China - Current economic position and prospects

RESTRICTED [ - This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR' RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION CURRENT ECONOMIC POSITION AND PROSPECTS OF THE TF,PTjIT.TC. (W CrITMA July 1, 1964 Department of Operations Far East CURRENCY EQUIVALENTS 1 U. S. dollar = 40 New Taiwan dollars NT $1 = U. S. $0. 025 mT $1 n00, nnn = U. t. $25,nn0 TABLE OF CONTENTS Page No. Basic Data......... ..... . . . . . . . . . . i Summary and Conclusions . . .. . . . . ............112. I. Introduction . . . . .. . . . . . . . . . . . . . . 1 II. Recent Economic DeveloDments Trends in Total Output and Expenditure . . . . . . . . 3 External Trade and Payments . . . . . . . . . . . . . . 4 Internal Finance . . . . . . . . . .. . . . . . . . 6 a. The Public Sector. . ......... . . . b. Overall Monetary Developments . . . . . . . . 9 III. Growth Prospects and Requirements in the Hain Sectors . . . 12 Agriculture, Forestry and Fisheries .. . . . . . . . . . 12 Manufacturing . .... ............ . . . . . . l Transportation.......... .... . . . . .7 Power 0. . . . . . . . . . . . . . . . . . . a8 Overall Growth Prospects . . . . . 18 IV. Problems of Finance ....**..... . . . . . 20 Appendix "L Growth Prospects in Manufacturing Statistical Appendix BASIC DATA zo FUpulaUU End of 1963 12.4 million Annual rate of growth 19o o -1963 /0 Density per square mile 895 Employment (end 1962) 3.) million 3. Gross National Product 1903, current market prices NTO"81,6 billion Per capita uj5160 Annual rate of growth, constant prices, 1958&-!963 GNP 74%/ Agricultural production (1958-62) 3.2% Industrial production 11.75 4. Government Finance Consolidated budget of the central, provincial and local government Estirmates for FY 1964 (billions of NT dollars) Current revenue 15,2 Current expanditure 13.9 Defense 8.0 Others 5.9 Current savings 1.3 development outlays 3.2 Overall deficit 1.9 Financed by drawdown of U.S. counternart funds 1-1 Tay Burden: Tn FY 19(0- tYi nrinontnri t.n 17.71 nf' the nnt.innn! inr-nam '-q1al4ncP of _PrrPa fen, (mllon_o.q_dolas (Preliminary) 1062 1963 Imports c.i.f. -328 -373 Total goods and service -ut - 29 U.S irants ani IoanA7n Donations and capital movements 19 42 Net inreaen (-o in onld and shorttferm aents - 16 illl Errors and Omissions - 2 22 - 11 - o uniciai Gold ana oreign Exopange 1no1ngs Ub 3uu million (MKrch 1964) 7 Morey, Credit and Prices 1961 1962 1963 (end of year) Money supply (NT$ billion) 7.3 7.9 10,2 Loans and discounts (NT$ billion) 15,2 19.7 21,4 Time and savings deposits (N'1 billion) 9.5 12,l 15.5 Call loan rate 16o2% 15.8% 140% Wholesale prices (1956=1co) 145 154 163 Cost of living (1956=100) 162 167 168 8. External Public Debt (November 1963) Debt service in 1963 US$12.6 million Debt service as percentage of export earnings in 1963 3.5% - iii - SUMARY AfD CONCLUSIONS i. Economic growth has continued to be very rapid in Taiwan. During the fifties, the increase in real GNP amounted to between 6 and 7% a year, and approximately the same growth rate has prevailed during the sixties. As a result, per capita GNP is now at a level of about US$160 per year, some 50' higher than ten years ago, in spite of a population growth of over 3%0 a year. ii. The fast increase in the national product has been achieved in spite of a heavy defense burden (10-12% of GNP). U,S. economic aid averaging US$100 million a year during the last decade has been of major importance for the financing of the defense effort. Aid arrivals in 1963 amounted to US$80 million and the expected amount for 1964 is around US$70 million. However, a decline in aid is expected over the next several years. iii. To a large extent, economic progress has been propelled by the growth in manufacturing output which accelerated from an annual rate of 11% in the mid-fifties to 15.5/ in recent years. As a result, Taiwan is gradually becoming an industrialized country with 26% of the gross domestic product now originating in the industrial sector. While import substitution was the most important factor in the industrial expansion in the earlier years, most of the momentum since 1958 has been derived from a spectacular growth and diversification of exports. Manufacturing exports increased from a level of US$20 million in 1958 to US$140 million in 1963 and a rate of perhaps $200 million in 1964. This impressive increase was achieved over a large range of products comprising natural and synthetic textiles. plywood. cement. window alass. pharmaceuticals, plastics and some rolled.steel products. The export growth of a number of processed foods. especially canned mushrooms. has been eoually spectacular - from around $1: million in 1958 to $40 million in 1963. There has also been a growing diversity of m;rkets. which strengthens the impression of sound growth. iv. The human factor has been of major importance in Taiwan's fast economic growth. In all lavers of society. there is an abundance of hard- working, intelligent and enterprising people. The Government has through- out the nost-wqr neriod made unrelentine efforts to encouraEe Drivate enterprise. Numerous incentives and institutions have encouraged the Ath1iAhmAnt of many nAw antArnrisen nnd hpvp attrneted n nhQf.nti inflow of foreign private capital and know-how. Another important factor has been thR crowing nonfidence in Taiwan an a viable economic entity. v. During 1963 and to-ante in 196. the Peonomic nieture was further improved by extra foreign exchange earnings of over US$50 million annually reulting from the high sunar nrin. Thn-e fanter.q le to q qharn reduc- tion in the current account deficit and an increase in foreign exchange reserves of $100 million in 1963 and nother 1hhO million in the first thre- months of 1964. Net reserves at the end of March amounted to $255 million, or nin eenrv hs iMpn rs t e 196 3 hras.b Althogh or hn f of the increase in reserves since 1962 has been sterilized by deflationary movements in net dcoestic creditJ,,! e J" reane ha- Il ton a,Q 2 ninl Jn- ace in +J)p - iv - money supply during 1963 and the first part of 1964. So far, the reaction in the reail- n"i-np 1=al hma ben moder+ (nhnii+. 9< i-ina IQA4 rni n change in the first quarter of 1964), but this may simply reflect a normal continuing, a higher level of imports in 1964 could absorb a good bit of ~nceaed emd ~Ionv~ atin o nst-,,+ +I-n~-verf n-P nffnlinn and private investment could become necessary if the increase in demand be required in the present instruments of fiscal and monetary policy before V.L. u-VLvtli 1tDUnC1V-Le ±LI~UtJ-a- .L-Ua.L~aJ t5UaLU.L-L±L.V, j.41U LIU UVLt' .raJLuLI in the external political situation, Taiwan's prospects are distinctly .UrvJoable. rulrwiu Vi. iliauIIuiuia.curUg.Ll% prUULuLVIi Vy LWo, anIu of industrial exports by 15% annually seem well within the bounds of 3usvLJ .* lUL11eU W.Luh a uruner ilieij.icabion Ul U1I WUe u-i IUL''alw ai scarce agricultural resources, this should make possible continuation of a gruoh rate li real GNP of at least 6o and probably more. Un the assumpuion that arrivals of U.S. aid of a grant type will decline sharply during the nex few years, a significant increase in the national 5avings rate k.irui an average 1961-63 level of 16% of GNP to perhaps 1910 in 1968) will be required Lor financing the expansion without inflation. In order to achieve this, the Government has first of all to combine restraint in current expenditures, especially defense, with a sizeable increase in revenues. Secondly, it is important that the Government continue to provide incentives for resource mobilization in the private sector, which has to generate the largest part of the savings increase. vii. Taiwan's foreign exchange prospects are very favorable. It appears very likely that there will be at least a small surplus on current account in 1964, as the result of a further rise in industrial exports and maintenance of sugar exports at record levels through the first half year. Over the next several years annual earnings from sugar are likely to drop by some $50 million as the world price returns to more normal levels. But assuming reasonable domestic price stability, other exports should continue to grow quite rapidly, and earnings could well exceed $450 million (f.o.b.) within four or five years even if sugar exports drop back to the 1962 level. In that year total exports were only $220 million., In order to permit such a rapid growth in exports and to permit the expansion of investment in other sectors which seems desirable, imports will also have to rise substantially. Thus, a current balance of payments deficit is likely to emerge again by next year and to grow to perhaps $60 million by 1968. However, there are sizeable U.S. aid funds still in the pipeline, so that even with the cut in new aid commitments which has recently been announced, foreign exchange reserves will probably continue to rise for another year or so. With these prospects, Taiwan can afford to start contracting increasing amounts of debt on conventional terms. Assuming a continuation of medium-term supplier's credits and long-term borrowings totalling $50-100 million over the next five years or so, debt service might rise to around $30 million by 1968. This would correspond to only about 6% of projected export earnings, which would not constitute a serious problem for Taiwan's external payments position. I. Introduction 1 -. -, a h+~r ,-~1 ~ .j1 nnr cf~, i pn1 mjiP , rdff tInt. nnast of mainland China. The island is divided over its length in north-south direc- of 13,900 square miles (about as big as the Netherlands). The population side of the island. Only one-third of the island is cultivated and the elcctLve density of population - about 3,700 person per culivated square mile - is among the highest in the world. Per capita income is still low but has been rising rapidly. ,:L The island has few natural resources. The forests wnicn cover aLmost 55j of the area consist chiefly of low-value tropical hardwoods and most of them are inaccessible because of the terrain, The islandis mineral resources consist of important natural gas fields and of coal deposits from which 4.5 million tons of bituminous coal are extracted annually. There is still a substantial unused hydro-electric potential, although its economic value is diminished by large seasonal variation in the river flow. The natural fertility of the soil is low, but the climate is very favorable to agriculture, Vhere adequate irrigation is available, farmers can cultivate their fields all year round and.,with the use of fertilizer,can obtain very high yields. 3. The political tensions between the government of the Republic of China and the present government on the mainland have been an important factor in the life of the island since 1949. One of the most important consequences has been a large military effort which annually amounts to 10 to 12% of Taiwan's gross national product. An estimated half a million men are in the armed services. Substantial military and economic aid has been contributed by the U.S. Government since the early 195Os to heln finance this burden. 4. In spite of the poor natural resources and heavy military expend- performance of the past decade has been the human factor. The people are hn nlworki n g The literacyirat isz higYh. The fanrme-rszr sk-illful in in- tensive agricultural cultivation and there are many people who are also ,je tiaie Jn d J J tve an te inia oc upatio s LLLL;O.Z C'L 4).'1'LO L P J.U Iid.aV_L two million mainlanders who came over between 1947 and 1949 comprised not onlL about half a million u the personnel o the armeu ervices but also a large selection of the top administrative leaders and businessmen from * Another iactor in encouraging the recent rise of domestic savings and investment has been a growing confidence in the economic viability of Taiwan. During the fifties, China was not considered creditworthy by the -2 - Eank# Tn 106.1, nf+-w +hIin+h4h + ^-P +hom Tn+-"n+4-a ne---i--ma+ Association, China received four IDk credits to a total value of US'15.3 that the "prospects of the economy appear favorable enough to conclude u-na+ Taiwan cox uvueumuin un um PcU-U Ul -LU, J_orEgnI financing requirements... Hence a mixture of loans with easy-term credits rjoid s/T-n finacino-awan uuu approriate uric DA financing in Ialwan," In vIew of the continued progress during the past year, it now appears that Taiwan can ue considered creatworthy for lending on conventional terms and does not need IDA financing, at least for the next few yearso -3- Trends in Total Output and Expenditure 6. Economic development in Taiwan during the early sixties has continued at the rapid pace set in the fifties. On the average, GNP in real terms increased during the years 1960-1963 by 6% - 7% a year. GNP, converted at che prevailing foreign exchange rate, now amounts to the equivalent of US. 2.0 billion or about USq 160 per capita. 7. Closely connected with the fast development of the economy has been an ipnortant shift in the relative imnortance of the different expenditure categories. As shown in the following table, the relative share of nivilian consum-otiondeclined durinL recent years from about 83 during the mid-fifties to 73% in 1962 and around 72% in 1963. At the same time. savings increased from a low level of 8 to 10M in the mid-fifties to over 15% in 1962 and perhaps 18, in 1963. Lefense expenditure has remained at round 10% of GNP excent in 19 8 and 1962 when snciaI stocknilin3 nr-grnms tor military preparedness increased the ratio temporarily to around 12%. The increase in spvings has mide it nossihli to ince .a the rate of gros capital formation from about 15% in the mid-fifties to around 20% in 1960- 196'. -Xnendence on cqnital inflnow, minli in t! fnrm of Tj q a ni [T very important up to 1963 when a spectacular increase in the value of exporta at least temnorRrily eliminated thp trfiri- in t.hp t.rn iance Kntin1rplP-rPri+iurP, 1QI' - 1063 (expressed as percentage of GHP) 1954 1956 1958 1960 1961 1962 1963 Mission) Defense 10 10 12 10 11 12 10 Civilian consumption 83 80 78 76 75 73 72 Gross capital formation -17 C! -I JC 1) e) 1 L I l Import surplus (-) -9 -5 - 7 - 8 --7 -6 - Gross National Product 100 100 100 100 100 10O 100 Savings 8 10 11 16 15 15 18 8. During recent years, the composition of gross domestic product by origin has gradually cuangeu. Between 1956 and 163 the snare of agricultural production dropped from almost 33 to 29% of GDP. The share of the induutral secUor (manulacturing and mining, construction and public utilities) increased at the same time from 27 to 29% and the services sector (including transportation) went up frcm o to 420.. 9. The change in the composition of the gross domestic product does not fully reflect the wide difference in the growth rates in the agricultural and non-agricultural sectors of the economy. During the last six years, agricultural production increased annually by about h while the output W. - Mul CIC V±~U J M "Is LU In UJ GI- I'LlL.J. V CIOU Uty _L_ C UP CU 0 LLIO %JUU.PUV 'J_ VIIUAA sectors also increased at a much faster rate than agriculture. The reason domestic product is that agricultural prices between 1956 and 1963 have ULurIUaIju auuuu Uw±Ice as labu as U1 PricLb IuI ±Luusul'apu partly as a result of a national price policy favoring agriculture. fu'uur-ial wages rose as a result of rising olod prices, bu UUOUr_C productivity rose faster and, in spite of the unfavorable shift in the price structure, manufacturing production expanded at the vigorous pace of 12' a year. An important result of the price shift is the fact that the share of the farm population in total national income has remained much more stable than would have been the case if the prices of agricultural and industrial products had moved at the same rate. Between s95o and 1902 the per capita income of the agricultural population went up by 901 in current prices as compared to a. 100o increase for the total population. This relative income stability has contributed to the atmosphere of modest well-being which prevails in rural surroundings in Taiwan. External Trade and Payments 10. Taiwan's foreign trade has expanded very rapidly during the past decade. The combined value of commodity imports and exports rose from just over US$300 million in 1954 to close to US$700 million in 1963. Up to 1963 there was a large deficit in the trade balance, averaging about US$100 million a year, which was financed largely by U.S. aid imports. Although the relative importance of the import surplus declined as total production and foreign trade grew, there appeared no clear tendency for the absolute amount of the trade gap to narrow until last year. The unusual export performance in 1963 led to a very large reduction in the trade deficit and foreign exchange reserves increased by an amount in excess of foreign aid received in that year. Part of the spectacular improvement in the trade balance was, however, due to temporary factors such as the unusually high price of sugar. Had the price of sugar been at the same level as in 1962, the increase in exports would have been US$56 million smaller and the trade deficit would have been $97 million instead of $41 million. The developments in Taiwan's foreign trade are summarized in the following table: Taiwan's Foreign Trade (in millions of US dollars) 1954 1956 1958 1960 1961 1962 1963 Total exports (f.o.b.) 96 124 156 164 196 218 332 Total imports (c.i.f.) 205 222 264 287 330 328 373 Balance -109 -98 -108 -123 -134 -110 -41 U.S. aid imports 88 96 82 93 108 84 80 Percent of total imports 43 43 30 31 33 26 21 Source: Customs, Returns. -Li- Taiw U UVLE_ Z&J1 liV:UtM1 cl ilU.--an's tradiioa -Ut Ur r-.Lz * JU.L -Lr the mid-fifties, these two commodities accounted for about three-quarters of the total value of cULmouiy exports. n1U1wvUr, mUre recetUy the relative importance of sugar and rice exports has diminished, so that in 103 the ratio of the value of sugar and rice export to toal ommoity exports had dropped to about one-third, in spite of the high sugar price and the relatively large exportable surplus of rice in that year. The value of industrial exports has grown at an average yearly rate of about 48' during the last three years as compared to a rate of 28,% for the total value of commodity exports. In the first five months of 1964, all exports other than sugar and rice were up 30% above the 1964 rate. The developments in the export sector are summarized in the following table: Value of Exports (c.i.f.) by Major Commodities - in millions of US $) Annual Averape Growth Rate 1956 1960 1963 19641/ 1956-1960 1960-1963 Nw exports 16 52 168 (230) 34% 48, Ceer.nt - 1 1 (20) Textiles 3 21 44 (58) M-'etal and machinery 4 6 22 (22) Plywood 1 4 27 (44) Chemical products 1 5 19 (23) Canned mushrooms - - 17 (23) Other 7 15 21 (40) Traditional exDorts 114 118 190 (200) 1% 17% SuEgar 76 74 106 (110) Rice 13 4 23 ( 15) Other 25 40 61 (75) Total exports c.i.f. 130 170 358 (430) 7% 28/ Total exports f.o.b. 124 164 333 (1400) 17-Tirst five months at annual rate, with sugar and rice seasonally adjusted. 12. The destination of Taiwan's exports has changed considerably in recent years. With the relative decline of sugar, rice and other agricul- tural products, Japan's share in total exports dropped from 50 to 60% in the early fifties to 24/ in 1962. There has been a rapid increase in the relative importance of sales to the U.S., which climbed from only 6% of total exports in 1959 to 25, in 1962. The proportion of exports sold to Europe increased from 4% in 1954 to 9% in 1962 with most of the increase consisting of canned pineapple and mushrooms. Important markets in Asia are Hong Kong (101) which buys a large variety of industrial products including US$8 million of cotton textiles, Thailand (55) and Viet-Nam (9%), The off-shore procurement of U.S. aid goods is important in the latter two markets. 13. Over the past six years, imports appear to have expanded faster than GNP. Tn 1963 alone. they rose by around 131 as aLainst a rise in real output of about 7%. However, this tendency may be attributable in nnit to n Ponaratively high rnte of inventory accumulntion. averaEina - 6- around 4Z of GNP in 1960-62. It seems quite possible that a similar magnitude was reached in 1963 as well. The composition of imports has been chnnginq stendily over the past decade with a shift in relative weight from consumer goods to capital goods. The import substitution resultinp from thp fnst development in the industrial field made it possible to reduce the proportion of consumer goods in total imports i'rom VR'f in 199 to 99< in 19(9_ The Rhne of nnitnl aoodR PpnnniAllv of machinery and equipment increased from l to 27% as a result of the in~reased. ,r deP.veln-opmnt. effort. r1irina thIlis nperiod_ ThA_ vmtin of' ranT. mf.Pri.Q1. to total imports has changed very little over time. About half of total ~rnv' ic in- +.hic '+cev'r T i hn-rrilu nrrlv-PQ~c mn-r rrtP_t.!1 norp. natural fibers, crude petroleum, natural rubber or vegetable oils. Tndutrial npo u ition n most field thorofore Annnds to a l?reo ext.nt on imported raw materials. 14. All imports are still subject to licensing. However, the rc rn'&4 n ..nt-C. , -. b facto .r,- -tin.g of --impeor li4 crenes Ias slf-lirte_ i.. recent years from preservation of exchange to the protection of domestic future of Taiwan has led to a growing inflow of funds of private foreign and eventual repatriation of foreign capital have made Taiwan attractive .L'u r kur 1L UItv J1VUUiUVU JL'. Vi;;U _L1VtaUm11lU, maiU"y Uy Ue., tiapanei;e and overseas Chinese investors, had been running at US$9 million in 1961 ad 1962 but rose in 1963 to $18 million0 Tnese investmenus are in a large range of industrial projects: fertilizer, textiles, pharmaceuticals. J.ight MachLinery, processed foods, etc. Fost of The ventures are in cooperation with local capital. 16. U.S. economic aid averaging US$100 million a year moderately exceeded the deficit in the balance of payments up to 1962 so that there was a slow increase in Taiwan's foreign exchange reserves. In 1963, the favorable trade balance together with U.S. aid of around US$0 million led to a doubling of reserves. At the end of the year, they amounted to Us$217 million (net), and at the end of the first quarter of 196 they amounted to US$255 million, the equivalent of nine months'imports at the 3oo rate. Internal Finance a. The Public Sector 17* Tax revenue, including the government monopoly profits on wine and tobacco, grew somewhat slower than GDP in current prices during the years 1958-1962. For the fiscal years 1962-1963, however, the Government adopted a number of temporary surtaxes and raises in public utility tariffs to finance the extra expenditure of a special stockpiling program to heighten military preparedness. As a result, fiscal revenue in 1962-1963 jumped by over 201 to NT$12 billion. At the beginning of the current fiscal year, the special surtaxes were discontinued and the revenue estimates for fiscal year 1964 were set at a level slightly below the actual collections in 1963. However, the results for the first half of the fiscal year give a preliminary indication of revenue collection at about the same level as the previous year, This reflects some increases in basic tax rates, an important simplification of income tax procedures, and the general buoyancy of economic activity. 18. Apart from fiscal sources, the Government obtains important ,eeusfrc.m the prorfit-. of' Or---nrrPn. pPr'vi- ~ th P.o nd r)f thp Japanese rule over the island, the Government acquired the ownership of a la rge-, mbe-n,-', r -v of ind,_,Sti ~1 enp " Qp D nr k ",nh u e i+5i I i +. i T1i± +r)+n1 production of these enterprises amounted to 36% of total industrial product- the Governent, constituting about 10% of total Government revenue. On the amounts to only about half of this and the Government enterprises thus ma±~~ Ii.PU+L U U I~I ±L~L± H L. Lii1_ .L±kL,L LJl UJ U Uilu L "T VIUi expenditure. The budget estimate for the current year does not fully _U, U U-LC good p)I'-Li LU~~ett U.L U11U UOVU1J11lA5LIU i 1 _j 1'.1-0 U 0 5 et-_ . L L. of the Taiwan Sugar Corporation. The understatement of expected revenue in tIs respect may be as much as 1jul,0 billion. 19. Almost 6o of the current expenditure budgeted for the current year will be devoted to cefense. In 1961, the Government announced its intention not to increase the absolute amount of defense expenditure any further. Irmmediately thereafter, however, the special military preparedrss program mentioned in paragraph 19 was adopted which led to a sharp rise in defense expenditure in fiscal year 1961/62 but especially in 1962/63. The special preparedness program is now completed. However, the high cost of replacing obsolete military equipment with usually more expensive modern equipment and the urgent necessity to raise the extremely low salaries of military personnel have led to defense expenditures for the current fiscal year which are still 1% higher than in 1961, the year before the special preparedness program. Although substantial, the increase is smaller than th! increase of GNP in current prices in the same period (3)%), so that the relative weight of the defense burden has fallen somewhat, from 10.8% of GHP, in 1960/61 to 9,4/ in 1963/64. 20. The categories of current expenditures that show a marked upward tendency are education and. remuneration of Government personnel. Government salaries are still at a low level, although the total sum of Government salaries was raised by 16" in 1961 and by 10% in 1962. Large though these increases were, they hardly kept pace with the general increase in GNP in money terms and the increase in the number of Government employees. The relative position of Government workers in comparison with the remainder of the economy is therefore still about as unfavorable as before. The increase in education expenditure is also due to an increase in the number of students of about 8"j a year, due to the growth in size of new generations of students and the increase in the length of the period of the study. 21. Since the end of the fifties, Government development outlays have been growing at an average rate of about 16% a year, somewhat slower than development outlays in the private sector. Government outlays are heavily concentrated on irrigation and hydro-electric projects and the construction of roads and bridges. These expenditure categories together account for about two-thirds of total Government capital formation. Fairly large expend- itures have also been made in the fields of forestry, fisheries and harbor construction. 1EcNenditures on urban develooment. housing, drinkingz water and sewerage systems however have so far been very small. - 8 - 22. In addition to the Governmentts development exprenditure, there for projects in agriculture, power and transportation. In receñt years, ULe totaL U- i e ct uW U.L LfLow ofhi ext-VUUULy ljortjUL U. r JUUliU _PrUjetU iso estimated at roughly NT1. billion, or about 10% of total gross cepital U-Lul.- -SIW._ u1' L ul l - --C U,V rl,( 1 - £ UUlv t -LL u u _Lur form~ation. A summJTary of the GoJvernmLentu budgetu (consolidated figures for the central, provincial and local Goverrment) is given in the table below. The expenditure and revenue under the special military preparedness program which mostly took place in 1962/63 is included in these figures. The table dces not inciude the financial operations of public enterprises or develop>- ment outlays financed directly by U.S. aid. Consolidated Budget (in billions of NT dollars) 1957/58 1960/61 1961/62 1962/63 1963/64 (Budget) Taxes and monopoly profits 6.4o 9.07 9.93 12.09 11.92 Other revenues 1.59 2,62 3.39 3.89 3,31 Total revenue 7.99 11,69 13.31 15.98 15.23 Defense 4.26 6.79 7.65 8.97 8.00 Other current expenditures 2.83 4.08 4.81 5.19 52$ Developnent outlays 1.39 2.25 2.72 3.20 3 Total expenditure 8.48 13.12 15.18 17.36 17.10 Book deficit , 0.50 1.43 1.87 1.38 1.87 lags (-) or leads - 0.13 0.71 - 0.09 - 0.41 - Cas'i de:icit 0.63 2.l 1.78 0.97 1.87 Finncing: Transfer froim counter- part funds .39 1.29 1.05 1.06 1.06 Borrowing from non-bank sources - - .15 .16 ) .81 Net bank borrowing .24 .85 .58 - .25 ) 1/ This is derived as a residual (difference between book deficit, and recorded data on financing). ation in Taiwan depends not only on revenue and expenditure in the budget., fulfill an important role in the Government's stockpiling policy and increase in counterpart balances during this period, reflecting the fact Unat generation Of cunterpart has consiuently exceeded the amount of the transfers shown in the above table. The summary table below gives a consoliuateu picture of the monetary impact of all publc sector operations on a calendar year basis since 1959. A comparison with the changes in the money supply on a cumulative basis snows that the expansionary impact of public finance equalled 80% of the money supply rise during 1958-62. In 1963, however, the favorable condition of the public enterprises (espe- cially of the Taiwan Sugar Corporation) led to a net contractionary impact. In the first four months of 196, the overall monetary impact of public sector operations continued. to be contractionary, both because of a rise in counterpart balances and because a small overall cash surplus was achieved in the Central Government accounts. Monetary Impact of Public Sector Operations (in billion of N-T dollars) 1959 1960 1961 1962 1963 1964 Jan-April Net bank borrowing by Government 0.51 O.J9 0.59 0.03 0.76 -0.14 Net bank borrowing by public enterprises 0.25 0.10 1.09 1.12 -1.38 0.03 Increase in counterpart balances (-) -0.28 -0.79 -0.78 -0.55 -0.76 -0.34 Net impact of the public sector 0.48 0.30 0.90 0.60 -1.37 -0.44 Over-all Monetary Develooments 24. Credit expansion to the private sector has been rapid in recent years but the rate has been declining. After more than doubling in the three years 1959-61, the amount outstanding increased by 25% in 1962 and 205 in 1963. However, this growth has been more than offset since 1958 by increase in time and savings deposits !land in the capital accounts of the banks. In 1963 this rate of increase was 30'', corresponding to NT.3.5 billion as against total private credit expansion of only NT$2.9 billion. In the first four months of 1964, they rose even more sharply 71,ile the rate of private credit expansion again slowed down. Taken together with the impact of the public sector's transactions and moderate changes in reserves since 1958, the net result has been a slowing down in the money supply increase from an average rate of 30% in 1952-55, to 16' in 1956-59 and 13% in 1960-62. Under the impact of the sharp rise in external earnings, the money supply rose at an annual rate of about 291 in 1963 and the first four months of 1964, even though over half of the rise in reserves was at least temporarily sterilized by the deflationary effect of net domestic credit contraction. 1/TAlmost one-fourth of time and savings deposits is held outside cormercial banks, mostly with rural credit cooperatives which are very well deveCpFd in TAiwa-,n. - 10 - oc2 Prico increes on the .Thole have qlso been progressively smaller in recent years. After an average rise of 12" annually from 10iA +-n-eic loa- trorjomp nvo inrlpy rnqe hv onlv 9, in 1962 qnd 1963 and fell by li in January-April 1964. The trend in wholesale prices Ihas been very si;M-Jlar, -,l4-.huF,,-' thne latter iunrredr byv 7% 1 in~ I -r.iqin1V as a result of the sharp rise in sugar prices. Interest rates have also A tL1rU V .bl . X.± 0 1 -4, - __ - -'4* - -. -_ --, - dropped to 18% in 1959 and is now dowm to 14%. As a result of the high ..eman' 'or 'overnme-4ii UO a L, -tLC.) L4O ±4-/ J-3 ~~~ . rt is being lowered to 10% for the next issue. PMonetary and Price Movements (1959-63) -In InJ -IJ± C.J /-,- -LL I n4 /1Of IO ) J-,'!D _ ±7. UL ;L I7, U-~) ± U 4 Jan-April Factors affecting the Money Supply 1. Credit to private sector 0.94 2.87 2.97 2.86 1.09 Less: time & savings deposiTs 1. 3.12 e.50 eay 2.UU Net credit to private sector -0.58 -0.25 -0.4o -0.63 -0.98 2. Public sector (net) U.3U U.U U.Ou -1.37 -U.u4 3. Foreign sector 0.82 0.57 -U.h9 L.2o 2.39 4. Total Money Supply 0.54 1.23 0.59 2.28 0.97 Percentage increases in Money supply 10 20 8 29 9 Wholesale prices l 3 3 7 0 Consumer prices 18 8 2 2 -1 26. This pattern of monetary and price developments reflects a pronounced trend toward greater stability. This may be attributed in part to direct government financial policy - e.g. its decision to finance the whole of the special defense budget by non-inflationary measures in 1962-63. It can also be attributed to a growing confidence in the currency which has increased the willingness of people to hold a growing portion of liquid assets relative to the national product. Money and quasi-money together have grown from around 15% of GNP in 1956 to 22% in 1961 and to about 27% in 1963. However, this ratio is now at a level which seems fairly typical for countries at Taiwan's stage of development. (The ratio is about 25% in the Philippines and Thailand, and around 22% in Mexico.) 27. Thus, while the increase in prices during 1963, and through April 1964, was very moderate compared with the increase in money supplv. this may reflect in large part simply the lag in effecUve demand behind a sharp increase in incomes. With external earnings continuinr at a very hiah level. it should be possible to permit a 1~1= -Lage flow oL importsL to ab 'sor. i a goo part' which may make themselves apparent in 1964. However, if present exchange reserves are to be maiuaine u uL incu uuU Sulo Stanual further price inflation, it may soon become necessary for the government to take f1scal action to restrain Auumi-on o actio tooan r rest private credit expansion, or both. At present the degree of flexibility in existing instruments of fiscal and monetary plticy sus oo limitU for such action to be taken as quickly and effectively as may be needed. - 12 - III. Growth Prospects and Reouirements in the Main Sectors 28. The nature of Taiwan's economic achievements indicates the potential for a rapid growth rate in the future. However, in some resnects the problems which will have to be overcome if this potential Is to be realized are more difficult than those which confronted the ec.onomy in the fifties. The growth rate of the labor force has accel- erated, while the possibilities for absorbing more labor in agriculture are rlITini.bing Unemployment has not vet become a problem of major significance in Taiwan, but raoid economic growth sustained over a long Peri od wll be rennr p pd +.n nrent. +.hj - from 1iannpni no in thp funtur -v the path of economic development in the years to come will not appear as clea'ly +Lndl I +d a n f 0t1.1 whn thr wer nueru obiu opportnitie for import substitution and export promotion. To guide the government duringlU thc next fe yer more sytmai bete inep-ned 0 nC0 r0 'ZIO '0M- J 'n planning will be required. The decision in 1963 to strengthen the central pJ.LCXLJL"L1r, k0.L..4C:LLL.aQ-LVL1 ..LL±UIA, , V11iC LU ULA. LJA U s. un"ersL oo. My tM'4 ~ au+h,. - ities. Agriculture, Forestry and Fisheries 29., After the large production increase of the post-war rehabilitation during the years out-ly>u, agricultural production in TaL;an has increased annually by around 4 per cent a year. The contribution of agriculture ntincluding forestry and fisheries) to GD" amounted to about 2600 in 1,62. As there has been almost no expansion of the total area under cultivation, most of the increase in production has been derived from increased yields. These were the result of an expansion of irrigation iaciLities, an improvement in cultivation methods including the use of more fertilizer, disease control and improved seed and planting materialso important factors in the agricultural develorment during the past decade were a successful land reform, and the research and extension activities promoted by the Chinese-American Joint Comission on Rural Reconstruction (JCRR) 3C The increase in agricultural production in the next five years will depend primarily on the further intensification of the production on the area presently under cultivation. Although agriculture in Taiwan is marked by high diligence and skill, there is ample scope for the introduction of more scientific farming. Wider dissemination of agricultural know-how and more scientific use of fertilizer, improved seeds and planting materials will be decisive in this respect. In addition to this, it will be neces- sary to increase the area presently under irrigation. Out of the total cultivated area, only 1/3 is adequately irrigated while 1/3 is not irricated at all. There is also scope for a better utilization of lands which are now being used sparsely or not at all. Soil conservation and improvement of foot-hill lands can lead to higher yields of tea, pineapple, citronella oil and banana, while some of the area can also he used for an rnnnc4nn in dairy farming. Similarly, there is some scope for the improvement or recla- mation of river bed lands. salinatedpinds and tidal lons. uos+ o +e V es and obvious irrigation and land development projects have by now been com'let'd and future develorment will r-cuire +.he nimnrrn+ +tn op ---x and expensive projects, In line with this, Chinese officials tentatively e amua fLor t,!. ne--c' tRn yea..rs an nnuail nxenitr of JT':9 ). biJllion for 1an-1,~ - 13 - water resources develorment as comiared with an average annual allocation of NT$1.5 billion in the current four-year plan (1961-1964), 31. Rice is by far the most important agricultural crop, contributing about 117, to GDP. Production in recRnt years has increased by somewhat over 3%0 a year and amounted to 2.1 million tons in 1963. Taiwan is self- nqiifficipnt. in -ri P nrocint.inn and in fvorq1l crnn years she has bpn a marginal rice exporter. In 1963, exports amounted to 150,000 tons at a uinit p-rino~ n-P T.ki<r tn, Tis c is s:ightly+ -i hige thac- -In th+Je, domesticr wholesale price and compares with a Taiwan support price of US$105 a ton P~-ni r- crn d-n+ YWc-a milii-vr- ~p '~ + n nnri +-hg nu-iiln'Hil i +ir n-f' nrl i.i nnn r-rI - 1 - - Io -a d -- - - - - ---o water resources should make possible a continued increase during the next fx ivyrs ofP about+ 3%7 ar This wil be1, suficen to --r,e- the increase in domestic requirements, but will leave no room for exports. 320 The production of sugar, which is the largest cash crop and the U ~LI~U AjJ±U U,LtULU,, V.,?U)VVV UV[I- U d c U.L VW1ti ;Li about 120,000 tons is used for domestic consumption. The cost of sugar prou tion is being reduced by the Lauroution u g hnign U ye±U1g Une and the modernization of refinery equipment. At the projected equilibrium wora market price in a1968 of around vaoo a ton sy, IT Is estimated tat sugar production will be at least as attractive economically as rice production at the present prices. Tne competing claims of other crops, especially rice, for Taiwan's small land resources will, however, force the Taiwan Sugar Corporation to keep production at about the current average level of 860,000 tons of which, in view of the fast growing domestic consumption, only about 00,000 tons will be available for exports by 1968 33. The prospects for the production and export of a number of other crops are promising. This is especially true of fresh fruits and vege- tables, ramie, citronella oil and tobacco, which are mostly cultivated on foot-hill lands not fit for rice production. Currently, more attention is paid to the export potential of these commodities and programs to stimulate better cultivation and to improve soils are underway. Similarly, there are encouraging prospects for livestock and poultry production. An increase in the export of these unprocessed crops and livestock from US$35 million in 1963 to US05o million by 1968 should be possibleo Processed agricultural commodities have also risen sharply - from US$16 million in 1959 to US$q"0 million in 1963, with canned mushrooms accounting for US$16 million of the increase, For tea and pineapple, only moderate growth is envisaged, but further major increases seem Dossible for mushrooms and for miscellaneous canned fruits and vegetables. A total of $65 million in exports by 1967 may well be Dossible for this Proun. 3h. The forest areas which are a nc ile or not.nt.ally accessile are predominanrtly covered with low-quality trcpical hardwoods. An increase in the production of logs will primmyily dndonni a refoest- tion with commercial softwoods. The work in this respect is just coming out of the experimental chng. For the nox fTv yers, +Ia, nu- -creas 1/ Compares with an average of US$72 a ton in 1962 and US$156 in 1963. - 14 - in forestry production will probably not exceed h a year, about as much in the past ive years. This will brin forestry production from about 0.9 million m in 1962 to 1.1 million m in 1968. Taiwan's timber exports in 1963 were US$9 million. An increase to US.-L million is projected up to 1968. 35. As a result of the progressive motorization of the fishing fleet, the production of fisheries has increased during the last decade at an annual rate of 10r. The coastal waters around the island are now almost fully exploited and there is danger of over fishing. In recent years, -the rate of increase in production has come down considerably. The future increase in fishery production will depend to a very large extent on the expansion of deep-sea operations, particularly of the tuna fishing fleet. This fleet is now in process of substantial expansion, aided by a recent Bank loan. The future increase of production of fisheries, taking also into account the prospects for increased production from fishing ponds, is projected at Si a year during the next five years. Export prospects of fisheries products (mainly tuna) are favorable. An increase from US$0.7 million in 1962 to about US$ million in 1968 is projected. 36. The overall prospects for the agricultural sector including forestry and fisheries are for an annual production increase of about 4% during the next five years as compared with an increase of 3.8% during 1958-1963. On the basis of what is known of investment plans in the agricultural sector, total fixed capital formation is estimated to rise from NTd2.1 billion in 1963 to NT3.6 billion in 1968. In total, exports of this sector are projected at $190 million in 1968, as against 1.124 million in 1962 and $21L million in 1963. MAnufncturin,g 37. Inustriql growth on Taiwan in the last decade has been remarkable. Between 1953 and 1963, factory production grew at an average rate of ll: 1nmulatively or- excruin sar refining.bv 11'. Even allowing for some margin of error in this growth rate, it is clear that dynamic economic nrogress was nronelled to a very larie extent by the growth in industry. 3A. Far from subsiding. industrial growth has Dicked up speed in recent years. hereas the growth rate in 1953-1958 was about 11 per year (excluing siur refining), thn norPnonding rntp for 1Qq8-1962 was 15.5% per year. In 1963 output went up another 13). During the ear'lier.~a-, -i~Try+ i}~A±v+~~w n'-r-ifJqnrJ n rnnin A- 1pmnt Of ;-iOTfth. .Particularly from 1958 on, there was a spectacular growth and diversi- TJ 'ation_ or in-- --i I--+ rI..h- t ~ .he- i ncrease in the grross!- value of manufacturing output between 1958 and 1963 was exported, The whole of the increase consistgd of products other than sugar, most of whch w.ere exported on-ly in- negl-ibl qi-;_ie nl~8 uha cotton yarn and piece goods, manufactures of wool and syfnthetic fibres, fvoring oouer, plywood, cement, windam glass, electri .cpp-Anes, synthetic resins and some rolled steel products. By 1962, exports accouneud for some u; 01 LoIa manuacturln output. 39. Industrial growth during the past decade has led to a shJft ir the industrial structure. There was a marked increase in the importance of intermediate and investment goods and a corresponding decline in the i:portance of consumer goods. Percentage Growth Proportion of Manufacturing Sector 1953-1950 1958-i962 1953 1956 1962 T y Tearsa Consumer goods 29 50 62.1% 52.1% 47.3% Intermediate products 74 90 21,,% 24h4% 28.C% Investment goods 119 73 16.5% 23,,5% 24.7% Total $3 65 100,0% l00,0% 1CO.Cro 40. The investments made in order to raise the 1962 manufacturing output to 2.$ times the 1953 figure were moderate, corresponding to a "capital-output ratio" of about 2.0. Similarly, the increase in manu- facturing employment between 1953 and 1962 was considerably less than the increase in production (57% as compared with 150%), The increased pro- ductivity of both investments and mannower associated with the raid increase in production was a major factor in achieving export competetive- ness. hl. ndiutrial growth during t.he past decaet wasq acelrae bn number of favorable factors. The first anong these was the presence of an indbi!7+rialbsnrsutn fronT thIn economic devrelo pnt of' theisa before the second World War. In 1953 when the severe war damage had been overcome,, there wa a. I-LI v_" -Llu _ Luer4P -4- - and transportation facilities were reasonably good. A second factor was certain amount of experience in industrial and administrative occupationsc oU t is te exous from t1e mainland adaed a nignly traLned ana experiencea group of top managers and administrators. A further important factor was the encouragement given by te governmenTU to the economic development of Taiwan. The government established numerous incentives for the promotion of exports, onvestment and foreign private investment. The export incen- tives provided by the government are closely related to the export promo-- tion of new products. This includes the refunding of import duties on raw materials, preferential raw material prices and special low-interest rate loanso Among the investment incentives provided in Taiwan are deprecia- tion based upon revalued assets and a five-year tax holiday for pioneer industries. The foreign investment law provides for unlimited repatria- tion of earnings, guarantees against nationalization, and equality of treatment with local firms, In addition to these fiscal and credit in- centives, there are special government institutions doing important work in attracting and assisting would-be investors and advising medium and small-scale producers on management and technology. 42. Taiwan is gradually entering a more advanced stage of in(iiisf.ri-. alization. Industrial growth during this period will have to meet chalnges - 36 - which are sonua del -n+n-f t+e n nrlil inrn-q~m nf' the, rrist. 1 Ti ri n; the past decade, industrial growth took full advantage of the opportunity to~ et-lis.- a lan- -mo ofC cner-scs bae on Ta-a IQ rai 0711VA' ative advantage of inexpensive and hardworking larbor. Relatively simple U~L, %,L L AULUJ &Y 2 aII LLLLI L 11C I L d.1IC UL1~ I Id _ L_ L V.L '.JJ J. a -LI VVZ, W - : to score often outstanding successes in the field of import substitution anu exprut. hUe m1U1C%U1- uu .LL L.LLdLUvLei US L1UUt1Y ,uu--U usually be well solved within the frame of the traditional family-owned business. As industrial development proceeuds, he scope for expansion on the line of technologically unsophisticated labor-intensive production . niarrow±ng. Ie 1ndustrial sector requires now in an increasing degree the establishment of much more capital-intensive enterprises in such fields as petro-cnemicals, steel and machinery production. The development or these industries will require the establishment of large corporate structures with appropriate division of management and owner responsibilities and access to advanced technology and research. Industrial development in bigger units has so far been almost entirely confined to the public sectoro In view of the general limitations on efficiency of government industrial operations, it would seem preferable to give every reasonable support to private sector initiative for larger scale manufacturing output. 43. If proper progress can be made in the above areas - and the past perfo_rmance in tackling development problems is very encouraging - a continuation of the past healthv growth trend may be exnected. As before. it may be expected that the dynamic element will be provided by exports. It is obviously very difficult to nrcrlit Pynort f7owth in n .mitnotion where so many new products are just getting started. However, given reasonable progress in overnoming tho problem indicaed+ abIoe ad assuming that domestic price inflation is not permitted to undermine Taiwan's highly comnptitiAr nnzi+inn if. i, 1ili-kly +hn+ -vna'+e 7.-11 continue to grow rapidly. On the basis of past growth and present - 1 ~~rTh~~t~~ ~1 ~ v-nr%Y+_Q hp+T.Tpnn~ _10A1 -, '104A~ - --,4 ,..4 A - - _ - - - - - - L, CLJ.C;,' K-CU_n +L d to~ increase by another US$340 million. The prospects for industrial exports are revie,-d on an item-by-item usis in Appendix 1. As may be seen we feel that textiles might account for about one-third of this growth, whil3 othepr sizeabkle cotributions wvou-ld come from"---'--a' X 1U±U ,_, a metal manufactures and machinery. The latter group includes items like biye so 1'U. L.Lno aaz 'euremuur,ergerEauvrs anu ziundrj appliances. These are labor-intensive industries which do not require a hIgly opUsUICateu type of engineering development. Japan is a major producer of such items but its relative copetitive advantage in the production o n tese fiem is rapidly diminishing as laoor costs in that country mounts. Recently, there has been a conscious shift in Japan's export uifnsive t0warus more comp-lex products. - 17 - 44. Given export growth of this magnitude in manufactured goods, ib should he nosible for manufactur g as whole to -ontinue to ermnnd by 9 or 10% annually. Appendices 1 and 2 indicate the pattern such growth night take, hv mnin?- <Pnt.rr_ Tf. mav EP qAn that only P moArntp nmount of growth is projected in this period from further import substitution. tweAera it d ne y nslrmponahNIthat baic invetmnr will h qf.nY during the period which would lead to more important import substitution later. in particular wehave in mind then po-ssIility of steeal, peo-l chemical and pulp and paper. 45. In .view of the e production possibilities, it is + possile oI %-t -ery roughly the- magniude of investment 11 may be justified in this sector over the next five years or so. This suggest that the capital - output ratio for manufacturing in this period - around 2.1 in the past few years. On this basis, gross investment in manufaCuring for 196 might be projected. at around 14o6.u billion Dy 1968, as against NT$3.0 billion in 1962. Transportation 146. Transportation activity as measured by physical indicators expanded rapidly in the 1950's, but for the past several years has been expanding at a slower rate than GNP. This has been due partly to the great increase in export production, which is concentrated around the main port areas, and which consists increasingly of light consumer or producer goods. Another factor has been the dispersion of production facilities for the domestic market (e.g. cement, fertilizer, etc.) which has led to a. reduction in the average transport haul for the heavier items. 17. To some extent these factors will continue to operate in the future. However, offsetting tendencies will begin to emerge as marginal agricultural and forestry lands are developed further away from existing centres of consumption and as greater industrial concentration emerges in such heavy industries as steel. Moreover, consumer use of transport facilities is bound to rise fairly rapidly with the growth.of per capita. incomes. At present Taiwan has the one of the lowest ratios of passenger automobilp.s to nonultion of ;;nv nountrv in the world- Finallv. the con- tribution of ocean shipping to GNP should rise somewhat in the near future, ,qs t'hR rpp.it nf heainr inirP_q±.Ton+. -i c1iim Mnrl-~ in +In- h8. otalinvetmen in ransortand comunication facilities 1has averaged about NT'P2 billion annually since 1960. About one-third of this hAq ho)Pn in qhin-Z An in~rns+m-nt -~a in --A- - ~-t fo th fiv -r_ear1 period 1965-69 has recently been proposed by a team of consultants financed npar+ly 'ki +hn n-l T+ _ . -I- .. S J -_ 'U" - * 5Uoet::Z5. a 51arp cut In snipping investment, a doubling of outlays on railways and highways, and a tripling of investment .in Uo transpUU equipment over the _L1b-oL rate. Ine net effect would be an approximate continuation of the past total rate of transport invest- ment. The program, seems on the convervative sde, and for purposes of - 18 - financial nInninr_ an nnnIl rit. oF ronr1 T'.49_2 hillinr by 1968 for all of transport ana telecommunications should probably be allMwP for_ of about 1,040 M1,1W which is about equally divided between hydro-electric ~~~,,a~~ Ll D.,j :)caa VV11 V vjLIZ; VI oy 0a- ua vuc,c v vi o±v , aCL t j J..a. all industrial enterprises and over 80% of the population. The industrial CJJ)11U.LUL abtU U U /0 U.L IA~ULPd±J UU C .Lj _LL 1 U IiU IUI-CtUUU _LLI U _LCLU-L jI[ICUL number of large customers, with the fertilizer, iron and steel, and alu- mInum _IIuuj uly aouuunuloEg -Ur auuU riaL 0 'Ile ±rIus-riaL consuimptUlonl An analysis of the growth prospects of the major industrial customers and the -Lapacu of the expected growth in the economy on the other cate- gories of customers indicates a vigorous further growth of the demand for electricity. The Government-owned Taiwan Power Corporation, wnich is the sole supplier of electricity, forecasts an annual sales growth of 101 for the next decade as compared with 15.3% a year during l953-62, The power development program drawn up on the basis of this forecast, wnich on the whole seems reasonable, will require an average investment outlay of about NTS2 billion a year during the next five years. For 1968, investment of around NTW2.5 billion might tentatively be projected, as against NT41,5 million in the recent past. Overall Growth Prospects .0. On balance, it seems quite possible that a growth rate of at least 6 and probably even more can be maintained over the next five years or so, given adequate levels of investment and continued success in exports. The general pattern of prospective production trends in the main sectors is illustrated below: 1962 Growth rate wei!:ht in next 6 vrs, GDP Agriculture, forestry and fishing 29 4.0 Manufacturing, mining and construction 26 9.0 Transport and power 8 6.0 Services 37 6,o Total 100 62 5l. Investment in the next five or six years may be expected to grro-i- somewhat fastear t-han (I\P, since the +api1 --t4u 4 raio for the main commodity producing sectors will tend to increase. Another factor which o rsillingbed qur-asn facil s can generally. Avrapi the need for more housing and urban facilities generally. A rapid ur- bani;zation, h-as taken plcJn the pastL few y -ar an the rat wIll - 19 - undoubtedly increase in the next five in view of the growth of industrial U-L 4v. y U LU ~ c U L LAI t.U± ILLY 111ii-L.ut-a IGEU~IL L 101 - .I= development for agriculture. Allowing for an increase in total investment .U. ')Z_VLkt:; L a ou d 'P2 00 ULL-L-VIU O U'c_ 1 P)&V U-L.L.LLI 1tU 1 _ L ULd-L fixed investment might be projected at around NT$20 billion by 1968 as n Tmdln -I ,, ')r-------------- r % - ------ - JI- --I-,, - - __- agaLus)b i'.p±C U1L_Un In _Lyof. neUwever, L1 beem5 1.KeLy uIaU U1ne raUe oJ inventory investment in 1968 will be less than the exceptionally high NT$3.3 Ullion of 1962. Inus, in aggregaTe, domestic investment might rise from NT$15.3 billion in 1962 to around NT$22.5 billion by 1968. 52. Finally, we may summarize the export projections discussed in this chapter as follows: Projections of Exports (c..f.) 7in millions of US dollars) 1959 1962 1963 1968 Sugar 66 50 lo6 60 Rice 24 7 23 - Fish and timber 5 8 10 20 Other agriculture, unprocessed 18 30 35 50 Other agriculture, processed 17 29 40 65 Other manufactures 25 97 127 265 All other 6 15 18 40 Total (Exchange Recordbbasis c.i.f.) 161 239 359 500 Total (balance of payments basis f.o.b)(156) (218) (332) (460) It should be noted that, in real terms, this projection amounts to an increase of over 60% between 1963 and 1968. since about $55 million of sugar exports in 1963 were accounted for by the exceptionally high price in that yeara 53. Given Taiwan1s poor resource base, it is evident that imports will have to rise substantially to sustain growth rates of oubout and investment of the magnitude indicated above. With the projected annual expansion of manufacturing growth at around 10%. imoorts of raw materials and intermediate goods are likely to grow by at least 7% a year even with further import sub- stitution in some sectors. Similarly. the orojected 70% increase in fixed capital formation by 1968 is likely to involve an increase in the imports of canital goods by at least 601. even after allowance for q trinling of Taiwanl. own output of capital goods. Finally with some easing of import restrictions, at least a moderate rise in thp imnort nmnonent of nonumntion ho1uld nrobhl be projected. On balance, a growth rate of 7% or 8% over the 1963 level seems nlminihI in the next five vanrs. This wuld man a rise in imports+. vrt-nd $530 million by 1968 as against $373 million in 1963. 54. Thus by 1968, one might project a trade deficit of about $70 million allowing for net invisible receipts. For the period from mid-1964 through mid- V11.- , u4-- ~ ..LL~ L 1AUL.~ L~I~..± YC-U;J I 11L.L-L.LULI J -LLq CLO _Lt L r0 .L. 'L drop in earnings from sugar largely offsets the expected rise in other exports durUig te next year Ur tWo, wILe imports keep rising at a fairly rapid paceo - 20 - IV, Problems of Finance 5.5. The continued upward surge of manufactured exports in 1963 and 1964 Mnke it cleaMr that prges nti S-cto ir s notv~ - or at le_a+ nne not~ be-- - a temporary phenomenon, However, the basis for sustained improvement in dom- national savings rate of 18% can be sustained in the years immediately ahead, consumption expenditures behind the sudden increases resulting from the boom IoLsugar prices, nVwever given the over-all growU11 pru(pecUS ouUlineU pre- viously, it should be possible to effect the sort of changes in fiscal and credit pouicies which are needed to ensure that this savings rate is regained or exceeded within several years. 56. A factor of decisive importance in this respect will be the level of defense expenditures. 11 the growth in these outlays can be Kept down below the growth of GNP, a practicable solution to the longer-run financing problem should be possible. If they are allowed to grow at the same rate - or a higher rate - than GNP, the problem will remain very difficult indeed. In this respect, it is encouraging that defense outlays are budgeted for the current fiscal year 1963-64 at around NT$8.0 billion, as compared with actual spending of around NT$9.0 billion in 1962/63, including "special" defense outlays. 57. Expenditures on civilian government consumption are bound to rise rather sharply if adequate expansion is to take place in both the quantity and quality of government services. To enuure that quality stays up will re- quire increases in salaries, which are seriously lagging behind those in the private sector. Tn addition, allowance should be made for further increases in personal per capita consumption. A growth of 2.0% annually in this period would seem reasonably consistent with the over-all projection of a 6% growth in national output. Taken together with the rising investment requirements discussed earlier, such trends in expenditure might lead to an over-all pattern of national expenditure for 1968 of the following sort: - 21 - National Product and Expenditure 90f L±L±L 0 NIU1<a~ (current prices) (1962 prices) Growth Rates Gross Domestic Product 72.5 81.5 104.5 6.3 Factor income Payments -0.1 -0.2 - 110 Gross National Product 721 o1.3 Ju> C.0 Import Surplus 45 1,,2 2.6 Total Resources 76.9 d2.5 106.0 5. Investment 15.2 15.7 22.5 7.0 Fixed (11.9) (13.0) (20.0) 9.0 Inventory ( 3.3) ( 2.7) ( 2.5) Government Consumption 1:2.7 13.2 16.0 4.0 Defense ( 8.5) ( 8.5) Civilian ( 4.2) ( 4.7) Personal Consumotion 4,.o 53.6 67.5 5.5 National Savings 10.7 14.5 20.0 10.0 as % of GNP 15 18 19 29 (marginal' savings rate) 1/ 1963 estimates reflect tentative impressions of the Mission. Official estimates are not yet available. 58. Foreign aid has played a major role in helping Taiwan meet both its current and capital requirements in the public sector. On the average about NT$3.0 billion has been made available for this purpose in the past five years - about half through the generation of counterpart funds, and the other half through direct financing of nublic rroipcts. With the nrogress that has been made in the external accounts, the fiscal aspects of the adjustment to reduced fnraemn A may be even moy liffirnl +.th.n +.hp fornian exchange anerts. 9. The nroblem is not onp which will reach maior nronortions overni2ht. Substantial aid funds are still in the pipeline and other external sources of nzw finanneA for nnhlic spctor nro)ipcts will b nvnilable. However. if nublic sector savings are to be adequate to the development task ahead, an important inn"ance in AnMuaQ+i finnneirtl -rPQnenrracz will hmvr to ho n1i ed hl increases in government revenue will undoubtedly be required to offset the prob- both current expenditure and capital outlays. 60. Excluding profits of government enterprises, government revenues in I1 -LVjCL.L 11.Vt-, L%- Z;,V L J 1 Utt=i ItAII..L146 at. U J. ".U '.J 1/0±' WL L 4 yL. M6C"Ll 15.5% a few years ago. However, the recent rate reflects in part the special U-1 111CW±II1 W J~~± LL± U-3,L J-± ---1 *1o1-,) A- 1 - -UI 1~, UU d±1 ~ ~ t has been made since then in tax collections as the result of recent changes in nie uax. abruuuure, uLser returma are unuer cocurtn .uu±uu±iug uauge5 I land taxes and import duties. However, more rapid progress will be needed and snould be possible to achieve. - 22 - 61. It is clear that an expansion of private sector investment of the magnitude indicated by0198 wilrqieiute n"g- o,nnnQn of t-rorlit, nrt equity capital. It should be possible to obtain a significant part of this froMabod but the Main ncrease will have t oefo oetcsucs h recent growth of time and savings deposits provides a hopeful indication that such inCreaSeS in the ure--- will permit the b1n, to meet a lag par ofth requirements on a non-inflationary basis. In addition there is scope for im- ~t re spe "..L 4- - __ 4 -4 *1~ ^l -+ vvr provernentii L1 L;U1fjV1."U.La_ UaH.UI Ig Pu±±c±J--, W-LULI 1toV; WA 114U-LUJ11 CL11"~ finance. In this respect it is encouraging to note that two new foreign banks nave recnUy been permitted to open branches in 1awa. Ib wil ao u - ant to expand and strengthen institutions such as the China Development Corpora- tion which are designed specifically to proviae equity capital and long-term finance for industrial development. 62o The United States Government has indicated its intention to reduce or even eliminate economic aid on concessionary terms over the next few years. ouch a phase-out could be achieved without harm to Taiwants economy if: a) export growth develops along the lines discussed earlier; b) the necessary changes can be affected in the governmentts fiscal and monetary policies to keep import growth down to 7 or 6% annually without domestic price inflation; ana c) other forms of capital inflow can be increased. 63. For the next five years as a whole, the problem is not likely to be very severe. Even assuming that imports rise rather sharply this year, the current deficit for the period should not exceed US$200 mill4on while service on existing debt will add the need for another $60 million,±' U.S. aid in the pipeline at the end of June 1964 is estimated at $115 million, while undis- bursed funds from IDA and the IBPD amount to about $15 million , leaving an overall gap of around $130 million. % 64e However, the time phasing of these flows is likely to be one of con- tinued arrivals of U.S. aid at a fairly high level in the next two years, with a sharp fall thereafter. This implies the prospect of a further increase in reserves in those years and dragdown in reserves during 1967-68. On the assump- tion of no U.S. grant aid by 1968-70, the annual gross requirements for capital from other sources might well be in the neighborhood of $80 million given the prospect of a current deficit of $50-60 million and debt service of $30 million by then. Against this, we might assume new private long-term investment around $ 15million annually, leaving an annual need for about $60 million in lcar caital. While relatively large. inflows of this magnitude should be possible if Taiwan relies on a combination of bilateral and multilateral sources. 1jith debt being contracted at this rate, total service would rise to around $65 million by 1975. Considering Taiwants prospects for continued export growth at a high rate, this should not lead to a serious burden. Total debt service would amount to around 6% of merchandise exports in 1968 and would gradually risA to qboit 105 in the later seventies. 17 Including an estimated $25 million in repayment of suppliers credits' for rl' -n n-r - nl,le 4 vi A,a-n-iv, Tnh1o, I ndr 2. ~f-k.LV-d_ Iables I -.-i 2 AFFENDIX 1 Growth Prospects in Manufacturing A. Domestic Consumption of Manufactured Products 1. These,projections of industrial growth have been made within the framework of a growth model which includes the following main assumptions: a) Real GNP increases by 6% annually between 1962 and 1968; b) Fixed capital formation increases by 8% annually; and c) Personal consumption increases by 5.5% annual - per capita, by just over 2,,. If anything, these projections can be regarded as conservative. A faster growth rate may well be feasible, and would certainly be desirable. 2. The domestic demand for manufactured products was computed on the basis of assumed income elasticities for articles of final consumption, including metal manufactures and machinery intended for final consumption, like household sewing machines, bicycles, etc. The specific income al'Iti ci ti !7 sumed were qs follows: 'Foo 0.72 Tobacco and beverages 0.72 (assumed to be held back hv innrPenP tAxes) Textiles 1.23 Ma1-n-ma-de f ibre S. I Pharmaceuticals 1.43 T.+a t1h1 er4 Paper 1.67 and appliances 2.38 Income elasticity was defined as the ratio between (a) the percentage increase+)I C nn conumpio ofteseiiemrdc roupn ndr (I-) the1 percentage increase in income. Thus consumption of manufactured foods 'was as u e = m0 bAI~J L LLL~L U Ld JLiA' a LLUJra -U -i .I LU *.+.- which gives an income elasticity of about 0.72. The actual values for for foods and textiles, unpu1blished Economic Staff study for paper, etc.). Some[~ va-ufes, e.tg. IfOr- Jharmacu~U_LACL..0, C. - C,.4ILA.P_LY0 3.* I11J U Wt~U U~Id L U . .U UJ1OULU.U L V1 .JII JICLUU 1.LL Lii window glass) was estimated on the basis of a 8.0% per year increase in construction. !4. 9out ou;> of tne domestic uemand ur mietal mianufactures an machinery was assumed to vary with investment activity. The remaining 20l of the output of the metal manufacturing and machinery _LustesZ were assumed to be purchased by households (the actual proportion is not - 2 - known, however), with demand doubling by 1968 (income elasticity of 2.38). Combinina the demand for oroducer items and consumer items. onp ohtnins an increase in demand by 620. 5. It was roughly estimated (based upon the types of steel presently consume.don Taiwan and q1so innon the knnian end -use nnttrn for countries in a similar stage of economic development) that one-half of the steel used on Tail.M)an oes irn cosrcin ndir thei nfther hlIf j iousedby then metal manufacturing and machinery industries. The growth in the output o nnt n l nr)u nt _ vnr -rl Yn-1ijn"ir~V, , AIIi ,-~ IT se a at l estJ ., . at ed at 192,. This combined with the growth in the construction demand for steeI -iHolrl nn n-r _ -hrt for steel of 100, bowe 1060 nd, _1960 (applied to the whole basic metals sector, i.e. steel plus non-ferrous 6. Te tentative andk apprima LtLte, nlatu ofte abveu Pro-jet-;_ion needs stressing. In the first place it would have been desirable to chec. adJa reco cil4. 1, e V4 -.LJ 1 UU- LI~ __i2dI -O 4 IIU- - .3-J-___1 with the total income available for consumption and with other claims upon the ccnsumer's purse, e.g. for agricultural producus and for various types of services. Secondly, refined consideration of input-output relationships might conceivabLy also nave improved tne estimates. n, LIIfUY - u's'-"Lut*on 7. We nave defined import substitution as the satisfaction by domestic manufacturers of an increased proportion of the total supply (domestic production plus imports) in a given sector. Possibilities for additional import substitution in manufactured products has narrowed down, in the main to three sectors: chemicals, basic metals and manufactures, and machinery and transport equipment. 8. With the expansion recently completed, Taiwan will become self- sufficient in fertilizers other than potash. Expansion in man-made fibres is already underway, and Taiwan is expected to become an exporter of such fibres (see discussion under C below). Some imports of special types of fibres may still be necessary but would presumably not weigh very heavily in the total. picture. 9. For other chemicals and for imported machinery and transport equipment we have assumed that by 1968 Taiwan manufacturers would be able to supply about one-third of those requirements which, according to the 1962 pattern, would have been imported. As mentioned in the text, this would cover additional expansion in light engineering products, further expansion in automobile parts and subassemblies, and the initiation of some outputs of heavy machinery. 10. While a portion of the above import substitution is already embodied in firm projects, much of the assumed substitution is conjectural and, at best, illustrative of opportunities. It is also conditioned upon supporting Government policies. C. Export Prosnects 11. Our export projections, based upon detailed consideration of growth prosnects for individual products indicate that it should be possible at least to double industrial exports (excluding sugar) between 1962 and 1968. norresnondina to an average growth rate of about 13, per year. The growth in 1963 was nearly 305. 12. Processed foods. The following projections were made (values :n billion WfN%: Canned pineapple 0.L0 0.42 0.61 Mri--- n7 n) 1 o. 8 Tea 0.30 0.31 0.37 n+)m tn , I; 1 ) n1a n LAR MD-I ')Z z '1 71 0) op with the United States and Western Germany as the major markets. Sales IgrevT from sa.,ple shipments in :Lr960 to about lvu2 mlin qivln in 1962. They doubled again in 1963, and a further 50% increase by 1968 vrouu seem a reauoaule exiDetatLui n u Unauge a abumeu _o U1n Lreotlu export price of US$ 12.00 per case. 14. Soil and moisture requirements are less exacting for pineapple than for certain other crops which has permitted the extension of pineappLe growing to marginal lands on Taiwan. Moreover, pineapple growing and canning is a labor-intensive industry which gives Taiwan a clear compe- titive advantage. Until now, Taiwan canneries have been processing as much fruit as they could. obtain. The world market for pineapple (mainly the United States, Western Europe, and Janan) may be approaching saturation, and we have conservatively assumed only a 2.5,_ per year increase in this market. Since no major increase is expected in Haaii's production, now accounting for about one-half or world exports, production in other areas could grow by 5% per year. If Taiwan shared equally in this growth, its exports would grow from 3 million cases in 1963 (2.5 million cases in 1962) to 3.75 million cases by 1968. The coming into production of new American-owned plantations in the Philippines and elsewhere might reduce this to, say, 3.5 million cases. World market prices for pineapple have been stable during the last three years, and with Taiwan canned. pineapple selling in Western Europe about 25% below the Hawaiian prices, Taiwan prices should remain firm. 15. Mono-sodium glutamate is a base for flavoring powders (e.g. "Accent"), exports of which rose from virtually nothing in 1960 to US$ 1.7 million in 1962 and an estimated $3.0 million equivalent in 1963. It is produced by fermentation of agricultural raw materials. The major export markets are South-East Asia, particularly among the Chinese population in Singapore and Hongkong, and, increasingly, Western Europe. - It - export prices have fallen by nearly 50% since 1960 to a present level of abou+ so7O q%r oni e nesen ahn-oi+Ja nroipt annroxi-mately a 50% increase in exports by 1968, based partly on the assumption of a large I. uenAA.. a.L-.4- -ces-however,,are expcted to ejee-li ne to "880 per ton. The market picture for this product is clouded by (1) (11_L..LLCU.U_LU In. tBStJ1m.LLL 6 CL 1iJC:L1rVZ-, V kdVV UL L w'' ~ ~ --Y tastes and customs (2) development of a native mono-sodium glutamate indUZUstry in some of the MajOr- SduvhIM DG _'/ regarding Taiwan's competitive position; due to the high cost of molasses, the industry has recently shifted to cassava as the maJor raw material. Mainly as a guess, we have reduced the Chinese estimate of 1968 export proceeds from US"l7,o million to v$2e mullon, 16. Tea exports in 19'3 exceedea USIP.) miinon, vxven one aIsa quality of Taiwan tea, and its relatively small share in the world market, the industry has a good potential for expansion. However, present yields and processing productivity are poor. Substantial investments will need to be undertaken in variety improvement, and it will be some Time before full benefits of these improvements can be realized. Expectations of a 20% increase in the present output by 1968 would seem reasonably conserv. ative. No change in the present prices has been assumed. 17. A doubling of the exports of all other processed foods to a total of about $12.0 million equivalent by 1968 would seem a reasonable target. This group includes preserved fruits, canned fruits and vegetables (e.g. asparagus, bamboo shoots, tangerines), and yeast. 18. Textiles. The following projections were made (billion NT5 ): 1962 1963 1968 Cotton yarn and thread 0.33 0.40 notton nic anods 019 0ip60 Wool yarn, cloth and manufactures 0.08 0.17 Rayon and nylon yarns 0.25 C.1 Clothing and apparel (other than wool)0.39 0.26 Mqnufnturpm of other fibres 0.11 0.06 Te-it.l 1.A1-90) 180 Exot of' t.-ti Ign man-ractu1ras Ami'hlpti 'hsz+jTAPno 19 "C) nnei 1gP A2 r. rP.,q.qPA by 17f% in 1963 and in the first four months of 1964, they were at an annual ra nearl TwQ aboe the 1963 level. Tn analyzingy7 ntn ftur ortnrospect.s it seems convenient to look at the textile sector as a whole. Taiwan is at world market prices, and a new and promising industry manufacturing textile machinery is modern, and much of it is manufactured on Taiwan at praces eow ne UUty-free lande U 0 5L ua0ar imporeU mUUacLiu Je Wages are low, and efficiency and quality in manufacturing are improving. The trend towards better fabrics (using Egyptian cotton and blends with Taiwan-made synthetic yarns) should increase average export valueso 7inally. Taiwan is +.ill a small factor in t.hp total world market. and with aggressive marketing there should be ample room for expansion. A doubling eenln 1963 and 1Q6 Ould eem uite vnniblr zniyally in view of the success achieved to date in 1964. 19. Lumber and manufactures. The following projections were made a4 U00 I n.)- Lumber, sleepers, etc. 0,26 0.39 0.50 Total 0,68 1.06 1.80 The overwhelming portion of Taiwan plywood exports goes to the United 'rates" The major exporters to this market are Japan (about ig of the total in 1962), the Philippines (18%), and Taiwan (12%). Most of the plywood is cut from Philippine lauan (a type of mahogany) logs. The Philippines are not likely to restrict or tax exports in view of the existence of substantial additional supplies on Borneo. Perhaps to forestall excessive price competition, Japan has voluntarily limited plywood exports in recent years and seen its market share decline in favor of the other two major producers, particularly Taiwan. The Philippines enjoy substantial tariff preference on plywood imports to the United States (5% duty as compared with the regular import duty of 20%) but this preference will now gradually disappear. Hence, Taiwants export competitiveness should remain high. 20. The lumber industry on Taiwan has not reached the development which might have been expected, considering the existence of substantial forest resources, including softwoods. The Government is turning its attention increasingly to this sector. Some foreign interest in an integrated forest operation is renorted. The planned conversion of low- yielding hardwood forests to conifer plantations would increase the supply of logs and should bring prices down. All this activity should also be reflected in increased exports. 21, Pulp, paper and board. Exports are projected to increase from NTWO.l7 billion in 1962 to 0Tibillion by 19Q(8 Piln and ner production in Taiwan has been increasing rapidly in recent years but the futurn looms 1iffinilt for a numhpr of racznnc intina. +hm rcan+. primitive state of the industry, the need for heavy capital investments imodePrn newsp-rint. ndr kraft. pumlp mills, nd +TinTl "I r% nie P^ 1 ^ There are some compensating advantages, in particular a plentiful supply C) _I, -lb r t and~ re'asonJLabJle Pue- and power 2, Cheicals and al.lied. products VS, rt are.PV prjete to-- IUJUUU grouw from about NT$0.6 billion in 1963 to NT$1.2 billion in 1968, with man- made fibres which are now unimpurvaun i the export picuure providing virtually all of the increase. The China Man-Made Fibre Corporation wIch. began production of vIuse rayou in 195?, has since quaarupled its rayon and also expand into nylon, polyester fibre, and polypropylene J._Ure. Tut, mIJUlU n L L IVt:bUIIIIUZ VUL&LU Ue on 1e o ue LaU _L Iv.L - \- a joint venture with the China Development Corporation) and on the other hndu in polyester and poJypropylene fibres (financing ovt yet arranged)o Altogether US33 million equivalent would be invested in 1964-69, including production of the basic Intermediates (di-methy] terephta-late, pulyprupylene resin, caprolactam). The attractiveness of this scheme arises, in part from the forward and backward "linkages", supplying the Taiuan textile ndustry with domestic man-made fibre and providing the backbone of a domestic market for basic petrochemical raw materials which could be produced from refinery feedstocks (ethylene, propylene, aromatics), The major drawback of investments in this type of petrochemical complex is the small market on Taiwan (rather too small, it would seem, for caprolactam, di-methyl terephtalate, ethylene cracking, or thermo- plastic resins) and the high cost of capital which would substantially raise the selling price for e.g, ethylene or caprolactam. On the other hand, world market prices for some of the petrochemical products are high in relation to production costs, partly to cover research and dLvelopment costs and partly to allow for the risks of obsolescencej Considering the favorable investment incentives and investment climate on Taiwan, and also the low costs of research, one could easily conceive of foreign participation in such a petrochemical venture. The complicated economic, financial, and technical considerations involved in predicting the growth of this industry do not lend themselves to an easy "yes" or "no" answer. We have assumed that the rate of exransion of exports will be considerably slower than projected by the Chinese authorities, and that the major intermediates would not vet be manufactured by 1968 Hence, there would still be a 60% import component in the projected exports of NT80,70 billion. projected to grow from NT:3O .32 billion in 192 tot billion in 1968, projlc ion but data are lacking for a more careful appraisalo Exports in tJ-*,s -rp i r qIn lowliN J-r -A Kii+. -mor thain rrhlc __-"iy, grew by more than a quarter bo;een 1961 and 1962. The main items are manfacturesof -1-P ln-stics (4-01% of{ th toal an rubber,~ 1 Ac V±~ . ~ 9 . 4- A -1-. 13 £AUI . O_4- projected to grow as follows NINT bilion 1962 1963 1968 Cement o,28 0.0 0.31 ',u .U Oj UJ4 U OU *: U0i,..'J Other 0. 01 .9200 0.07 Total 033 0 7 O52 Taiwan cement exports have been rising in geoietric progression since l955-6o, and estimated 1963 exports of abc;;t 0.75 million tons place Taiwan in the fifth place among world exporters. (Japan is in first - 7 - n1n-er,? ~'+.1i ,QA9. nrnn+c rif{ I mi V12 nn +eNnoc~ rp-, o ~-rrn't. n"i -P level differs only slightly from domestic prices on Taiwan after considering commodity oA.ost. .. tt t.' taaN aand, Ch,larg. 5 0 -thle vi o - '.J' 1_T?-h A-A,J~jJ.t .U..l.4 are expanding their cement production, and some shrinkage of exports in that area may be exeed, with po-il 4ome lowrin of expor prices -4- -P--4 4 A reduction in exports by about 40% below the 1963 record level has vacLc1U1ULVet; uterL assumurne CunC eivau, D ly evr hawnmgymzos e UII~~1t~~jA.J± 11 U~L IN UlU, VUit± dU Y L Ul'e ) LCL_LAJdL III-'LiU IIkCAL1U,1LIA LMUJ. present rate of exports in competition with Japan. Japan is also the ma±u uuIIpe±u_ur in ±±aUU giass. la±UanVs new I.au glass :nausury is expanding, and is initiating the production of new qualities of glass. Since Tawan's share in the total export market is small, a very sizeable increase in sales may be expected. 25. Basic metals and semi-manufactures. Exports are projected to grow as follows (AT$ billion): 1962 1963 1968 Iron & steel products 0.25 0,40 coho Aluminum ingots and products O,o8 011 0,25 Other 01 0.01 0.10 Total 0,36 o52 0n75 The outlook for the world steel market is one of hard competition and low profit margins, and Taiwan producers which are quite inefficient will find it difficult to increase their prese.-t rate of exports. The prospects are better in aluminum where the capacity needed for the additional outDut is already being installed. Production would appear to be profitable at present world market prices based upon power rates which are a fair approximation of the actual cost of supplying this type of power. Economies of scale should be obtainablp from a tun_-hrcs Jnorrqz in output above the 1962 level0 26. Metal manufactures and machinery, Exports in this sector are projected t.o row _from NTS0.21bTllion in 1962 to NT0-10hilion in 196A. The growth between 1958 and 1963 is shown below (billion NT). 1958 0.01 1961 0.15 194Q 0cf0 oAA n ol 1960 0.05 1963 oo36 There are about half a dozen major manufacturers in this field, of which four are pubhliclyi o-wnedAt Thie -~~i+ - - -~ - -~ 1 --- ncuedee engines and engines for fishing vessels, electric wire and cable, electric meterS and sundyletia app-liances. Prospective items are ccls sewing machines, textile machinery, processing machinery, small electric motIo, rei.geAoruv, small Uransurmers, sIp., These are all quite labor-intensive industries and, with a few exceptions, they do not require a igly Piueicated bype of engineering. Japan has been a major producer of such items in the past but that country is now consciously Urying tou sht its export offensive towards more complex products, Taiwan is well placed to fill the gap. A three-fold increase in exports - A - hbtueen 1963 and 19A BeJl + +e rAnR. of th' 'i1 14,a+s';m+In proper Goverment support for these new industries. Even at that rate, SQ~J'l1 U JLI-j~ -L%Jl. CLLJUUU U Ik,qIA Ut:;.L U.J. ULi~U UUl- jJ UU U±U[n of the sector, and in quite a few cases would be a necessary condition ax n eonomumi soale of output, STATITSTICATL APPENDIX External Public Debt External Public Debt Outstanding (repayable in Ia foreign currency) External Public Debt Outstanding (repayable in local currency) lb External Public Debt Service 2 Population and Employment Pupulation by Age 3 Employment by Sectors 4 National Accounts Industrial Origin of Net Domestic Product at Factor Cost 5 Expenditure on Gross National Product 6 Gross Fixed Capital Formation by Industry 7 Production Statistics Area, Output and Yield of Agricultural Crops 8 Cutput of Selected Mining and Industrial Products 9 Index Numbers of Production 10 Transportation 11 international Transactions and Trade Balance of Payments 12 Volume of Foreign Trade 13 Value of Principal Imports l Value of Principal Exports 1 Trade with Selected Countries 16 Financial Statistics Consolidated Budget of the Central, Provincial and Local Governments 17 Gold and Foreign Exchange 18 Consolidated Statement of Condition of the Monetary System 19 Factors Affecting the Money Supply in Hands of Public 20 Interest Rates 21 Pric T,4 22 la: CHINA - EXITRNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS CF JU1E 30, 1963 UITH MAJOR REPORTED ADDITIOS JULY 1 - NOVEIJER 30, 1963 Debt Repayable in Foreign Currency (In thousands of U.S. dollar equivalents) Debt outstanding Major reported items June 30. 1963 additions tesNet of Inciuding July 1 - undisbursed undisbursed November 30. 1963 TOTAL EXTERNAL PUBLIC DEBT 585,8 1,696 AuG,300 1/ Loän.R not in service -' M1,397 M -,397 - P-reA_-ny-rld Warmi TT Aebt 23, 3 2 53 Publicly-issued bonds 243,183 257Y3 Iorld War II inter-governmental 61,307 61,307 1939, 3 7,859,000 Sino- Brit-ish, loans, 1939 and 19741 15,195,7 Post-'orld War II debt 131,587 131,587 - U.S. U%JLoIIvernmeIintlv Luculö1/ a (,uDu8 77,814DU Export-Import Bank - ~2,387 27,387 - Other 51,071 51,071 Canadian Government _ 5hl29 54,129 Loans with repayment terms not settled 88,938 88,9383 _O - Torld Iar II d2bt .22,859 22,8,59 - i 50,0uu,00 Sino-British loan, 19hh 22,859 22,859 - Post-World iuar II debt 66,079 66,079 - $75,000,21C U.S. Government Surplus Property Credits 66,079 66,079 Loans currently in service 54,673 83,361 44,300 Privately-placed debt 29,730 31,019 - I3RD loans - - 7, d00 IDA credits 4,533 15,3o0 - U.S. Government loans 20,10 37,02 36',50 Export-Import Bank 2,261 2,261 Agency for International Develop- ment 8,866 25,200 36,500 Maritime Commission 631 631- Department of Agriculture 8,652 8,950 1/ Excludes renegotiated portions of three Export-Import Bank loans, included - below as currently in service. Statistics Division IBRD-Economic Staff January 29, 1964 Table Ib: CHINA - EXTERNAL PUBLC DEBT OUTSTAND:G ICLUDING UNDISBURSED AS CF JUNE 30, 1963 Debt Repayable in Local Currency 1Ž (In thousands of U.S. dollar equivalents) Debt outstanding at Amount of June 30, 1963 Item loan Net of Including2/ agreement undisbursed undisbursed- TOTAL 111,383 161,469 ICA to ROC, 194-94. for nroiect assistance 3 20,000 19,813 19,81.3 ICA to ROC. 1 56-96, for projct assistance ' 20,000 19,892 19,892 TT to OC, 3 1/2, 195I-93, for multi-purpose dam 21,500 20,239 21,300 L.F to ROC, 31/2, 1958-69, 1st Ra ilway loan 3,032 2,143 2,1h9 DLF to Tnn3 Bn of TaiWan, 5, 1959-64, for improvement of DLF to Taiwan Aluminum Corp., , 1959-.6i for aluminum prducn 1,3)3 96i 961 DLF to four TaiwTan banks, f2, DLF to ROC, 32<, 1960-71, 2nd Railway loan 5,896 5,58h 5,58h DLF to Taiwan Telecom. Admin., 32P, 9-702,001,U21,8 DLF to Taiwan Power Co., 32<, -LI iIýC,111JL .LIIe±IIk.L Power 1h,910 12,410 13,778 nTI4.- TT-1---T2.~n JLF to Hsincher W±ido Gls I.Jorks, 5 3/4h, 1961-73 1,600 807 1,600 flYr -L.M.2m--- - "_' DLF,r to Taiwan rower Cu., 3 1961-91, for Tachien Reservoir 40,000 184 39,950 ICA to RCC, 12 7-97 for project assistance 21 20,000 19,375 19,375 IC 4. Rn c, 1 95 9 - , nn o project assistance ' 951 951 951 10A to ROC, t4o 1961-?001, for project assistance-V 1,955 1,955 1,955 F-C, % (- rCn ?' _/ , -,,- .n-, IuA tLo R , lr, -21, for project assistance ý' 3,648 3,481 3,648 AID to ROC, 4 , 3-C003, for project assistance - 2,030 - 2,030 AID to RCC, h,16~91 o project assistance - 937 ' 937 AID to ROC, 3/%, 196793, for project assistance 3,920 - 3,920 i, 1,ith maintenance of value unless otherwise noted. 2/ May be over-stated, as cancellations are not known. 3/ Debtor has option to pay interest and principal in U.S. dollars or local currency; interest 35 if paid in dollars and h5 if paid in local currency. / Loan denominated in local currency without maintenance of value. Conviersion rate used is NT$39.73.= US$ 1.00. Statistics Division IBRD-Econonic Sta.f January 2,!, 1964 Table 2 : CHINA - ESTIMATED CONTRACTUAL SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING INCLU.DING UNDISBURSED AS OF JUNE 30, 1963 WITH MAJOR REPORTED ADDITIONS JULY 1 - NOVEMBER 30, 1963 /1 Dobt Repayable in Foreign Currency (In thousands of U.S. dollar equivalents) Page 1 Debt out- Payments during year ebt out- Paymients during year standing standing Year plus un- Amorti- In- Year plus un- Amorti- In- disbursed zation terest Total disbursed zation terest Total January 1 January 1 Total debt Private]ly-placed debt 1963 83,361l 12,590 450 13,040 1963 31,019/2 10,920 88 11,008 1964 122,343 8,255 693 8,948 1964 265,628 7,187 114 7,301 1965 14,088 6,490 1,083 7,573. 1965 19,441 5,720 70 5,790 1966 107,598 5,170 1,484 6,654 1966 13,721 4,179 1967 102,428 4,268 1,767 6,035 1967 9,542 2,549 - 2,54 1968 98,160 3,841 1,871 5,712 1968 6,993 1,248 1,248 1969 94,319 3,389 1,816 5,205 1969 5,745 376 - 376 1970 90,930 8,477 1,731 1020 1 5,369 5,369 5,369 1971 82,453 2,942 1,639 4,581 1972 79,511 3,195 1,557 4,752 1973 76,316 4,138 .1,461 5,599 1974 72,1 4,248 ,344, 1975 67,930 4,359 1,223 5,587 1976 63,571 4,4// 1,12 5,579 1977 59,094 4,601 973 5,574 IBRD loansi IDA credits 1963 -/2- - • •• 1963 30 1964 7,800 - 107 10 1964 15 300 36 36 1965 7,800 - 250 250 1965 15,300 - 1966 7,9700 21 3 613 1966 15,300 47 47 1967 7,579 462 410 872 -196- 7 13,37 52 52 1968 7,11 /4/ 3 8T/ 1968 15 ,300 56 56 1969 6,630 515 357 872 1969 15,300 -U60 6U 1970 6,115 49 1970 15 , 300 - 65 65 1971 5,572 574 298 872 1 1972 4,998 6 266 8T2 1972 15,300 154 74 228 1973 4,392 639 233 872 1973 o5,146 154/ 1974 3,753 6 / IT9 ?T2 1974 14,992 154 78 232 1975 3,078 712 160 872 Ty T 1,38 4 57 2 / 1976 2,366 752 120 872 1976 14,684 154 84 238 1977 1,614 794 78 872 197 4 ,30 in 79 243 See footnotes at end of table. Table 2 : CHINA - ESTIMATED CONTRACTUAL SERVICE PAYMENTS ON EXTERNAL PUELIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF JUNE 30, 1963 WFITH MAJOR REPORTED ADDITIONS JULY 1 - NOVEIBER 30, 1963 / (CONT.) Debt Repayable in Foreign Currency (In thousands of U.S. dollar equivalents) ------ot-- - - - - - - - - - -- -Page 2 t dtPaynents during year aandaYnts during elar Year plus un- Amorti- In- Year plus uln- Amorti- In-o9 dlisbursed ation terest Total disbursed restotal Jrarmary i , ain trs Januaryl1 U.S. Government loans ö- Tt U.S. Govt. loans-E Bank 1963 37,042 2 1,670 332 2,002 193 > 7ä19 1964 72,6T5 1, 435 -,-50- 1964 2,100 322 70 392 1965 71,547 770 721 1,491 1965 {, // T22 2T ool 1966 70,777 -770 1,012-1, /8 1966 1,456 322 48 370 1967 70,007 1,257 1,305 2,562 1967 1,194 372 / T 1968 6 50 , 1968 812 291 26 317 1969 66,644 2,498 1,399 3,897 1969 bil 1/ 1970 64,14 2 1970 263 263 6 269 1971 61,581 2,368 1,273 3,641 1972 59,23 2,435I1,2/ 3,5T· 1973 56,778 3,345 1,152 4,497 1974 53, , -o- 1,069 4,488 1975 50,014 3,493 985 4.478 1976 46,521 3,571 898 4,469 1977 42,950 3 ,653 806 4,459 U.S. Government loans - Other 1963 34,7814 1,218 135 1,353 1964 70,515 746 365. 1,111 -1965 69,769 448 662 1,110 1966 69,321 448 964 1,412 1967 68,873 935 1,268 2,203 19'68 -67,938 1,815 1,404 3,219 1969 66,123 2,240 1,383 3,623 1970 63,883 2,302 1,331 3,633 Debts currently in service only, as shown 1971 61,581 2,368 1 ,273 3,641 on Table 1, prepared January 29, 1964. 1972 59,213 2,435 1,217 3,652 1973 56,778 3 , 345 1,152 4 27 Amount outstanding is as of June 30, 1963; 1974 53,433 3,419 1,069 - payments are for the whole year 1963. 1975 50 ,014 3,493 985 1976 46,521 3,571 895 1977 42,950 - - 3,653 805 S Statistics Division IBRD-Economic De>t. January 29, 1921 Table 3 (Unit: 1,000 person) Do f Toal under :> 5-0 Over ou Year 104,)8,128 3,442 4,352 334 .953 0,430 3,605 4,493 340 1754 8,749 3,769 4,630 350 9, U78 3,941 4,772 365 1956 9,390 L,123 4,892 375 1957 9,090 4,289 5,013 388 1958 10,039 0,472 5,157 410 1959 10,431 4,674 5,330 427 1960 10,792 4,904 5,439 449 1961 11,149 5,112 5,568 469 1962 11,512 5,293 5,729 490 1963 (Oct.) 11,809 - - - 1/ Excluding conscripts under military training. Source: "Household Registration" of Taiwan Provincial Government. Table h F-iPLOY-I VIT BY SCTRS A. Numbers Emploved (thousands) Personal Liberal Government Total Agricultu_re Industr Corrterce Tr2ansrtati on Jrvices j rfessions Services .thers 1952 2,936 1,792 272 251 66 226 73 175 81 1953 2,954 1,812 271 251 68 226 74 179 73 1954 3,0CO 1,811 289 251 78 253 81 179 5U 1955 3,026 1,812 296 253 80 269 86 179 51 1956 3,015 1,806 298 252 80 269 87 177 46 1957 3,110 1,810 323 262 86 292 94 194 49 1958 3,178 1,813 345 275 90 303 99 204 49 1959 3.272 1,853 362 289 95 309 107 212 45 1960 3,344 1,877 377 298 99 309 115 224 45 1961 3,429 1,912 387 307 101 316 122 237 47 1962 3,504 1,936 404 310 106 324 130 250 44 B. Percentage Distribution 1952 100.0 61.0 9.3 8.5 2.2 7.7 2 5 1953 100.0 61.3 9.2 8.5 2.3 7.6 25 6.0 2.8 1954 100.0 60.4 9.6 8•4 2.6 6.1 2.5 1955 100.0 59.6 9.8 8.4 2.6 8.9 2.8 6.0 1.9 1956 100.0 59.9 9.9 8.4 2.6 8.9 2.9 5.9 1.7 1957 100.0 58.2 10.4 8.4 2.8 9.4 .0 5.9 1.5 1958 10.0 57.1 10.9 8.7 2.8 9.5 1 6,4 1.6 1959 100.0 56.6 11.1 8.8 2.9 9.4 3 6.5 1.5 1961 1o00.0 56.1 :11.3 8.9 3.0 9.34 6.7 1961 100,0 511.3 9.0 2.9 9.2 35 6.7 1.3 1962 100.0 55.3 11.5 8.9 3.0 9.2 3 7 7.1 1.3 Source: "Household Regi,stra-tion", of Provincial Department Of Civil Affairs Table 5 INDUSTRIAL ORIGIN OF NET DOK:ESTIC PRODUCT AT FACTOR COST (est) biionsJ~Ur~ of NT Doll±ars) Anriculture, forestry hunting & fishing 4,595 8,557 10,403 11,769 16,390 16,993 18,039 19,064 idning & quarrying 273 59o 890 955 1,96 1,2C9 1,5o 1,4 Manufacturing 1,935 4,468 5,758 7,270 8,381 9,624 11,111 13,492 Construction 634 1,338 1,545 1,809 2,221 2,501 2,6l9 3,50 Electricity, gas, water and sanitary services 88 242 395 465 647 879 1,038 1,177 Transportation, storage and communication 591 1,110 1,475 1,633 2,050 2,711 2,773 2,783 Wholesale and retail trade 2,190 4,296 5,187 6,272 7,315 7,966 8,746 10,212 Banking, insurance and real estate 164 472 715 799 816 901 1,148 1,397 Piblic administration I and defense 1,489 3,202 0,026 4,713 5,671 6,548 7,116 7,916 Otqer services 1,091 1,763 2,456 2,850 3,426 4,274 4,680 5.897 Net Domestic Product at Factor Cost 13,050 26,046 32,850 38,535 48,013 53,606 58,806 66,630 1952 1956 158, -1959 1960 1961 1962 1963 (Per cent of Total) Agriculture, forestry hunting & fishing AS 329 T1 7 300 301 317 307 22.8 nining & quarrying 2.1 2.3 2.7 2.5 2.3 2.2 2,6 2.5 hanuacturin 14.8 17.2 174 1809 17 18.0 18.9 20. Construction ho9 09 4,7 4.7 4,6 4.7 4.4 4.5 Electricity, gas, water and sanitary services 0.7 5.1 12 L2 1.3 1,6 1,8 1.5 and. communication 46, 4.3 46.5 4.2 43 500 4.7 4.2 trade 16.8 16.5 15.8 16.3 15.2 14.9 14;9 16.3 real estate 1.3 1.8 2.2 2.1 1W7 1,7 2,0 2.1 and defense 110 12,3 12.2 12.2 11.8 12,2 121 11.9 uter services u.4 vou 7.5 7.4 ,.1 8. 0.u . Net Dumestic Prouuu at Factor Cost 100.0 100.0 100.0 100.0 100.0 100 0 100.0 100.0 Sonrco: nonTAm Table 6 EXPENUlTUn U N GUSS NATIUNAL PRUUUT I. At Current Prices Uni"-: "Etllion N.T.$ 1952 1956 1958 1959 1960 1961 1962 A. Consumption Expendi- ture 13 647 29 164 37 114 h3 23 51 5hh 56 739 6-1,618 1. Private 10,9 23,032 28,916 33, 37/0, n h,763 2. Government 2,693 6,132 8,296 9,798 10,856 11,976 12,722 B. Gross Capital Formation 2.887 h.88 7.7h 9.718 12,989 L1,658 15,2h9 (Percent of GNP)% (I. .0) 1 ( 19.9) (.7 ( ) 21.1 (Percent of TAP)% (17.) (1..3) ,16.9, (18.3) (20.1, (20.5) (19.9. 1. Fixed Capital Fonn2tion .019 )i007 6.381 8.h78 10.ý98 l1.7h8 1E1.49fl a. Private (1,107) (1,777) (2,531) (3,733) (5,435) (5,7h6) (6,150) Enterprise (532) (1,581) (2,578) (2,793) (2,937) (3,687) (3,368) Governiment (380) (649) (1,272) (1,952) (2,226) (2,315) (2,h27) 2. Inventory Accumula-T .i tion 868 851 1.193 1.2h0 2.391 2,860 3,30b C. Expenditure on Total Available Product (A+B) 16,534 3h,022 h,688 52,952 64,533 71,347 76,867 D. Net Import cf Goods & Services 773 1,667 3,074 h,451 4,693 4,877 4,b40 E. Net Factor income Paid to Abroad 3 5 23 22 5 75 122 F. Expenditure on GNP (C-D-E) G. Per capita TAP (N.T.$) 1,896 3,381 h,171 ,709 ,9 6 , 6 ý( ,368 H1. Per capita GNP (N.T.$) 1.810 3.209 3,888 h,hoh 5.289 5,668 5,996 I. Total Population (1,000) 8,695 10,06b 10,712 11,051 11,332 11,704 12,074 II. At Constant 1952 Prices (Prelim- iaary; 1952 1956 1958 1959 1960 1961 1962 19<3 A. Gross National Product 15,7h7 21,129 24,07 25,864 27,876 30,111 32,008 34,69 B. Per CapitA GNP 1,810 2.117 2,269 2.356 2.h60 2.67 2.652 2.753 Including statistical discrepancy ource: Direcorate General o. Bu(,d7et and StcatistiCS (DküS) Table 7 GROSS FIXED CAPITAL FORMATIO BY INDUSTRY (in billion of NT dollars) 196 1959 1960 1961 1962 Agriculture, forestry and fisheries 0.9 1.8 1.9 2.2 2.1 Manufacturing, mining and cons-tructio . 21 27 . . Electricity,igas and water 0.6 1.6 1.2 1.h 1.8 Transportation and cmunicatin i.5 1.a 2.0 2.3 1.9 Trdo.2 5J.1 U 0L.I .. 0.5 Housing~ n.a 1.^. . . Fublie administration 0.3 0.6 0.8 0.9 0.8 3ther services 0. 0.2 0.2 0.3 0.I Total .0 8 10.6 11.7 11.9 Sourcc: Directorate General of Budget and Statistics (DGBAS) Table 8 AREA, OUTPUT AD YIELD OF AG'CULTURAL CROPS (area in thousand hectares, output in thousand metric tons, yield in kilograms per hectare) Year Timber Rice(brown) Sugar Cane"' Sweet potatoes (m3 thousands) Area Output Yield Area Output Yield Area Output Yield Pre-war peak 558 625 1,402 2,242 162 12,835 79,039 139 1,770 12,734 1952 Lh9 786 1,570 1,998 98 4,801 49,003 234 2,090 8,9 3 1953 663 778 1,642 2,109 113 8,394 74,136 238 2,277 9,576 1954 477 777 1,695 2,183 96 6,310 65,950 248 2,557 10,328 1955 481 751 1,615 2,151 78 6,089 78,121 246 2,437 9,928 1956 493 784 1,790 2,284 91 6,343 69,782 230 2,568 11,15) 1957 577 783 1,839 2,348 98 7,083 72,110 229 2,693 11,774 1958 719 778 1,894 2,h34 101 7,522 74,142 229 2,958 12,934 1959 818 776 1,856 2,392 99 8,093 81,571 226 2,894 12,778 1960 822 766 1,912 2,495 96 6,736 70,505 235 2,979 12,65 1961 898 783 2,016 2,577 100 7,922 79,082 236 3,224 13,713 1962 905 794 2,113 2,660 93 6,1)2 65,697 234 3,080 13,178 Year Fishery Peanuts Bananas PineaDple Products Area Output Yield Area Output Yield Area Output Yield Pre-war ceak 120 31.5 31.7 1.008 21.2 219 10.295 10.h ll.6 l.013 19q2 122 81.0 60.0 7h1 1q.7 107 6.819 q.8 a 10.731 1953 131 82.6 60.1 728 12.7 96 7,556 5.7 68 12,076 191_ 1' , 9).0 6q.9 701 1.q 98 7-867 . 66 119)C 1955 181 96.0 66.6 693 10.7 85 7,934 5.7 71 12,437 98 1- QA 1AR 833 9.6 59 -A21 I .h A 19-PQ7 1957 208 103.6 93.7 905 11.3 92 8,205 7.2 99 13,813 1948 230 10h.0 96.1 927 11.8 111 8.01 8.1 137 16.326 1959 246 99.1 97.0 979 13.0 104 8,060 8.9 146 16,425 1960 299 100.4 102.? 1.017 12-7 11) 8.987 9.7 167 17-108 1961 312 98.6 104.6 1,061 14.8 130 8,791 9.7 174 17,823 (192 37 QA. QC.. 992 L.q 135 903 o0. 199 I 979 a! Crop year ending in the calendar year indicated. N.B. The sum of above area figures exceeds the total cultivated land area due to multiple opping. Source: Ilinistry of Economic Affairs and Taiwan Provincial Department of AgCon ctinuedon-Inextpa (Continued on next page) Table 8 (continued) Year Soybeans Tea Tobacco Area Cutput Yield Area Output Yield Area Output Yield Pre-war peak 17.7 10.8 520 45.2 17.2 398 5.5 9.8 1,776 1952 24.3 Ih.6 602 4h.1 11.6 263 5.5 9.0 1,621 1953 28.2 17.4 617 44.7 11.9 267 5.5 9.9 1,807 1954 30.0 20.3 676 h6.2 13.0 282 5.6 9.7 1,734 1955 34.5 24.2 700 47.0 14.7 312 6.2 11.6 1,863 1956 37.5 26.4 705 47.6 13.4 282 8.3 15.2 1.836 1957 41.0 33.1 806 48.0 15.0 313 9.7 18.7 1,930 1958 47.9 U1.7 870 48ej 15.8 37 8.8 6.8 1.916 1959 53.8 44.5 826 48.4 16.5 341 8.4 16.4 1,957 1960 59.7 52.7 882 480h 17.4 359 8.0 15.9 1993 1961 59.6 53.9 905 47.6 18.1 379 7.7 15.9 2,058 1962 54.4 53.0 974 37A lSOA 523 70 1O1 2,138 Year Citronella Citrus fruit Vegetables Area Output Yield Area Output Yield Area Output Yield peak L.3 45 10,500 5.4 38.7 7,128 42.5 440 10,341 1952 25.9 148 5,727 4.6 27.8 6,024 77.3 619 8,004 93 4.2. 150 6,-J76I 14-8 29.4 6,164~ 77.2 623 8,78 1954 19.8 36 4,378 4.8 27.8 5,745 79.0 636 8,045 3955 13.9 7u 5,494 5.2 30.2 ,76u 8.4 u4u u5u5u 1956 16.1 99 6,158 5.8 35.3 6,083 81.9 670 8,190 1957 17.8 92 54144 6.2 39.0 6,250 84.2 705 8,3714 1953 19.1 100 5,208 7.0 41.8 5,991 87.3 741 8,484 1960 13.5 73 5,423 8.1 52.9 6,527 91.6 803 8,764 19u1 13.u v0 ,,u 7.0 54.7 6,0u 90,6 814 u,991 1962 16.3 91 5,379 10.2 67.1 16,553 97.7 841 8,615 N.B. The sum of above area figures exceeds the total cultivated land area due to multiple cropping. Source: Ministry of Economic Affairs and Taiwan Provincial Department of Agriculture and Forestry. Table 9 OUTPUT OF SELECTED 1INING AND INDUSTRIAL PRODUCTS Item Unit 1952 1956 1959 1960 1961 .1962 (8 months) Mining: Copper M.T. 0.7 1.5 1.8 1.8 2.3 2.5 0.8 Natural Gas Million m3 17.3 27.2 26.3 25.4 37.0 38.4 28.8 Electric Power mn.K.W.H. 1,420 2,250 3,213 3,628 4,084 4,693 3,235 Manufacturing: Sugar ueptri- fugal) ' M.T. 520 767 940 774 924 710 752 Sugar, brown V M.T. 8 20 26 16 22 22 21 Canned Pineapple case 490 1,132 1,731 2,219 2,897 2,710 1,395 Cotton Yarn-M.T. 14 25 31 4o 49 52 31 Cotton Fabrics Mn.m 88 142 156 176 200 200 150 Plywood Sq.m 1 & 9 10 19 26 18 Bagasse Board piece 740 1,579 2,242 2,549 3,303 3,488 2,057 Paper M.T. 28 49 86 97 98 110 67 Bicycle Tires piece 332 526 883- 708 1,188 1,682 752 Caustic Soda M.T. 9 20 29 33 36 38 29 Soda Ash M.T. 1 2 5 11 14 12 8 Ammonium Sulphate M.T. 6 7 22 21 29 68 61 Calcium Super- phosphate M.T. 62 101 119 121 130 144 113 Plastics Kg. 115 1,432 4,257 6,266 11,717 22,817 15,866 Poly Vinyl Chloride Kg. - - 2,350 3,)418 7,055 10,924 9,440 Gasoline K.L. 81 163 231 298 313 318 222 Diesel Oil K.L. 46 112 182 217 231 256 1-49 Fuel Oil K.L. 110 322 352 423 464 569 397 Plate Glass case - 162 230 469 446 504 260 Cement M.T. 445.6 591.2 1,067 1,183 1,509 1,870 1,U3 Pig Iron M.T. 10 18 33 24 53 63 44 Steel Rods. Bars and Slabs M.T. 18 79 159 200 18 182 150 Aluminum Ineot M.T. L 9 7 8 9 11 at Crop years ending in year given. kcontinued on next page) Table 9 (continued) Item Unit 1952 1956 1959 1960 1961 1962 1963 (8 months) Aluninum Sheet M.T. 2 3 4 6 5 6 3 Bicycles piece 4 34 36 34 27 27 17 Electric Fans piece 10 82 169 204 189 207 154 Electric Meters piece - 115.2 147 218 278 171 139 Note:: M.T. metric ton K L kiloliter rc srnhi rnmc Source: Ministry of Economic Affairs Table 10 ILDEX NUw3ERS OF PRODUCTION A. Agriculture General index Agriculture Forestry Fishery Lvestock 19291 88 97 92 103 1953 100 100 100 100 100 1955 104 98 103 137 102 195 11 105 111 1)46 1134 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 144 132 187 235 121 1262 144 132 189 244 111 B. Industry General Building Public Index Manufacturing Hining Construction Utility Total -Ex. Sugar Total Ex. Sugar 1952 80 83 75 77 105 - 93 1953 iCO 100 100 100 100 100 100 1954 107 114 107 117 100 105 115 1955 119 126 120 129 113 15) 123 1956 125 133 125 136 120 104 135 1957 142 150 1)J3 155 134 117 149 1958 153 165 153 169 144 117 162 1959 173 188 175 197 155 118 182 1960 197 218 200 230 174 114 207 1961 217 2)O 222 257 186 129 22)t 1962 246 279 252 301 203 141 255 1962 (1st 8 months) 230 278 236 303 183 104 267 1963 (1st 8 months) 270 326 278 359 193 J79 286 Source: Iinistry of Economic Affairs. Table 11 Tl-NS -PORTAT ICN Passenger--Kil ometers Freig7ht, Ton-Kilometers (million) (million) Total Railway Highway Total Railway Higa 1952 2,938 1,928 1, 010 1,318 1,254 64 9533,73 1,285 1,52 1,I.2 78 11, 3, 926 2,27 1,679 1,614 1,h85 129 n ('l,7 1, 8 1,3 7U -L., 9C,, ?4 -j.,UU.7 f-, J 1956 5,159 2,861 2,298 1,952 1,797 155 11 l ,f I r 17 1<f nn n m n 19573,56 2 2CjL77 299 ,V1 1.7 1953 6,371 3,703 2,668 2,194 2,000 194 1959 6,773 3,705 3,068 2,215 1,96 251 1960 6,782 3,609 3,173 2,389 2,072 317 1961 7,183 3,763 3,420 2,527 2,160 367 1962 6,820 3,477 3,343 2,h68 2,056 412 Jan. -Sept. 1962 5,190 2,637 2,553 1,836 1,532 304 Jan -Sept. 1963 5,119 2,617 2,502 1,865 1,532 333 Source: Provincial Department of Communications Table 12 Balance of Paymentsj (in miLlions of US dollars) 1958 1959 1960 1961 1962 1963 (Preliminary) A. Goods and services -123 -122 -130 -131 -113 - 29 Exports 156 157 164 196 218 332 Imports -274 264 287 330 328 -373 Nonmonetary gold 1 - 2 - 1 - Transport and insurance 4 3 3 2 - 8 Investment income -. - 1 - 1 - 2 - 3 - 4 Government n.i.e. - 3 - 8 - 8 1 1 4 Other services - 7 - 6 -1 2 -1 2 B. Transfer payments 98 76 88 98 55 4h Privati T1 10 q 15 l_ 1h Government 83 66 83 84 40 30 C, Capital 39 39 61 49 44 7L. Direct investment 12 4 6 10 9 18 Private n-+erm 2 2 115 - h - 7 short-term 24 24 27 15 2 27 Government 1 10 18 10 37 36 Central bank -20 6 -21 -38 6 -53 Errors andclaissions 6 1 2 1 - 2 22 I / A~T.. .t- , A ;:y 1- lgu Iuca ues creait; minus sign incucates aeol . 0ource: Table 13 VOLUME OF FOREIGN TRADE (in thousand metric tons) lst 8 months 19ý2 1956 1958 1959 1960 1961 1962 1962 1963 Prineinal Exports Sugar (6 00 817 73' 863 660 63h )68 559 Rice and Paddy 105 170 179 160 35 65 42 39 58 Pineapple, canned 5 20 28 37 38 53 7 27 23 Tea 9 11 12 l 12 15 12 8 10 Bananas n3 20 61 h. 6 7 53 .7 25 Cotton piece goods - 1 6 10 82 81 55 53 Salt 181 lo? 291 288 29 29 237 13 11 Cement1268 115 75 276 b93 323 55h Selected Iirports 1.!heat 7 211 224 170 278 266 255 201 18h Da cotton 12 22 28 31 >n. Lo 3,7 ILd1 ~. vu'A. JS C r C L4L4. 4£4 '4/ '.'4 Chemical ferti- lI zer . - n03 31. 536 64 h)2 2n 3>n9 21 172 -L. - ,- ,.Li- I. is sni -.)6 c-L4,- ln C-, Crude oil 167 489 696 696 1,060 1,362 1,259 622 918 - I r_ i Ifnn - -- T------.. "If 1/ IL 1j metes since January, 196. 2/ Less than .5 thousand metric tons. Source: Industry of Free China. Table l4 VALUE OF PRINCIPAL IMPORTS a/ (c.I.F.) (in millions of U.S, dollars) 1952 1956 1959 U.S. Others Total U. eOthrs Total U._. Others Total U.S. Others otal Afrd Aid Aid Aid Machinery and Tools 2.6 10.3 12.9 18.5 l66 35.1 17.9 21.3 39c2 13.3 24.9 38.2 Cres, Metals and Mfrs. 5.2 11.6 16.8 8.7 19.7 28.4 2.7 21.7 24.4 5.2 27.7 32.9 Vehicles, Vessels and Parts 0.7 3.8 4.5 3.7 7,0 10.7 3.6 11.9 15.5 5.1 17.5 22.6 Raw Cotton 11.4 1.8 13.2 15.4 4,3 19.7 16.5 1.6 18.1 13.6 5.5 19-1 Wheat, Flour & Cereals 5.5 7.9 13.4 13.7 - 13.7 17.0 - 17.0 14.4 0.4 14.8 Beans and Peas - 0.3 0.3 9.4 0G1 9.5 9.6 1.1 10,7 6.6 1.3 7,9 Chemical Fertilizer 22.8 12.7 35.5 0,1 22.6 22.7 - 19.5 19.5 - 22.2 22.2 Crude and Fuel Oil 9.1 0,9 10.0 4,2 14.0 18,2 0.7 15,4 16.1 - 13.6 13.6 Electrical materials b/ 2.5 3.7 6.2 2.8 3.7 6.5 5.1 4.8 9,9 Chemicals 0,9 1c4 2.3 2.8 4.6 7.4 0.5 6.7 7.2 1.1 5.1 6.2 Pharmaceuticals 1.8 6.9 8,7 3.0 3.6 6,6 0.5 7.4 7.9 3.0 4.6 7.6 Oil and Wax 2.9 2,7 5.6 5.6 0.9 6.5 3.6 2.9 6.5 2.7 4.1 6.8 Rubber and Products 0.4 3.4 3.8 0.9 3.8 4.7 0.6 4.5 5.1 0,3 3.8 4.1 Logs, lumber & wood Mfrs. b/ 0.9 2,4 3.3 1.6 1.9 3.5 - 4.1 4.1 Others 25.8 _54_2 80.0 7.1 28.4 35.5 -4.7 30.9 _'5_s6 _3.0 31 2 34.2 Total 891 117,9 207.0 96,5 131.7 228.2 82.3 150.5 232.8 73.4 171.0 244.4 Adjusted to Balance 2 . 2: of Payments Basis 2_8.3 2=22.1 =-. --- a/ Excchange settlement data and U.S. aid arrivals. b/ Included with 'others'. b,/rce l wan lo t r Taiwan ond CU(continued on next page) Source: Bank of Taiwajn and CUSA., Table Rli (continued) 1960 _ _13 ___ _ ___ -123 lo,6o ,-, 196,3 U.S. Others Total U.S. gijle -Total1 U.S. tilers Totul ol Aid-- ROIJAc "'achinery and Tools 14.0 22.1 36.1 21.4 27.4 48.8 14.7 36.5 51.2 5.7 43.3 49.0 Ores, Metals and 14frs. 11.3 24.6 35.9 11.9 32.3 44.2 7.1 39.9 47.0 6.2 36.4 42.6 Vehicles, VessQls and Parts 8.6 12.4 21.0 9.9 17.2 27.1 1.2 15.2 16.4 0.9 17.4 18.3 Raw COtton 13-0 7.2 20.2 12.0 17.8 29.8 16.3 18.9 35.2 12.8 13.'7 26.5 Wheat, Flour & Cereals 16.2 0.8 17.0 16.9 3.0 1949 21.8 1.1 22.9 27.0 2./ 29.4 Beans & Peas 10.2 6.8 17.0 11.3 2.6 13.9 5.8 4.7 10.5 9,0 11..6 20.6 Chemical Fertilizer 1.3 14.3 15.6 1.6 15.5 17.1 - 11.5 11.5 - 5. -L.,5 Crude and Fuel Oil - 11.1 11.1 - 14.5 14.5 - 18.7 18.7 - 20.5 20.5 Electrical aterials 3.4 4.3 7,7 4.6 5.4 10.0 1.8 8.5 10.3 l.0 3.1 9.2 Cheicals 2.7 4.9 7.6 2.6 7,4 10.0 0,8 9.3 10.1 2.0 9.9 11.9 Pharnaceuticals 2.2 5.0 7.2 4.3 8.4 12.7 3.,0 9,7 12,7 0.8 9.2 1O.0 0:1 and Wax 1.4 4.2 5.6 2.8 4.1 6.9 3.0 5,0 8.0 -.9 3.6 7.5 Rubber and Products 1.9 2.9 448 2.6 2,2 4,8 0.7 3,6 4.3 0-7 3.0 3.7 Logs, lumber & wood Nfrs. - 2.7 2,7 - 4.9 4.9 - 7.8 7.8 ~60 12.6 12.6 Others 46 38.0 42.6 (3 53.2 59, 3.9 56.0 -. 5-.3.4 5.9 .4 Total 90.9 161.3 252.2 108,2 215.9 324.1 80.1 246.4 326.5 76.1 260.7 336.8 Adjusted to Balance 2 5.288 Cf Payments Basis: 2 6. -====-- Source: Bank of Taiwan and CUSA Table 15 VALUE O PRIACIPAL EXPO_RTS (C.I.Fj) ,1m11on of Unde ) Jan.,-rvar, 1956 1958 1960 1961 1962 1963 1963 1964 A. AFricultural Products Rice 12.8 28,6 h.3 10.1 7.4 230 - - Fanana 3.1 62 69 107 8.0 8.7 08 1.6 Eamboo shoots 009 009 13 18 203 3.3 0.6 0.5 Ramie, sisal & hemp 0,2 0.3 1.5 1.3 3.9 2,7 0,9 0.8 Fruits, fresh 0.1 0.2 0.6 1.6 1.9 2.2 1,3 1.3 Vegetables 0.3 0,2 1.0 2.7 3,5 5.4 1.2 2.7 Chinese medicines 0.1 01 0.1 0,2 0. 0.6 o1 0.1 Bamboo, rattan and products 0,2 0.2 0,2 05 1.1 08 002 0,2 Sea products 03 0,2 0WL 004 0.7 1.5 0.2 0.5 Other agricultural products 1.4 2,3 3.4 3.6 3o9 26 0, 0.9 Sub-total 19th 39.2 19,7 32.9 330 51.2 SoS 8o6 B, Processed Agricultural Products Canned mushrooms - - 002 1.8 8.5 16.2 63 5o8 Suga 76 1 AL 7 74 0 A1l 4 O mnA 270 48A Tea 5.1 6.8 6.3 8.9 7-9 801 3,0 205 Cirnel oil-~ 01 3.5 3. 3.8 5. 49 1 l.1 Canned pineapple 6,l 7.5 8.5 12,1 10,9 116 2,2 2.6 reathers 0o u 2 no io8 h 0.5 Qo5 o o Fruits, preserved 0.2 OWl 0.9 2,2 20 303 07 2,0 Sub-total 93. 103,8 95e1 91.4 8508 154.2 41h 63.h C. Industrial Products Salt 23 24 2.5 2.4 1.9 2,3 0.4 0.7 Coal 2,3 0,8 4.1 3.9 30 2f9 0o UC Celent & building materials - 4.9 2,3 o 110 l7ol 2o2 4.t Camphor 0.7 0,2 03 0.3 0.5 0,8 0,1 0.2 Paper & pulp 0.7 0.5 26 3.7 3.9 3,4 07 1.0 Chemicals 1.1 1.7 6.8 15,8 20,6 19.4 309 5.6 Ores, metal & machinery 4.4 2.2 6.2 12.1 13.3 22.0 4,1 5.3 (continued on next page) (Tp 1, onti ed Jan.-Mar,. 1956 1958 1960 1961 1962 1963 193 19( Fish liver oil & prouuUt .--- Uo *- u j. - Lumber, timber narrufactures 0 . 3o3 5c5 .11.L 1 7.7 27t.7 39 9u Cigarettes & vine 001 C)<1 0ch 11 1.9 1,2 0.3 0.5 Textile procucts _3I cj1 212 k(00 380 hoh 0ej- 14 cl Sub-total 15.5 1856 51.9 85.1 112.7 i41.2 24.5 42,3 Do·-Others 1,7 2 3c2 ho6 701 10n9 2, , 1 Total 130.0 16lo4 169.9 214.0 23806 357.5 7h.1 118.4 Source: Exchange Settlement data of BOT. Table 16 TRADE WITH SELECTED COUNTRIES (Including U.S. Aid Imports) hillions of U.S. dollars Exports (+) Imports (-) n Value % Value Balance 156 35.5 46.1 34.7 79.1 -33.0 1957 38,9 650 330 843 -18.8 1958 43,9 72.1 33, 78.0 - 5.9 1959 h24 6A 6 369 9001 -216 1960 370k 63.5 34.4 86.7 -23.2 14/1 2A ' A0 321 10h0 -h3A 1962 2h2 57.9 32.7 106.8 -48.9 1963 (first hal) 35 7 Al 13 290 LA1 +13 TT 0 A icA 1. A A 4.. A 101. 5o c' 1957 2.6 4.3 38.1 96.0 -917 1959 9.3 14,9 38.3 93.7 -78,8 1961 24.1 51.5 432 139.8 -8803 1963 (first half) 15.6 26.8 45.8 75.9 -49.1 Hong Kong 1956 7.2 9.4 14. 3.2 + 6,3 1957 9.2 15.5 1.3 3.3 +12.2 1958 5.5 9.0 1.6 3.6 + 5.4 1959 9.0 15.8 1.6 3.9 +1l 1960 110 19.6 2.0 5.1 +166 1961 11,6 2409 1.7 5.7 +19.2 1962 919 23.6 1.4 4.6 +19.0 1963 (first half) 8.1 14.0 1.7 2.8 +11.1 West Germary 1956 1.8 2.0 2.9 6.7 - 4.3 1957 1.,2 2.0 3.9 10.0 - 8.0 1958 3.2 5.2 4.2 96 - 4.4 1959 2.6 4.1 4.0 9.7 - 5.6 1960 2.3 4.0 4.5 11.3 - 7.3 1961 2.8 5.9 3.7 12.0 - 6.1 1962 4.7 11.2 3.7 12.1 - 09 1963 (first half) 4.9 8.5 3.2 5.2 + 32 (continued on next page) Table 16 (continued) Exports (+) Imports (-) Sincanore and Value Value Ealance 1956 8.1 1o,5 1.7 4.0 + 6.5 1 7 7.3 12.3 1.6 4.0 + 8.4 1. Lo 6 6 1.4 3.2 + 3.4 -, 3-9 6.3 1.3 3.1 + 3.1 5 2 8.8 o,8 2.1 + 6.7 191 3 7.7 1.o 3.1 + 45 1962 3.3 7.9 1.4 4.6 + 3.2 1963 (first half) 5.3 9.2 1 2.5 + 6.7 U Lte Kigo 95. -9' 97 A -3 1957 0.9 1.4 1.8 4.6 - 3.2 1958 o.1.94. 4.26 . 1959 1.0 1.6 1.9 4.7 - 3.0 L>u Lc.U 4.-Lý; e 1961 3.0 6.5 2.1 6,7 - 0.2 n~ n, l, r -'r' i 1.96 '0'2 0.92.u 1.6 -3 1963 (first half) 0.6 1.1 2,.1 3.5 - 2.4 Others 1956 4o.3 52.4 11.9 27.3 +25.1 1957 40.0 67.4 19.8 50.0 +17.3 1958 36.7 60.5 22,2 51.7 + 8, 8 1959 30.7 49.3 16.0 39.2 +10,1 1960 29.4 50.0 15.7 39.6 +10.4 1961 26.5 56.6 16.2 52.7 + 4ýo 1962 32.4 77.4 15.8 51.7 +25.8 1903 (first half) 29,6 50.9 16,6 27.5 +23.4 Totals 1956 100.o 130.1 100.0 228.2 -98.2 1957 100.0 168.5 100.0 252.2 -83,7 L958 100.0 164.4 100.0 232.8 -68.4 1959 100.0 160.5 100.0 244.4 -83.8 1960 100.0 169.9 100.0 252.2 -82.4 1961 100.0 214.0 100.0 324.0 -110.0 1962 100.0 238,6 100.0 326.5 -87.9 L963 (first half) 100.0 171.7 100.0 165.5 + 6.2 Source: Bank of Taiwan Table 17 COMNSOLIDATED BUDGET OF THE CENTRAL. POVINCIAL AJD LOCAL GOVERNMENTS (in milIlions of NT dollars) 1957/58 1958/59 1959/60 1960/61 1961/62 1962/63 1963/61 (Bdi i get Receipts estimate) Taxes h,977 5,hoh 6,006 6, n A72 7,nr 8,)06 8 Mn Pionopoly Profits 1,19 1,661 1,863 2,3h 2,746 2,845 3,000 Profits of Publi-Jc Enterprises 708 755 1,121 1,Oh 1,456 1,339 1,610 n+I.--* -D- -4.- Al P 1 [fZr 4[ .1 PÅlf i EA i o 14 i / R ) -1 0 7 o nh,7 n e ir' pin 3rr, -i,n 1, 6Inr' -l. nf6. 1d 1n7 Total 1eceipt 79 7 9,85 U 105 ,69 -9 LL3,1 ) LC 25 14. ,44 1 Defen-e /h,260 5,384 5,962 6,792 7,h8 7,596 7,786 Intr:L-nal Security 45 333 424 463 4806 560 Administration 1,097 1,197 1,398 1,619 1,887 1,924 1,993 Other Ion-development Lxpenditures 1,297 1,856 2,297 2,002 2,hh6 2,757 3,302 Development Outlays 1,385 1,607 1,876 2,216 2,77 3,198 3,2 5 Total I::penditures 8,484 10,377 11,957 13,122 14,578 15,991 16,886 Excess (-) of Ex- penditures over Revonue -497 -.992 -1,102 -1,429 -1,453 -1,937 -12779 Transfer from Counter- part Fund 390 371 969 1,290 1,052 1,060 1,060 Surpius (+) or Teict (-) of Special Defense Budget -- - - -18 +559 -87 'urplus (+) or Deficit (-) after Counterpart Fund Transfers -107 -621 -133 -139 -819 +318 -8o6 / Include defense outlays financed by transfers from Counterpart Fund iote: "Bookkeeping profits" arising from devaluation of the exchange rate were deducted from revenues for 1956/57, 1957/58 and 1958/59 Source: Ministry of Finance Table 18 GOLD AND FOREIGN EXCHANGE (In Plillions of U.S. Bollars) Figures relate to end of period Foreign Banks- Foreign Grass Exchange Net Gold Exchange Assets Liabilities Assets Assets liabilities Net assets 1952 31.0 34.0 65.0 - - - - 1953 30.0 )5.0 75.0 - -- 1954 32.0 20.0 52.0 - - - 1956 34.0 63.0 97.0 - - - 195'7 3i. 91.9f 125. 639 62060 . c-,2~, .~*' /~* 1 ~ ur uU.uu 1.958 35-0 102.5 137.5 55.4 82.1 8.3 0 8.3 19 9 33 . -rf -.6 13Q : .61 . 7 6 . 06. 1960 33.0 103.8 136.8 40.6 96.2 6.8 0 6.8 196 . h2.9 111.9 15h.8 37.8 117.0 10.8 0.6 10.2 1962 42.9 81.2 12.1 22.5 101.6 7.5 1.1 6.4 1963 50.0 187.0 237.0 28.4 208.6 10.5 1.5 9.0 Covers the Central Bank of China and the Bank of Taiwan. 2/ Covers the Bank of Communications, the Bank of China, and the Overseas Chinese Comercial Bank. Source: Central Bank of China and IF. Table 19 CoÅSoiIqT SD S1T: T OF CoDITTOJ OF THE iLTARY SYSTE M (in millions of NT dollars, figures refer to end of period) 1958 1959 1960 1961 1962 1963 Assets Net Foreign Assets 2,6'6 2462 3,278 70 4 - 4 ,2 3 Claims on Government 2,394 2,671 3,246 4,h67 h,558 5,305 Claims on Government Enter- prises 3,613 4,022 4,628 5,834 7,487 6.,48 Clains on Private Sector 4,61 o425 7,360 1u,26u 13,234 lo ,UOy Unclassified Assets 1,704 20-03 2,900 3,357 3,879 4,891 Total Assets 15,038 17,583 21,412 28,658 33ý413 11,269 Liabilities 5.129 5570 6,110 7,335 7,923 .10.198 Treasury Deposits 292 398 280 314 378 363 Pgencies 11495 1,653 1,860 2,071 2,602 2,940 Time & Savings Deposits 3,332 4515 5,933 9,501 12,115 1,S.L8h UIS1 Aid Deposits 1,553 1,835 2,624 3,404 3,955 4,711 Uinclass I id T il +.i and capital Account 3,237 3,612 4,605 6,033 6,44o 7,573 Total Liabilities 15,038 17,583 21,1412 28,658 33,413 141,269 Source: The Centra nof ChinaL.:a 1/ Thi1 statemnent differs .rom the :onetary survey in the TFS mainly cue ~ bo the inclusion in tie monetary ystem of th,e credi t denartrents of :frc-ers association arn ut?al loans anc ,avin:s companies, T'rese in .,ti ons are jell ceveloned. in Tai.n and as a res-,-t qasi- noney and credit to t r. private :scctor at t!e enl o 1963 are respect- ively iT' 3 anc 2 billion hic-her than is shoun in tho T7,3 Table 20 FACTORS AFFECTIN THE AOEY SUPPLY IN HANDS OF PUBLIC (in millions of NT dollars) 1958 1959 1960 1961 1962 1963 Jan.- Public Sector A Gross Credit 696 1029 1.181 1,783 1,744 -292 Genera Government 22 _2 1575 -2 91 777 Public Enterprises 274 409 606 1:155 1,653 -1.039 Tncrease in Blances -!18 5h6 878 880 1.146 1.079 Treasury 13 106 -118 -37 T -" GoermentAgnces"3 158 207 66 53 338 U.S. Aid Deposits -98 282 789 780 551 756 C. Net Effect (A-B) 814 483 303 903 598 -1_37L Private Sector D. Gross Credit to 0-i I ~ cvYr- n~ not~ v1. Krivate bector 1,1o 10 Y33 , 8 £,uu) Li 1UP A. Increase in Bank Lia- bilities & Canital 1,244 1,602 1,51L 4111 2,499 3,490 Time & baving Deposits 1,293 1,183 1,418 39546 ZoTL 3,Jo Capital & Oet Unclassified liabilities -49 419 96 -431 -115 121 Fo Net Effect (2-E) 22 142 -579 -250 475 -635 Go Total Domestic Credit Expansion (C+F) 836 625 -276 653 1,0 3-2,006 H. Increase in Net Foreign Assets 492 -184 816 572 -485 h,281 I. Increase in noney Supply_(G+H) 1,328 441 540 12225 588 2,275 (Percentage Increase) 735) (97 (17) 120Z) (8) T137 Note: Before preparing the above table, the accounts of the banking system for 1958, 1959 and 1961 were adjusted to eliminate the purely bookkeeping effects of devaluation of the New Taiwan Dollar. In addition, the accounts for 1961 were adjusted to eliminate the bookeeping effects resulting from the reactivation of the Central Bank of China on July 1, 1961. Source: The Central Bank of China Table 21 TNTLREST RATES (per cent per annum) Loans Time and-Savins Deposits a/ Rediscounts Central Bank Secured Loans Bank of Taiwan to Government Other Free Market Enterprises b/ Banks Taipei 3 month 6 month 1 year 2 year 3 year 1949 163.0 435.0 54.U 1950 47,6 231.8 27,0 1951 69.5 181.1 27.0 1952 42.4 90.4 21.6 1953 3Oc7 50.9 12.6 L954 26.1 444 10.8 1955 23.7 53.0 10.8 1956 11.4-12.5 23.7 47.6 - 1957 11.4-12.5 21.7 42.4 10.2 13.8 1958 11.4-12.5 21.7 42.4 10.2 13.8 1959 1.4-12.5 19.7 47.6 9.0 12.6 18.5 20.75 23,0 -1960 11.4-12.5 19.7 47.6 9.0 12.6 18.5 20.75 23.0 1961 15.5 11.4-17.4 17.4 32.9 7.2 10.8 15.3 15.8 16.3 1962 13.9 11.4-12.5 17.0 32,,9 6.5 9.7 14.4 14-5 14.7 1963 12.1 11.4-12.5 15.1 28I2 6.0 9.0 12.6 12.6 12,6 j/ Int c-,st has not been paid on demand deposits since 1957 ]l/ Other than tertile industry Sourec: Central Pank of Chinn Table 22 PRICE INDICES 1963 1946 1968 1960 1961 1962 1963 Mar. June Sept. Dec. .A. (1958 = 100) Ccst of livingp 88 100 131 Ihl 1h 1h8 148 1h7 15O ih? Wholesale prices 92 100 126 131 134 ih7 1h2 142 1h7 17 B. (1956 = 100) 1. Wholesale prices, Taipei 100 111 1h0 145 149 159 158 157 163 163 food 100 11i 156 163 167 183 180 179 190 190 rice 100 110 161 182 176 180 186 177 184 180 elothi100 A 107 105 inR 111 111 111 111 112 electricity 100 106 130 138 156 160 161 161 160 160 2. Consumers' prices, major cities 100 11' 1- 9 161 165 168 169 167 171 168 food 100 11h 157 163 159 162 160 161 168 163 staples 100 112 170 183 17 177 182 177 178 180 clothing 100 108 122 121 123 125 125 125 125 126 housing 100 116 128 130 13 138 138 138 137 137 Sources: A. I.F.S. B. Taiwan Monthly of Commodity Price Statistics