2h6 2,37 3h.5 2h.2 h7.0 1h.7 6.2 11.6 1956 784 1,790 91 787 23 2,568 37.5 26<h h7.6 13. 8.3 0 5.2 1957 783 1,839 98 861 229 2,693 c?.0 33.1 b8.o 15.0 9.7 18.7 1958 778 1,89h 101 913 229 2,958 17.9 4:.7 48.3 15.8 8.8 16.2 1959 776 1,855 99 966 226 2,894 53.8 44.4 48.4 16.5 8.4 16.4 1960 766 1,912 96 791 235 2,979 59.7 52,6 48.4 17.3 7.9 15.9 1?61 783 2,016 100 924 236 3,223 59;6 53,9 47.6 18.0 7.7 15.8 Peanuts Bananas Pineapple Citronella oitrus fruit Vegetables Area Output Area output ArEa output Area U, opi trea Output Area Out-p-ut Pre--war peak 31.5 31.7 .21.3 219 10. 1 6 1.3 45 5.1 38.7 12.5 h1o 1952 81.0 60,0 157 107 5.8 63 25.9 148 4.6 27.8 77.3 619 1953 82.6 60.. 12.7 96 5.7 68 24,2 150 4.8 29.4 77.2 623 1954 9,4.0 65.9 12.5 98 5.5 66 19.8 86 4.8 27.8 79.0 636 1955 96.0 66.6 10.7 85 5.7 70 13.9 76 5.2 30.2 80.4 648 1956 98.3 81.8 9.6 59 6.4 83 16.1 99 5.8 35.3 81.9 670 1957 103,6 93.7 11.3 92 7.2 99 17,8 92 6.2 39.0 84.2 705 1958 103.6 96.4 13.-8 1i 8,h 137 19,1 100 7.0 41.8 87.3 741 1959 99.1 97.0 13.0 -L4 8.9 1l6 15.7 84 7.4 42.6 88.3 749 1y60 100.5 102.1 12.7 114 9.7 367 13-5 73 8.1 52.9 91.6 803 1961 98.6 14.6 1. 130 9 13.8 80 9.0 54.9 90.6 814 /orop year ending in the calendar year indicated; output refers to sugar content of tlie sugar cane. N. B. The sum of above area figures exceeds the Ij al cutivaied land area due to mulilple cropping Sourcc: Ministry of Econ,oric Affiars ard Ta.wan rovincial Departrent of Agriculture and Forestry. Table VIII OUTPUT OF SLCTED INDiG AND INDUSTRLAL PRODUCTS (in thou.sands of unit indicaied) Itam Unit 1952 1956 1958 1959 1960 1961 1962 (7 months) Mlining: Coal M.T. 2.286 2.529 3,182 3.63 3.962 1.237 2.607 Copper !.T. 0.7 1.5 1.7 1.8 1.8 2.3 1.4 Salt M.T. 330 328 444 >30 >53 431 333 Natural Gas Million m3 17.3 27.2 26.2. 26.3 25.4 37.0 22.0 Electric Power mn.K.W.H. 1,420 2,250 2,880 3,213 3,628 4,o64 2,661 M anuf a c tur ing f U L.T. 624 776 867 888 8646 851 509 Sugar, brown 1Il. M. 11 20 20 25 18 23 16 Canned Pineapple case 490 1,132 1,744 1,731 2,219 2,799 907 Cotn Yarn +.T. 14 25 28 3V -0 Lg 3' Cotton Fabrics mn.m 88 142 147 156 176 187 109 P d 7 9 10\ 19 16 Bagasse Board piéce 740 1,579 2,128 2,242 2,549 3,303 2,325 PLaper M.T 28 2 6 9 166 Bicycle Tires piece 332 526 722 683 708 921 702 .1.. -a -3 INm n nafn ,c Causic Ia M.T. 9 2 26 2 3 S-da Ash M.T. 1 2 3 5 11 13 7 Ammonuium Sulphate M4.T. 6 7 17 22 21 29 32 Calcium Super- phosphate M.T. 62 101 104 119 121 130 170 Plastics Kg. 115 1,432 3,215 4,257 6,266 11,669 12,297 Poy Vinyl Chloride Kg. - - 1,457 2,350 3,418 7,055 5,734 Gasoline K.L. 81 163 202 231 298 313 195 Diesel Oil K.L. 46 112 157 182 207 219 142 Fuel oil K.L. 110 322 283 352 412 445 310 Plate Glass case - 162 162 23G 469 446 282 Cement H. .T. 445.6 591.2 1,015 1,067 1,183 1,505 1,043 Pig Iron M,.T. 10 18 17.1 33 24 61 38 Steel Rods, Bars and Slabs M.T. 18 79 107 159 200 198 98 Aluminum Ingot MI.T. 4 9 9 7 8 9 5 Aluminum Sheet . T. 2 3 4 4 6 6 4 Bicycles piece 4 34 31 36 34 27 14 Electric Fans piece 10 82 104 169 204 216 142 Electric Meters piece - 115.2 122.1 147 218 278 113 a/ Crop years ending in year given. Note: '1.T. = metric ton Sq.n = square meter IK.L. = kiloliter m3 = cubic meters Source: ilinistry of Economic Affairs Table IX TRANSPORTATION Passenger-Kilometers Freight, Ton-Kilometers (nillion) (milion) Total Railway Highway Total Railway Highway 1952 2,938 1,928 1,010 1,318 1,254 64 1953 3,358 2,073 1,285 1,520 1,442 78 1954 3,926 2,247 1,679 1,61. 1,85 129 1955 4,585 2,548 2,037 1,889 1,733 156 1956 5.159 2.861 2.298 1.951 1,796 155 1957 5,728 3,456 2,272 2,199 2,019 180 1958 6,371 3.703 2,668 2,19L 2,000 19h 1959 6,776 3,705 3,071 2,215 1,964 251 1960 6.772 3.609 3;163 2389 25072 317 1961 7,164 3,763 3,421 2,527 2,160 367 ist half 161 3)58A 1,89h 1,690 1,330 1, i5 177 1st half t62 3,657 1,857 1,800 1,280 1,076 204 Taiwan Railway Administration. Table 1 CONusmTm ±UDETOF THE CEI'TRALý ,r0 PRV I;VCin u1 m ' Oa OJNT (in millions of NT dollars) 156/5 1227/58 1958/59 !25h(0 1260/61 1961/62 1962/63 J (es t ima1te ) (e tima te2 Rec it s Taxes 4,340 4,977 5,404 6,006 6,731 6,850 7,812 Monopoly Profits 1,330 1,419 1,661 1,863 2,251 2,732 2,845 irofits of Public Enter prises .546 708 755 1,121 1,066 1,725 1,280 Other Receipts l._3 883 1,565 1865 2,335 1834 2,063 Total Receipts 7,250 7,987 9,385 10,855 12,383 13,141 14,000 Expre,n di Lures defense V1 3,613 4,260 5,334 5,962 6,792 7,052 7,40 Interral See rity 668 445 333 424 442 462 516 ,.dinistration 1,037 1,097 1,197 1,398 1,619 1,745 1,831 Other Non-.development 1x-erdittures 1,272 1,297 1,856 2,297 2,836 2,438 2,866 Development Outlays 1 260 1,385 1,607 1,876 2,182 237 Total Expenditures 7,850 8,484 10,377 11,957 13,871 14,609 15,750 Excess (-) of Expenditures over Revenue -600 -497 -992 -1,102 -1,488 -1,468 -1,750 'Transf er from Counterpart Fund 294 390 371 969 1,290 1,052 1,060 Surulis (+) or Deficit (-) -306 -107 -621 -133 -198 -416 -690 after Counterpart Fund Transfers 17 Including tax increases whicn became effective on august 15 1762, which are estimated to yield NT4300 million. 2/ Include deferise outlays financed by transfers from Counterpart fund Note: "Bookkeeping profits" arising from devaluation of the exchan,e rate were deducted from revenues for 1956/57, 1957/58 and 1958/59 joirce: Ministry of Finance Table XI P1CIBL BUDGC2T i 1, 1962¯¯une :3Q, 1963 Estimated Revenues frfi Special Defense kssessnents al-lIi- ) n -n -],T -P-r,.of, it - (in millions of§TT) Rates of stima>ted .Zit i tems a ---nf+ 01 ievnue -1.. LI1UJEit L.&KJ *~/ -L u ck'. " cu i &',U. i 2. Customs dutj 0 o' tax amountr230. 3. CommoDdity t ax 3 L oftil mut 3. 4. Slaughter tax 30% ofLta amount 120. 5. Anuseinent tax '0'- of tax aount mo. u 6. Feast tax 50% of tax amount 19.) 7. Land value tax 40%û of tax amount 30.- S. House tax 30 of tax- amount 67.2 9. Deeds tax L0j of tax amlount 18.6 10. Salt tox 50 of ta, amount 11. Electricitry fare for Iighting por 30 of fare amount 213.5 12. Telephone and telegraph fare 30% of fare amount 126.h 13. Railwa, passenger fare 30'l of fare amount 232. 2 l4. Highway passenger fare 30% of fare aimount 153.8 Sub-total 1,770.0 15. ýonopoly profits >o0O To tal 2,370.0 Source: Ministry of Finance. TbeXI i CONSOLIDATED STATEMENI OF CONDITION OF THE N,ONETARY SYSTEM (in millions of NT Dollars) 1952 -L956 1958 1959 19060 161 1962 Asseta (Oct.) Net Foreign Asset, 562 883 2,646 2,462 3,278 4,422 3,980 Claim,ýs on Government 962 2,156 2,394 2,(71 3,246 4,467 4,542 Claims on Government Enterprises 1,112 2,716 3,569 3,966 4,569 5,775 6,498 Claims on Private Sector 671 2,404 4,6:80 6,423 7,419 10,375 11,161 Unclassified Assets 221,6 1,909 _239() .315 2.C 5 Total Assets 4,114 9,086 14,903 17,431 20,902 28,354 29,134 Li abi'lities Money Supply 1,336 3,229 5,129 5,570 6,110 7,335 7,485 Treasury Deposits 137 146 292 398 280 314 ) - Deposits of Government Agencies 324 1,176 1,495 1,653 1,860 2,120 )2,980 Time & Savings Deposits 630 1,417 3,332 4,515 5,995 9,595 9,407 U.S. Aid Deposits 353 1,485 1,553 1,835 2,624 3,404 3,550 Unclassified Ljiabilit:ies and Capital Account 3 1633 ,1 .60 £.32 586 y l2 Total Liabilities 4,114 9,086 1/;903 17;431 20,902 28,354 29,134 Source: The Central :Bank of China, Taiwan Financial Statistics Montbly International Financial Statistics, (for 1962). Table XIII FACTORS AFFECTING TH.] hONEY SUPPLY IN HANDS OF PUBLIC (in millions of NT dollars) 1957 1958 1959 1960 1961 1962 - ~(JaniOct) Pablic Sector A. Gross Credit 71" 1.021 616 1.178 i.68h 9;8 General Government 311 574 257 529 -25 Public enternriseP 1404 19 357 nO, 1W15Q 1.013 R Tn--PP,' in i n -OI - 1 170 878 771 7W1 Treasury 133 13 17 - 11 - 132 '595 Goermetagencies 303 9r- -I 18q27 2 U.S. kid Deposits 166 - 98 282 789 780 146 C. Net Effect (A-B) 113 1,159 44 300 911 247 Private Sector D. Gross Credit to Private lE n TeIS i 1n Bank LiabiIbltes and Capital 655 1,461 1,098 1,572 3,224 1237 T1me and savings deposits >J ±,uzz 1,1u .L,4OU -5>ot -)1 Capital and net unclassified liabilities 102 40 - 3 92 - J13 -422 F. Net Effect (D-E) 330 - 19 581 - 576 - 303 793 G. Total Domestic Credit Expansion (C+F) Uh3 965 625 276 608 1,040 H. Increase in Net Foreign Assets 129 363 - 184 816 618 -786 I. Increase in Money Supply (G+H) 572 1,328 441 540 1,225 224 (Percentage increase) (17) T5T f 97 (1 -) 7 2) (4) Note: Before preparing the above table the accounts of the banking system for 1958 and 1961 were adjusted to eliminate the purely bookkeeping effects of deval- uation of the New Taiwan Dollar. In addition, the accounts for 1961 were adjusted to eliminate the bookkeeping effects resultinL from the reactivation of the Central Bank of China on July 1, 1961. Source: The Central Bank of China. 1nt.P.r,qn1n.q1 FnnilSaitc fr16) Table XIV INTEREST RATES Loans Time and 3avings Deposits (per cent per month) (per cent per annumi) Secured Loans Up to 1 year Free market 3 month 6 month 1 year 2 year 3 year Bank of Other Taipei Taiwari Banks 19h9 3.90 8.4o 15.0 5h,c 1950 1.80 3.30 1o. 5 27.0 1951 1.8c h.50 9.0 27.0 1952 1.60 3.oo 5,5 2-1,6 1953 1.20 2,25 3<5 12.6 1954 .99 1.95 3.1 10.8 1955 .99 1.80 3.6 10.8 1956 .99 1.80 3,3 - 1957 .99 1.65 3.0 10.2 13.8 1958 .99 1.65 3,0 10.2 13.8 1959 .99 1.50 3.3 9.0 12.6 18.5 20.75 23.0 1960 .99 1.50 3.3 9c0 12.6 18.5 20.75 23.0 1961 1.35 1.35 2.7 7.2 10.8 15.3 15.8 163 1962 June 1.35 i,35 2.7 7.2 10.8 lkhO 1)i76 15.12 af/ Interest has not been paid on demand deposits since 1957 Source: Bank of Taiwan and The Central Bank of onina. Table XV PRIGE INDIGES En. P1961 1962 End Period 1953 1956 1958 1959 1960 1961 Aar: Jun: Sep: D Jun: . A. (1958 - 100) Cost of living 68 88 100 111 131 14l 139 140 1L2 1)h 143 144 147 Wholesale prices 70 92 100 111 126 130 129 129 130 131 131 133 135 B. (1956 = 100:) 1. Wposale prices, Taipei 100 111 123 140 145 144 1>3 3148 165 l66 lh8 150 food 100 114 130 156 163 162 160 16,8 162 163 166 168 rice 100 110 118 161 182 183 187 183 172 182 176 170 c lothing 100 96 105 107 105 106 104 loh 105 106 108 109 electricity 100 106 120 130 138 130 133 166 146 16 161 161 2. Consumers' prices, majcr cities 10b 1114 126 1L69 161 159 160 164 162 162 164 167 f ood 100 114 127 157 163 165 162 167 157 159 16.) 162 staples 100 112 119 170 183 188 188 182 173 182 178 369 clothing 100 108 118 12:2 121 122 121 120 121 122 ]23 123 housing 100 116 121 128 130 130 130 131 131 131 133 137 Sourcep: A. I.F.S. 3. Revised indices of Provincial Government, in Industry of Free China Table NVI VOLUME OF FOREIGN TRADt (Jan. - April) Volume Indices (1952 = 100) Exports 100 124 177 167 Ib6l 16818 Imports 100 116 140 155 171 .186 168 (thousands of metric tons) Principal Exports (Jan. - June) Sugar 460 600 8-17 734 d62 660 395 Rice, polished 105 170 179 160 35 65 30 Pineapple, canned 5 20 28 37 38 53 16 Tea 9 11 12 l4 12 15 6 Bananas 43 20 41 45 46 73 18 Cotton oiece goods - 1 1 6 10 82a/ 33 Salt 151 197 290 288 292 294 78 Cement 11 b/ 268 115 75 276 228 Selected Imports Wheat - 211 224 170 278 266 179 Raw cotton 12 22 28 30 44 44 21 Chemical fertilizer 403 314 536 606 482 240 178 Crude oil 167 489 696 696 1,060 1,362 547 a/ In 1,000 metre since January, 1961. b/ Less than .5 thousand metric tons. Source: Industry of Free China, October, 1962 Table XII VALUL - iNCIPAI LIORTS (m-,illion of U.5. a 1953 1956 1958 1959 1960 1961 1962 lst half A. Agricultural Products Rce13 n 12.8 28. 23.5 1.3 1In 1 7.1 Banana 3,4 3.1 6.2 6.6 6.9 10.7 5.6 a o s. . n n . 1. 1.3 1. 0.9-1 Ramie, sisal & hemp 0.h 0.2 0.3 0.8 1.5 1.3 1.4 . ) n n CN ri A -1 A n 1ý Fruis, fresh2 01 02 0. . . - Vegetables 0.2 0.3 0.2 0.7 1.2 . . Chinese medicines - 0.1 - 0.1 0.i û.2 .1 Bamboo, rattan & products 0.1 0.2 0.2 0.2 0.3 0.5 0.5 Sea roducts 0.3 0. 0.2 0.3 0.h 0.3 0.3 Other agricultural produets 0.2 1.4 2.3 _5.0 3.4 3.5 2.8 Sub-total 17.0 19.4 39.1 38.5 20.0 3h.5 29.7 B. Processed Agrilcultural Products Sugar 90.3 76.1 8.?7 65.9 7-. 61.1 30.6 Tea 6.8 5.1 6.8 7.1 6.3 8.9 3.7 CLtronela iL 2. . 3. 3. 3. 1. Caimed pineaprle 2.c 6.1 7.4 83, 8.5 12.1 1.4 Fahr UL .8 2.8' 1.2L 1.2 1.3 1.5 09 Fruits, preserved 0.6 0.2 0.1 0.3 0.9 2.2 1.1 Sub-total 103.3 93.h 103.7 86.1 94.9 89.6 42.6 C. Industrial Products lt + 1 7 2. 2. 2.3 2.5 2. 1.7 Coal 2.9 2.3 0.8 1.3 4.1 3.9 2.1 Ilennent lg mawterials L.n - t.9 2. 23 6. k,.2ý Camphor 0.6 0.7 0.2 0.2 0.3 0,3 0.2 jp9.pe r c": p ul .p .7 2.7 2.5 3.7 -1. Chericals 0.4 1.1 1.7 3.0 6.8 15.8 10.9 Ores, mwta14 1 machinery 1.) . 1 .2 3. . 1 o.9 Fish liver oil & roducts 0.1 - 0.1 0.1 0.1 - - L-umler, timber r). manuf atr 9.3i .8 3. 1 1 1 . Cigarettes & wine 0.1 0.1 0.1 0.1 0.4 1.1 0.7 mextil pr t - 1 .1 n1 _12 1 21. 1 27.8 1.h Sub-total 8.1 15.5 18.7 33.7 51.8 85.1 53.3 D. Others 1.1 1.7 2.9 2.2 3.2 h.8 3.0 Total 129.8 130.0 16L.h 16).5 169.9 211.0 128.6 Source: Excangietlenmen data Amf B-PTRT Table XVIII VALUE OF PRINCIPAL IM4PORTS (in millions of U.S. dollars) 1952 1956 1958 U.S. Others Total U.S. Otiers Total U.S. Others Total Aid Aid Aid Mschinery and Tools 2,6 1.0.3 12.9 18.5 16.6 35.1 17.9 21.3 39,2 Ores, Metals and Ifrs, 5.2 ii,6 16.8 8.7 12.7 28.h 2.7 21.7 24.4 Vehicles, Vessels and Parts 0.7 3.8 4.5 3.7 7.0 10.7 3.6 11.9 15,, 5 Raw Cotton llh 1.8 13.2 152J h.3 19.7 16,5 1.6 18.1 Wheat, Flour & Cereals 5.5 7.9 13.i 1¾7 - 13.7 17.0 - 17.0 Beans and Peas - 0,3 0,3 90 0.1 9.5 9.6 Li 107 Chemical fertilizer 22.8 12.7 35.5 0.1 22.6 22,7 - 19.5 19..5 Crude and Fuel Oil 9.1 0,9 10.0 4.2 lh,0 18.2 0.7 15.h 16.1 Electrical materials b/ 2.5 3.7 6.2 2.8 3.7 6.5 Ch.eiricals 0..9 1,4 2,3 2.8 4.6 7.1 0.5 67 7,2 Pharmaceuticals , 8 6.9 8.7 3.0 3.6 6.6 0.5 7.4 7.9 Oil and HaX 2.9 2.7 5,6 5.6 0.9 6.5 3,6 2.9 6.5 Rubber and Products 0,l 3. 38 0.9 3.8 4.7 o.6 å.5 5.1 Logs, lumber & wood Ifrs, b/ 0.9 2.4 3.3 1,6 1.9 3.5 Others 25.8 54.2 80.0 7.1 28-4 35,5 _h3 .30.9 35.6 Total 89.1 117.9 207.0 965 131.7 222 82.3 150.5 232.8 a/ Exchange settleient data and U.S. aid arrivals b/ Included with lothers 1 SOUrCe: Bark of Taiwan and CUSA (Continued on next page) Tabie XVIII (continued) 1959 1960 1961 1962 (ist half) U.S. Others Total J.S. Others Total U.S. Others Total U.S. Others Total AiÄAid -- Aid --Aid Mvachinery and Tools 13.3 24.9 382 1j.0 22.1 36.1 21.4 27.h 48.8 8.6 17.1 25,7 Ores, Metals and ifrs. 5.2 27,7 32.9 13 24.6 35.9 1.19 32.2 )4.1 5.6 23.8 29h Vehicles, Vessels and Parts 5.1 17.5 22.6 8.6 12,4 21c0 9.9 17.2 27.1 0.,7 32.4 33.l Raw Cotton 13.6 5.5 19.1 13.0 7n2 20,2 12.0 17.8 29.8 9,5 13.2 22,7 Wheat, Flour & Cereals 14.4 0.4 1)4.8 16.2 0,8 17.0 16.9 2.9 19.8 12.0 0.6 12.6 Beans and Peas 6.6 ijL3 7,9 10.2 6<8 17.0 11.3 2.5 13.8 5.0 1.6 6.6 Chemical Fertilizer - 22,2 22,2 1.3 14.3 15.6 1.7 15.5 172 ·· 7.2 7.2 Crude and Fuel Oil - 13.6 13.6 - 11.1 11.1 - 13.7 13.7 - 9) 9t. Electrical materials 5.1 4.8 9.9 3.4 4.3 7.7 4.6 5.h 10.0 0.8 4.0 4.8 Chemicals 1.1 5.1 6.2 2.7 4.9 7.6 2.6 7.h 10.0 0.h 5.2 5.6 Pharmaceuticals 3.0 4.6 7.6 22 5.0 7.2 4.4 8.h 12.8 2.3 5.5 7.8 Oil and wdax 2.7 4.1 6.8 1.4 4.2 5.6 2.8 4.5 7.3 1.6 2.1 3.7 Rubber and Produets 0.3 3.8 h1 1.9 2c9 4c8 2.7 2.1 h.8 0,5 1.6 2,1 Logs, lumber & wood Mfrs. - .1 4.1 - 2,7 2.7 - )4.9 .9 -. 3.8 3c8 Otherb 3X 31,2 3)4.2 4.6 38rn 42.6 6ýo 53.5 5å 1,5 26. 27 9 Total 73.4 171.0 24.4 90.9 1613 252.2 108 2 215.h 323.6 8.5 153.9 202,h Source: Bank of Taiwan and CUSA Table XIX INT RNATIONAL TRA.NSACTIOIS a_/ (In millions of U.S. dullars) 1952 1956 L958 1959 1960 196_ L62/ A. Goods and Services .(1t half) Exports f.o.b. c/ 119.5 12.l 155..8 156.9 164.0 196.2 108.5 Imports mainly c.i.f. d/ -208.3 -222.1 -273,5 -264.o -286.5 -330.1 162.3 Trade balance - 38.8 - 98.0 -117,7 -107.1 -122,5 -133.9 -53.8 Nonmonetary gold 1.9 1.L, 1.3 - 2.1 - 0.7 0.1 0.1 Transportation and in- surance - 1.0 - o.o4 4.,1 2.5 2.1 0.8 -0.4 Government, n.i.e. - 7- 5 . - .9 1.2 0.1 Other services - 3.8 - 5.h - 7,9 - 6.6 - . - 2 _-3 Total - 99.5 -1.07.6 -124,9 -123.0 -131.6 -133.8 -57.2 3. Miscellaneous Donations and Capital Private donations 1.8 - . 14.4 9.8 3.5 12.2 5.7 Private capital L.1 5.0 35.9 2h.h 39.5 26.2 2.7 Officials loans received e/ - - 0.9 3.7 15.0 3.6 fficial repayments - 1,2 - 1,6 - 6.0 - 5- 3.1 - 13.4 -7.1 Other 0.7 0.2 3 2 ..h 5,ó _ 11 0 . 6 Total 5.h 3.2 52,0 38.0 50.6 29.0 4.3 G. Net E.rors and Omissions - 2.1 - 7.9 6,2 0.5 0.7 2.0 -1.6 D. Total (A through 0) - 92.0 -112.3 - 66.7 - 8h.5 - 80.3 -102. 8 -54.5 E. U.S. Grants and Loans f/ 93.9 97.3 88.2 75,3 98.7 .114.-L 47.0 F. Monetary Movements Shortýtern liabilities - 0.5 20.2 0.1 2.2 - 9.8 5.9 -3.7 Short-4erm assets (i-n- crea,e -) 0.5 - 3.6 - 20.3 5.0 1 - .6 - 1L.6 11.2 Monetary gold (increase ..) - 1.9 1.6 1.3 2.0 -- 2.6 - Total - 1.9 15.0 - 21-5 9,2 - :18.4 - 11.3 7.5 (See footnotes on ncxt page) Table XIX JOTNOTES a No sign indicates credit; minus si6n indicates debit. bJ Preliminary. c Exports for 1952, and 1956 are based on the exchange settlements data; those for later periods are based on the trade returns. d/ Iaports for 1952, and 1956 are based on the exchange record. Imports for later periods are based on trade returns. e Loans received under official gu,rantee by Taiwan Power Company and Chinese Petroleum Com-ar from U.S. comoanies. f/ The data include ECA/'.SA/FOA/ICA grants. U.S. Government loans out of the proceeds of sales of sur.lus aLricultural commodities fo New Taiwan dollars 120.0 million for 1 9 6. .37-1 million for lI56 and 19.7 million for 1959, .16.6 million for 1960, and *18.2 million for 1961). and inrreqses in niTbilitism on -ooon. U.f holcbinclic of eew Taiwan dollars acquired through sales of surplus agricultural commodi ties (il2.1 mill ion fo-ir 19. .. 9 milii~n fri lR Q~and 45.0 million for 1959, -.4.3 million for 1960, ;7.6 million for 1961). g/ Includes a decrease in portfolio security holdings (credit of 41.7 million)- Source: International Monetay Fund. Table XX 00 E D FOREIGI EXCHAIGE (millions of U.S. dollars) 1952 19.i53 1954 1955 1956 1957 1958 1959 1960 1961 1962 Gold 36.3 37-9 39.3 38.8 LO.4 41.h h2.3 40.2 3Ž.3 35.0 3> Fareign exchange (gross) 38.h 54.2 29.0 54.7 70.0 97.8 108.5 112.2 109.9 122.7 83-9 Total: gold and gross foreign exchange re- serves 747 92,1 68.2 93.5 11, h 139.1 150.8 152.4 142,2 157.7 ,7 89 Less: Baril of Taiwan foreign exchange lia-- bilities 23.2 23.3 22.0 23.6 4l.9 63.9 55.4 63.0 4o.6 38.4 24,1 Total: gold and net 51.5 68.8 46.3 69.9 68.5 75.2 95.4 89.4 101,6 119.3 9k3 foreign exchange re- s erve s Changej in total gold and net foreign exchange reserves7 22.5 2 1 6A7 20 -6.0 12.2 17.7 .å Source: Ministry of Finance and Central Bank of China CHINA elung Ta iwo n PHILIPPINES Hs nc áN Tochun PHILIPPNE SE,A tungaun Koosoiun \~~ -.T l TAWA N n rU OL ur Railroads Main Roads Mountainous areas of 3000 feet and over SOUTH CHINA. SE4 0 0 5 20 2 30M,1e5 MAY 1961 IBRD 833