RESTRICTED Report No. AS-117a FILE COPY 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 The report may not be published nor may it be quoted as representing their views.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 REPUBLIC OF CHINA November 30, 1966 Asia Department CURRENCY EQUIVALENTS 1 U. S: d(llar 40 New Taiwan dollars NT $1 U. S. $0. 025 NT $1:000, 000 = U.S. $25, 000 No par value for the New Taiwan dollar has been agreed with the IMF. TABLE OF CONTENTS Page No. BASIC DATA SUMMARY AND CONCLUSIONS i I. Introduction ............................... 1 II. Recent Developments ...... * ................. ......... 3 Trends in Total Output, Expenditure and Employment .........................********* 3 Net Output and Sector Growth .................. 4 III. External Trade and Finance ...................... 10 IV. Internal Finance .... .. ........... ...... ..... l V. Future Development and Associated Problems ...... 20 VI. External Financing Requirements 1966-70 ......... 26 APPENDIX I - Energy Materials Requirements and Supplies APPENDIX II - Industrial Development STATISTICAL APPENDIX: Tables 1-37 This report is based on the findings of a mission in August 1966 to the Republic of China composed of Messrs. Maurice F. Perkins and Guenter H. Reif of the Bank. BASIC DATA (FY 1965 - July 1, 1964 - June 30, 1965) Area: 13,866 sq. miles Population: Mid-1965 (including armed forces) 13.0 million Rate of growth (1960-65) 3.2% per year Population density (per sq. mile) 937 Population density, per sq. mile of arable land 3,790 Political status: Republic Gross national product: 1965, at current market price NT$110.0 billion Real rate of growth: Average 1953-65 7.9% 1965 10.0% Per capita GNP 1965 US$217 Gross domestic product at market price (1965): NT$110.2 billion Net domestic product at factor cost (1965): NT$90.5 billion of which: Agriculture, forestry and fishing 26.6% Mining and quarrying 2.7% Manufacturing (including construction) 23.5% Trade 15.4% Other services 31.8% Percent of GDP at current market prices: 1965 1960-65 Gross investment 22.2 19.5 Gross savings 18.8 15.5 Import surplus of goods and services 3.4 4.0 Net investment income payments abroad 0.3 0.1 1964 1960-64 Government revenues from taxes and monopolies 13.7 14.4 Resource gap as percent of investment: 1965 1960-65 13.3 20.5 Money and credit (billion NT$): Annual Rate of Change 1965 1962-65 Money supply 14.85 23% Time and savings deposits 23.26 24% Bank credit to private sector 26.36 26% Rate of change in wholesale prices -4.1% 1.4% Government finance (billion NT$): Consolidated budgets of central, provincial and local governments. FY 1965 Revenues 20.15 Expenditures 21.92 Deficit 1.77 Financed by: Sale of property 0.35 Bond issues 1.20 Loans 0.02 US external assistance (counterpart) 0.76 Lags and leads -0.56 External medium and long-term public debt (million US$)1 Feb. .966 End of 1960 Debt outstanding 289.5 35.06 1965 Average 1961-64 Annual debt service 9.74 10.77 Debt service ratio (as % of export earnings) 2.2 3.6 Balance of payments (US$ million): Average Annual Rate of Change 1965 1960-65 Exports, f.o.b. 450.8 22.5% Imports, c.i.f. 574.0 14.9% Net invisibles 21.8 General upward trenC of which, investment income (net) 8.3 Balance on goods and services -101.4 Wide fluctuations due to sugar boom in 1963 and 1964. 1965 deficit roughl 25% below 1961-62 level. 1965 Average 1960-65 Commodity concentration of exports (sugar, bananas, textiles) 39% 45% End of 1965 End of 1960 Gross foreign exchange revenues (excluding commercial banks) 300 117 (or 6 monthst (or 95 monthst imports) imports) V/ Debt with an original or extended maturity of one year or more. Not including external debt contracted on Mainland before 1949 and currently not in service. I14F position (US$ million): 1965 1960 Quota 550 550 Drawing - - External financial assistance (US$ million): 1965 Average 1960-65 Disbursements Disbursements Total 34.8 77.8 Soft assistance 2.1 3.7 Hard assistance 9.7 34.2 Major donors: U.S. 23.1 73.8 U.S. aid except PL-480 terminated as of June 30, 1965. IBRD and IDA operations (US$): Past operations (September 30, 1966) Amount Committed-/ Amount Disbursed IBRD 42.5 23,h9,440 IDA 13.1 13,083,716 Total 55.6 36,533,156 Terms of IBRD/IDA operations: (January 1, 1961 - October 31, 1966) Weighted Average Rate of interest Grace Period Repayment Period (p.a.) (years) years) 4.25 5.1 25.3 1/ Excluding cancellations. SUMMA.RY AND CONCLUSIONS 1. Economic growth of the Republic of China at a very favorable average rate of nearly 8% over the past 13 years has permitted an increase in per capita real GNP to US$217 in 1965, as compared with US$121 in 1952, in spite of a high rate of increase in population of 3.4% per annum. Significant progress has also been made in the transformation of the economy from one largely agricultural, with exports consisting primarily of sugar and rice, to one in which a fairly widespread light industry now plays an equivalent role with agriculture. The composition of exports has been diversified by the addition of new agricultural products, particularly canned fruits and vegetables and bananas, and a wide variety of manufactured goods, including textiles, metal and chemical products and plywood, to the extent that the economy is much more insulated from the effects of movements in the terms of trade for a few commodities. This satisfactory performance may be attributed to a hard-working and intelligent but low-wage,labor force, the management and technical skills largely supplied by emigres from the Mainland, the material resources and technical assistance provided by US aid and generally appropriate Government development policies. 2. Other accomplishments of the 1960's include a cessation of inflation and growth of confidence in the currency, and a rise in the level of invest- ment and savings. Termination of US aid was effected in June 1965 but it is still too early to appraise the consequences in view of the short intervening period, the resources remaining in the pipeline and short-term factors which have affected export earnings during the past two years. 3. The Republic of China was not considered creditworthy for Bank loans during the 1950's. Four IDA credits of US$15.5 million were extended in 1961. Economic progress to 1963, however, led to the view that the country could service conventional loans.. Three Bank loans totalling US$h2.8 million were subsequently made. The record over the past 13 years has demonstrated the ability of the Republic to utilize such external resources in the development of a viable economy. The basic ingredients for appropriate use of further external borrowing are present, provided that active military operations are avoided and that reasonable access continues to major world markets for manufactured goods under favorable economic circumstances. Given these conditions, the Republic of China may be considered creditworthy. Further strong external support is both justifiable and necessary. External financing requirements for the five years, 1966-70, amount to US$720 million including a reasonable expansion in foreign exchange reserves to maintain the present official target level of 6 months, imports. This additional debt would not constitute an undue burden in terms of debt service, estimated by 1975 at 8.5% of exports. 4. Continued growth hinges on the further expansion in export at a relatively high rate due to the limited size of the domestic market and the lack of unused natural resources. Imports will also continue to rise due to the high import content of exports. Should the expected rate of growth 1/ FE-36a "Current Economic Position and Prospects of the Republic of China", July 1, 1964. - ii - in exports not materialize, there would be a corresponding growth reduction in imports, investment and total output. 5. Even though in the short-run growth prospects are favorable, continued development over the long-run may not occur automatically without certain adjustments and corrections within the economy. These relate directly to the need to orient production more closely to the highly competitive world export market. Continued reliance on cheap labor will not ultimately suffice; current inefficiencies involving small-scale opera- tions, unspecialized management, inadequate cost and quality controls, insufficient finance and deficiencies in market organization need to be progressively eliminated. 64. The growth potential of the Republic during the next five years would be more easily achieved by means of an appropriate fiscal policy designed to reduce the budget deficit and increase domestic savings. Current practices of financing budgetary deficits by means of bond issues of increasing size is aggravating the chronic scarcity of domestic capital and credit, particularly to the private sector, and is maintaining interest rates at very high levels. Improvements in tax collection and revisions of the tax system so that revenues would be more responsive to expanding incomes and which would also retard the growth in private consumption are necessary as a means of achieving a more balanced budget and increasing the volume of domestic savings. In addition, increases in charges for some public services to bring returns on invested capital more into line with going interest rates would contribute to this end. Since the full benefit of any basic fiscal reform would be felt only after some time lag, necessary steps toward such reform should be taken as early as possible. I. INTRODUCTION 1. The Republic of China is an outstanding example of the effective utilization of foreign aid in general and US aid in particular. Sustained economic growth has replaced chaotic and stagnant conditions following with- drawal from the Mainland. The economy is currently able to sustain a much higher level of per capita consumption than a decade ago and a continuing growth in spite of a heavy military burden involving a probable expenditure of 9% to 11% of GNP and an isolation of over 600,000 men from the labor force. Economic improvements have also contributed to an easing of tensions between the local Taiwanese population and the two million or so who fled from the Mainland. 2. It is too early to appraise the effects of the termination of US aid in June 1965: substantial amounts remain in the pipeline and extraneous factors, such as windfall sugar profits and a sudden boom in banana exports, have combined to boost export earnings in the past year or so to levels which may slow further trade expansion by comparison in the short-run. The record indicates, however, that a continuation of past growth trends will continue without this form of aid, provided more conventional means of external financing are available. 3. The Republic's main asset has been its hard-working, economically minded and intelligent population. The emigres from the Mainland have con- tributed a large proportion of the technical, managerial and business experience, which would otherwise have been lacking in what was formerly an essentially rural economy. The literacy rate is high and the extent of education is rapidly improving. 4. Future growth will require a relative shift in resource allocation from the rural to other sectors to a greater extent than normal, in view of acute scarcity of uncultivated land which can economically be brought under arable cropping. The 13,900 square mile area of the island, which is about the same size as the Netherlands, contains a high proportion of rugged and mountainous terrain. The result is a very high man-land ratio for the h5% of the 13.2 million population occupying the cultivated area. 5. The process of diversification is, however, handicapped by an additional scarcity of non-agricultural resources. Tropical forests, which cover 55% of the area and include most of the mountainous region, consist, to a considerable extent, of relatively mixed hardwoods of which a large propor- tion is economically inaccessible. Mineral deposits consist largely of coal which, however, occurs in narrow and irregular seams; these are becoming progressively uneconomic to work. The potential economic value of the relatively high rainfall is limited as a source of hydropower by the irregular nature of the precipitation and the absence of natural reservoir capacity. The recently discovered natural gas fields, however, are being developed into a new major resource of the economy. 6. In spite of all handicaps, economic progress has been rapid and steady over the past 13 years with an emphasis on the development of light industry, expansion in fisheries and forest products and technological improvement in agriculture. Industrialization efforts, directed initially towards import substitution, were successful and have been followed up by a - 2 - program of export expansion in manufactured goods. Low labor costs, increas- ing domestic savings and encouragement of foreign investment and enterprise have been favorable features. 7. The Fourth Four-Year Plan for Economic Development covering the years 1965-68 must be regarded largely as indicative. It envisages a growth rate for GNP of 7% per annum. This is based on an increase in gross capital formation at a rate of 10.7% to 21.9% of GNP in 1968 as compared with 18.7% in 1964 and gross savings of 20.1% of GNP as compared with 17.9% for the corresponding years. External financing amounting to US$412 million covering the four years of the plan period includes allowances for repayment of external obligations which will accrue during the plan period and an increase in foreign exchange revenues to six months' annual imports in 1968. Gross capital formation of NT$98.5 billion is to be financed 92% from domestic savings and the remainder from external borrowing. This rate of growth may be regarded as conservative in view of the 10% increase in GNP in 1965 and the somewhat less but still favorable prospects for 1966. Although the plan includes sector targets for investment and output the estimates relating to intentions in the private sector are difficult to establish as experience shows in previous plans. Moreover, overall estimates of capital formation are only loosely tied in with the specific project and sector programs. In addition present methods of budgetary accounting do not permit an appropriate appraisal of either present capital programs or past performance. The national accounts data used in support of the plan, therefore, are at best illustrative. - 3 - II. RECENT DEVELOPIMIENTS Trends in Total Output, Expenditure and Employment 8. Real GNP has grown at an annual rate of almost 8% during the past 13 years; in 1964 and 1965, with very good export market conditions, the increase was 13% and 10% respectively. These high rates may be attributed to a number of circumstances, apart from the natural drive and energy of the people: political stability, substantial US aid support, achievement of monetary stability, generally appropriate government development policies, and a favorable competitive position on export markets. A recent factor has been a general trade buoyancy within the Eastern Asiatic areas as a result of United States expenditure due to hostilities in Viet Nam. 9. Population growth has averaged 3.4% in the past 13 years. The crude birth rate has, however, been declining more rapidly relative to the death rate in recent years, so that the natural increase now stands at 2.7% as compared with 3.7% a decade ago. The increase in per capita GNP has approximated 4.6% and, in real terms, amounts to US$217 as compared with US$121 in 1952. Expenditure, Net Foreign Trade and Savings as a Percentage GNP at Current Prices a/ 1960 1961 1962 1963 1964 1965 Consumption 87.8 87.3 86.9 83.3 80.7 81.2 Private 68.5 68.1 68.2 65.1 64.0 64.0 Public 19.3 19.2 18.7 18.2 16.7 17.2 Gross capital formation 19.5 19.9 19.0 17.4 18.8 22.2 Iffport surplus -7.3 -7.2 -5.9 -0.7 +0.5/ -3.4 Savings 12.2 12.7 13.1 16.7 19.3 18.8 a/ Percentages have been adjusted backwards from 1963 by the Mission to allow for recent revisions in the national accounts. b/ Export Surplus. 10. Significant changes in the long-term pattern of expenditure have occurred. The trend in the consumption ratio to GNP has been downward at an annual rate of 0.7%. Rapidly increasing real incomes and a lessening and even- tual disappearance of inflation have contributed to a decline in private consumption from upwards of 68% of GNP in the 1950's to 64% in the id-1960's. Public consumption has also declined slightly from a high of 19% to 20% in the late 1950's to a recent level of 17%, although this must be regarded with caution as government accounting does not distinguish between consumption and investment. The above normal rates of growth of GNP during the past two yearc, however, werenotaccompaniedby commensurate increases in both public and privatE consumption. The increase in gross capital formation to an average of 19.5% in the 1960's has been marked and compares favorably with the 15% to 18% of the 1950's. The decline in 1963 and 1964 may be partly attributable to general official restrictions on imports which were to some extent copensat3d for in 1965. A relatively low average capital-output ratio of 2.5 is indicative of the scarcity of capital and the intensive use of labor in the present stage of development. This ratio, however, should be treated with reservation in view of the tentative nature of the basic data from which it is derived. The trenc in savings has been upwards particularly in 1963 and 1964, when high sugar prices were influential in boosting the marginal savings rate to about 30% for the years 1960-65. This was a significant factor in reducing dependence on external resources for capital formation at a time when US aid was declining. 11. Rapid growth does not seem to have had an appreciable effect on the level of unemployment estimated for several years at 5% to 6% of the labor force, excluding seasonal agricultural unemployment, although the statistics are currently not comprehensive and a considerable proportion may be accounted for by frictional factors. Absorption appears to have been limited to slightl1y under 3% per annum, the current growth rate in the labor force. Within the employed labor force, the proportion of underemployed is believed sizable in such fields as the trades, services and government. A pressing social probleM also exists in the large number of discharged overaged military servicemen fo- whom a special training and reintegrating effort is being made. In spite of this overall situation, average industrial wages are rising at about 6% per annum in a country where labor unions are not active. This is lower than the growth in productivity and corresponding wage increases in Japan and Hong Kong. Currently wage levels in the Republic are about half of those in Japan and 10. to 25% less than those in Hong Kong. An absolute shortage exists in the case of skilled workers and intermediary management personnel and their wage rates are advancing more rapidly than the average. Net Output and Sector Growth 12. The composition of net domestic product by sector shows little chan,,e in proportionate importance except for rural industries and manufacturing. The Percentage Shares in Net Domestic Product at Factor Cost 1960 1961 1962 1963 a/ 1964 a/ 1965 a/ Rural Industries b/ 34.1 31.7 29.5 26.7 27.7 26.7 Manufacturing 17.5 18.0 18.8 19.6 20.2 19.5 Construction 4.6 4.7 4.3 3.9 3.7 4.0 Trade 15.2 14.9 15.0 15.5 15.8 15.4 Public Administration 11.8 12.2 12.4 12.2 11.6 11.7 Ownership of Dwellings c/ c/ c/ 6.8 6.1 6.2 Transport and Communication 1.3 .0 T.7 4.2 4.1 4.h Others 12.5 13.5 15.3 11.1 10.8 12.1 Total 100.0 100.0 100.0 100.0 100.0 100.0 a/ Based on the revised national accounts. b/ Crops, livestock, fisheries, and forestry. c/ Excluded from old series. relative decline in the former, which is particularly in evidence after 1961, reflects an unusually high shift to manufacturing, due to the almost absolute lack of new and unused land which can easily be brought under cultivation. The increase in the cultivated area over the past 10 years has been at a rate of less than one quarter of one percent and growth in output has been achieved by a more intense utilization of the already intense use of land. The growth in importance of manufacturing, on the other hand, demonstrates the opportunities available in light industry which have been progressively exploited over the past 13 years, first in import substitution and more recently in export development. 13. Power I/ - Total energy consumption increased at an annual rate of 7.8% from 7.32 to 7.17 million tons of coal equivalent between 1960 and 1964. As energy production from domestic sources grew only at a rate of 6.9% during the period, crude oil imports had to be expanded from 930 thousand to 1,212 thousand kiloliters or to 21.8% of total energy consumption. Coal production which at present accounts for about 90% of domestically produced energy, shows a declining rate of growth due to the rising cost of mining. Recent dis- coveries of natural gas have boosted production to 310 million cubic meters in 1965, but its contribution to total energy supply is still small. The long- term increase in electric power generation has been 12.1% as compared with 10.8% for installed capacity. Expansion in thermal power generation from 13.3% to 60.1% of total electric power output since 1952 has made power supply tn industry relatively less vulnerable to the ups and downs of water supply during drought periods. 14. Rural Industry - Production recovered momentum in 1961 after 3 years of stagnation, but growth at an annual rate of 6.8% over the past 5 years measured somewhat below the rate of increase in GNP. Expansion in crop produc- tion was largely due to continuing improvements in technology, promoted by the Joint Commission on Rural Reconstruction (JCRR), accompanied by increasing inputs of capital, particularly working capital for fertilizers, insecticides, etc., which has offset the tendency to diminishing returns of labor as the land becomes utilized more labor intensively. Intensification is also illustrated by the relatively high marginal capital-output ratio of 4.5 for the rural sector during 1961-65. Weather conditions have been generally favorable during the past 3 years. Rice production continued to lag at a growth rate of 2.3% as virtually no new paddy land has been brought into cultivation. The loTw growth rate for sweet potatoes of 1% reflects its substitution by more highly valued crops. Sugarcane production was adversely affected by low prices in 1962. Producers were thus not in a position to take full advantage of the high international prices of 1963 and 1964, as 18 months is required to bring additional acreage into production. Delayed response to price increases, however, is responsible for the sharp expansion in output of 40% in 1965 when world prices were declining. An interesting feature of crop production has been the shift to higher valued crops stemming from urban growth and increasing population and incomes on the domestic market and the exploitation of export opportunities. Expansion in fresh vegetables, oilseeds and scme citrus is directed largely to the domestic market. Amongst exports the traditional 1/ See Appendix I "Energy Requirements and Supplies". - 6 - pineapple crop was increased at a rate of 6.7%. This was followed by mush- rooms, as a new crop, which was not produced in 1960 but whose output is now 32 thousand tons. Asparagus production for canning has also been a feature of the past few years. Banana production was doubled in 1964 and increased by another 50% to h08 thousand tons in 1965 for export to Japan; the 1966 crop, however, has been affected by typhoon damage. 15. Although livestock production has been stimulated by increases in urban domestic demand, growth has been relatively slow at a rate of 5.6% in part due to the cost of imported high protein feed, which is kept high by price policies of the government trading agency, and to the fact that the center of rapid expansion has been in specialized commercial production of pigs and poultry which still represents a small proportion of total output. 16. The fisheries catch has been growing at a rate of 8% since 1.960 largely as a result of mechanization of inshore and deep-sea fishing; coastal fishing without powered vessels and pond cultivation have stagnated or declined. However, mechanized inshore fishing may now be facing diminishing returns after a long period of expansion, including a rate of 1L.2% in 1960-64 as a slight decrease was registered in 1965. The official explanation is the migration of important fish species, which may or may not be temporary. 17. Forestry growth at a 6.3% rate since 1960 reflects a slowing down in domestic demand due to changes in construction techniques and a need to preserve broad leaved species in accessible cutting areas which have been logged excessively. Big timber is largely exhausted and 75% of the accessible forest is in poor condition. Very few domestic species appear suitable for export except, possibly, in manufactured form, such as furniture. 18. Manufacturing 1/ - Manufacturing has not only increased in value of output at a rate of 15.8T over the past 5 years but has become more complex and diversified as new industries for wood processing, chemicals, machinery, electrical appliances, and transport equipment have been introduced. However, the marginal capital-output ratio has remained relatively stable at about 3.3. The role of public enterprise, which accounted for 57.7% of the value of production in 1952 has declined relatively to 36.3% as private enterprise is rapidly assuming the lead in industrial development. Growth has been most pronounced over the past 5 years in the relatively new industries where rates of increase have generally been above 20% per annum and which now account for 36% of the total value of manufacturing. The earlier established industries for food processing, textiles, metals and metal products, and non-metallic mineral products representing 55% of total value of output have increased at slower rates of 10% to 12%. 19. The rapid expansion of canning is in contrast to the modest growth in food processing in general. Sugar output has temporarily expanded, follow- ing high 1963-64 prices, only to experience a severe downward price adjustment thereafter. Textiles and apparel items have suffered from overextension in cotton and a slowness in developing fabrics blended with synthetic fibers. 1/ See Appendix II "Manufacturing". - 7 - Plywood, plastics and a variety of light metal and electrical appliances have shown strong upward increases. Overcapacity exists in flour milling, mono- sodium glutamate and caustic soda production. In the case of monosodium glutamate and also in the textile sector initial high profit prospects had encouraged overexpansion, a tendency which may also be present in other fields. Cement has been saved from this situation recently by strong export demand stemming from the Viet Nam war and the construction boom which began in 1965. Glass and other non-metallic mineral production has also profited from this construction boom. 20. Overall rapid expansion in manufactures over the last few years has precipitated large segments of the industry into export markets as the process of import substitution has been largely completed. Leadership has been taken by the newer and bigger firms but there remains a long tail of very small enterprises in a number of fields which may be unable to withstand competition in future. Again in most fields as, for instance, paper, some canning lines, textiles, iron and steel and bicycle assembly, small-scale operations hamper the attainment of low cost volume operations, a problem currently masked by low labor costs. In addition, deficiencies in standardization, quality control and marketing are present. 21. Transportation and Communications - Value added by transportation and communications has increased at a steady rate of 5% and capital formation at 7% per annum. Growth in railroad passenger traffic at 2.8% has been slowed due to the increase in rates. Freight on short hauls has tended to be transferred to the trucking industry but the growth rate was 3.4%. Even so, existing railroad facilities are being used largely to capacity. The Taiwan Railway Administra- tion's route mileage of 975 km appears adequate, particularly in view of the competitive growth in highway development, but there is an opportunity to increase utilization of existing mileage by higher efficiency of operations through further dieselization, rolling stock increases, additions to yard equipment and facilities, and some additional double tracking. Rates charged for passenger and freight services, however, reflect a low rate of return on invested capital of between 7% and 8% as compared with higher going rates of interect 22. Highway density and mileage per unit area compares favorably with advanced countries but the quality of facilities lags. Only a quarter of the 16,300 km of highways is paved and the present north-south arterial highway is insufficient to accommodate the rapidly increasing traffic. Additions to private bus and truck fleets are being made. Also an expansion in the publicly owned bus fleets is required but current tariffs are insufficient to cover capital replacements. 23. Growth in domestic telecommunications has been at annual rates of 11 to 14% for telegraph, toll telephone and city telephone calls and subscriptions. The supply of new service subscriptions on telephones is lagging 4 to 6 months behind applications. Further increases in services will require expansion and modernization of both domestic and international facilities as present instal- lations are fully utilized. 24., Increases in annual cargo volume in the two main ports of 14% at Kaohsiung and 8.6% at Keelung during 1960-64 are indicative of the traffic - 8 - growth of an economy rapidly expanding into international markets. Due to topographical conditions, the possibilities of extending port facilities in Keelung are limited. Kaohsiung, in the south, on the other hand, is most suitable for large-scale development, particularly in view of the growing industrialization of this area. At present, the port handles about 70% of the Republic's maritime freight traffic. The custom-exempt Export Processing Zone established recently in Kaohsiung Harbor appears to be a successful undertaking. Expansion in ocean cargo tonnage carried by Chinese vessels is increasing by 14.7% each year as the volume of trade expands and more ships are added. The merchant fleet, which now carries 50% of the volume of Taiwan's seagoing trade, is increasing its business at a rate of 22% in terms of ton-miles of cargo. Further expansion plans plus the high average age of the 145 vessels will require further acquisitions. Air passenger traffic volume, both domestic and international, is doubling every 4 or 5 years. 25. Social Services - Free elementary education covers 6 years in over- crowded classes averaging 52.4 pupils in 1963. At that time there was a shortage of 6,200 classrooms or 16% of the total required to have one room per class. Only 54% of each year's 300,000 primary school graduates can be placed in the 3-year junior middle school program. Hence, large and increas- ing numbers of children leave school at the age of 12 before they are mature and cannot meet the requirements now becoming necessary for skilled employ- ment. Emphasis under the Fourth Plan, 1965-68, is being given to education for which 91.5% of the funds for social development was allocated. The focus of attention is being placed on an expansion in the junior middle schools, but progress is being delayed due to the allocation of insufficient funds, both for current expenditure and construction, even on the basis of charging for tuition and books. A shortage of teaching personnel is limiting expansion in the vital field of vocational education. It would also appear that emphasis is being given to agriculture and fisheries to the relative neglect of vocational industrial education. 26. Most populated areas now have health establishments and most commu- nicable diseases (except for TB, which is decreasing) have been eradicated or severely restricted. Malaria is a problem of the past, given continued attention to preventive measures. These advances are reflected in the decline in the crude death rate to a low 5.5 per thousand and in increase in life expectancy at birth to 66.8 years as compared with 45.6 in 1941. The government is now giving special attention to birth control. 27. Public works in terms of urban roads and streets, sewerage, water supply and housing in the five major cities are inadequate and reflect a lack of attention to these aspects of general development. Current planning calls for a total of 92 million square meters of streets of which 17 million or 18.5% was open to traffic in 1964. Of the total required 370 sewer systems, both sanitary and storm, only 31 have been planned and most not completed. Ii 1964 existing waterworks supplied a daily total of one million cubic meters to 4.6 million people or 37.4% of the population. These problems are being slowly tackled in the Fourth Plan but housing construction, representing 76.,6% of expenditure earmarked for urban and suburban development, is being given priority due to the social implications of the severe shortage, and the multiplication of congested slum areas. - 9 - 28. Tourism - Although tourism is of only recent importance its growth of over 5000 since 1960 to 135,000 visitors in 1965 is attracting more and more interest,officially as a foreign exchange earner and privately as an opportunity for investment. Attention initially was confined to Taipei where international air connections are available and where hotels, cultural centers and night life catering to an international clientele are quickly being established. It is now rapidly being extended to other attractive places of interest where air, rail and road connections exist. III. EXTERNAL TRADE AND FINANCE 29. The Republic of China's foreign trade has been expanding steadily, if allowance is made for significant temporary changes in the terms of trade such as was caused by the boom in sugar prices in 1963-64. Generally a passive balance of trade has prevailed, except for a temporary active balance in 1963 and 1964. Foreign export markets are becoming more important relative to the domestic market since 1960 and the growing diversification of the economy has necessitated more imports of capital goods and raw materials. Thus exports, which were 11.4% of GNP in 1960, have now risen to 17.7% and imports from 16.8% to 20.2%. Total trade currently amounts to 37.9% of GNP as compared with 28.2% in 1960. The Republic of China's Foreign Trade a/ (million US dollars) 1960 1961 1962 1963 1964 1965 Exports (f.o.b.): Agricultural products 115 124 119 206 261 267 Lndustrial products 55 90 120 152 202 221 Total 170 3 imports (c.i.f.): Capital goods 69 92 84 83 102 164 Raw materials 159 194 212 226 265 348 Consumption goods 24 38 32 28 43 43 Total 252 72 328 37 1410 5 of which US aid: (91) (108) 80) (76) (40) 67) Balance of trade -F2 -110 -89 21 ___ -67 a/ Based on customs data. 30. The composition of trade has altered in line with structural changes in the economy. Although exports of agricultural products, including pro- cessed agricultural products, have increased absolutely by 134% since 1952, they have declined relatively from 95.2% of total exports in 1952 to 54.6% in 1965. On the other hand, non-agricultural and predominantly industrial products have increased from 4.8% to 45.4% of total exports over the same years. On the import side, capital goods have assumed a much greater importance, rising from 13.1% of the total in 1952 to 29.5% in 1965 whereas raw materials imports have declined from 74.2% to 62.7% over the same years. Consumption goods imports, which are rigidly controlled, have generally been held below 10%o of the total. 31. In general little import substitution has occurred since 1960. Con- sum,ption goods imports have now levelled off at 2% of total consumption as compared with 7.6% in 1952 in spite of a considerable rise in per capita consumption. The ratio of capital goods imports to gross fixed capital forma- tion has increased slightly from 29% in 1960-61 to 32% in 1964-65. Raw materials imports have remained relatively constant as a proportion of total value added at 13.5%. This situation reflects the emphasis on light industrial - 11 - consumer goods rather than capital goods production and the absence of a variety of unused raw material resources. The proportion of US aid financed imports to total imports has been declining rapidly from 36% in 1960 to only 8% in 1965. 32. The progressive exploitation of new export markets by the developmen of new products, both agricultural and industrial, have diversified Taiwan's trade to a considerable extent and thus reduced the risk of dependence on a fe- staple commodities. This is a significant achievement. Whereas in 1952 two commodities, sugar and rice, constituted 78% of total exports, in 1965 they only represented 23%, in a year when rice exports were unduly high. Agricul- tural producers and processors have been actively seeking new export markets for high valued canned goods products during the past several years. Canned pineapple first received added attention; canned mushrooms were included and quickly expanded in the early 1960's; canned asparagus became a substantial export item in 1965. The Japanese banana market was eagerly invaded in 1964 and 1965 following the abolition of import quotas,in spite of the substitution of a 70% tariff. Fibres, textiles and clothing have become important since 1960 amongst industrial goods and now rank closely behind sugar as principal export products, although trade was slowed in 1965 due to delays in adjusting to blended fabrics. A wide variety of metal products, chemicals and petrol3um products, each in relatively small amounts, make up a large and growing proportion of new exports testifying to the increasing versatility of the Republic's industrial development. Plywood exports have expanded considerably in recent years and, although stagnant in 1965, are expected to exceed US$35 million in 1966. The Republic has become the world market's biggest supplier and a strong competitor for Japanese plywood,especially in the US. 33. Although total exports have increased at a rate of 28.5% in 1961-64, their growth slowed down in 1965 to a rate of 5.4% due largely to lower sugar prices plus a pause in textiles and plywood and an absolute decline in cement. Further readjustments occurred in the first half of 1966: in sugar as prices continued to decline; in bananas, which were affected by typhoon damage and quality problems; in rice whose volume was reduced to more normal levels, and in some canned goods, such as asparagus, where production increases have exceeded current export market absorption. Agricultural products on the whole have thus fared relatively poorly in 1966 and for the year may be below the 1965 levels. On the other hand, significant gains were made in those industrial products, which lagged in 1965, during the first half year 1966: textile and fibre products, up 22.0%, plywood and other timber products, up 44.5%, and cement and building materials, up 39.8%. In addition, further advances of 46.6% were registered in metals and machinery and 41.31 in canned mushrooms. Over- all trade during the first half of 1966, however, showed only modest gains of 4.3% over the corresponding period of 1965 but a greater improvement should occur in the latter half of 1966. By 1967 downward adjustments in sugar and rice should be over and with good weather, bananas should recover their advance. If industrial exports perform as expected, substantial gains in total exports should therefore be registered over 1966 levels. 34. At present, Japan, the developed countries of North America and Europe, and Southeast Asia constitute the three main export markets for the Republic of China, each accounting for approximately 30% of total export, - 12 - trade. Other markets in Asia, Africa, Oceania and Latin America are of minor importance. Japan long occupied first place amongst Taiwan's export markets with a 50% to 60% share in the early 1950's but her role has declined with the diminution in importance of the traditional export crops and the possible in- ability of Taiwan to enter the protected Japanese markets for light industrial products. The relative importance of the Japanese market has been maintained during the last three years largely due to high sugar prices in 1963-64 and the upsurge of banana exports in 196L-65. Exports to the developed countries of North America and-Europe are growing absolutely, with the United States pre- dominating, as increased emphasis is laid on canned agricultural and fisheries products and labor intensive manufactures of light industrial products, such as textiles, plywood and some chemical and electronic products. Exports to Southeast Asia, which are concentrated on South Viet Nam, Thailand, Malaysia and Singapore, consist of manufactured products, including textiles, chemical, and pharmaceuticals, metal products and cement. The Vietnamese market is becoming increasingly attractive since the war was intensified and in 1966 may well represent 15% of total exports. 35. The Republic had an average deficit in the balance on goods and services of US$129 million during 1960-62. This was made possible to a considerable extent by transfer payments from abroad, predominantly official US grants. The remaining deficits on current account were confortably counter- balanced by capital imports but the official foreign exchange reserves , remained at the relatively low level of around US$120 million. The situation changed basically in 1963-64, when export earnings rose rapidly, due to high sugar prices. The deficit on goods and services decreased to US$15 million in 1963 and a small surplus of US$5 million was recorded in 1964. Net public Balance of Payments (million US dollars) 1960 1961 1962 1963 1964 1965 a/ Trade balance b/ -123.2 -133.9 -123.1 -24.4 -12.5 -123.2 Net services - 6.8 - 3.2 - 3.0 8.9 17.4 21.8 Balance on goods and services -130.0 -130.7 -126.1 -. . 101T Net transfers 88.3 98.4 54.8 44.7 20.2 32.9 (public) (82.8) (83.7) (40.2) (30.6) ( 8.1) (17.7) (private) ( 5.5) (14.7) (14.6) (14.1) (12.1) (15.2) Net capital inflow 61.8 52.5 56.7 69.3 48.2 18.3 (public) (18.6) (19.5) (37.5) (36.1) (16.6) (32.1) (private) (43.2) (33.0) (19.2) (33.2) (31.6) (16.2) Net commercial banks, assets c/ 0.1 - 75.6 18.3 -54.2 37.5 19.3 Net central bank claims and monetary gold c/ - 22.6 57.3 - 0.6 -50.8 -103.1 - 7.8 Net errors and omissions 2.4 - 1.9 - 3.1 6.5 - 7.7 8.7 a/ Preliminary Exports f.o.b.; imports c.i.f. c/ (-) indicates increase. - 13 - transfers continued to decline rapidly as US aid was reduced but there occurred a substantial net inflow of capital, especially from private sources. Thus, official gold and foreign exchange reserves increased rapidly to about US$300 million. In 1965 imports rose by 30% due to a more liberal issue of import licenses at a time when export performance was lagging. A deficit of US$101 million consequently occurred on goods and services. The deficit was, however, compensated by transfer payments and capital inflows and the official exchange reserves were held at approximately the US$300 million level. Official gold and foreign exchange reserves have increased to US$327 million during the first six months of 1966. China's total current reserves, after the commercial bank'1 foreign exchange holdings have been included, now amount to US$345 million, corresponding to about 60% of the present annual import requirements of the country. - l4 - IV. INTERNAL FINANCE 36. The Public Sector - The consolidated budget has been consistently in a deficit position over the last seven years. Moreover, apart from re- ductions in FYrs 1963-64 and 1964-65, the gap is becoming wider. The budget deficit has come increasingly to be covered by bond issues. Gross issues have expanded from NT$0.4 billion in FY 1960-61 to NT$2.8 billion as budgeted for FY 1966-67. The preliminary 1966-67 budget deficit, which may increase somewhat when the supplementary budgets areintroduced, is a record NT$h.07 billion of which about 70% is expected to be covered from bond proceeds, 12% from counterpart and the remainder from other sources. Consolidated Budget (billion NT dollars - fiscal years July/June) 1962-63 1963-64 1964-65 1965-66 a/ 1966-67 b/ (budget) (budget) Revenue 13.65 16.52 20.15 20.62 21.48 Expenditure 16.46 18.66 21.92 24.19 25.55 Book deficit 2.81 2.1- 1.77 .7 h.07 Lags and leads c/ - 0.62 0.24 0.56 -- Deficit 2.19 2.38 2.33 3.57 h.07 Financing: Sale of property 0.37 0.62 0.35 0.3 0.12 Counterpart 1.06 0.91 0.76 o.64 0.48 Bond issues 0.60 0.80 1.20 2.10 2.80 Loans 0.16 0.05 0.02 0.27 0.32 Other - - - 0.12 0.35 a/ Excludes supplementary budgets of the Provincial and local governments. T/ Excludes all supplementary budgets. c/ Difference between book deficit and financing data. 37. On the revenue side total receipts have decreased from 19.2% of GNP in FY's 1958-59 and 1959-60 to 15.9% in FY's 1963-64 and 1964-65. This relative decline is apparent for all sources of revenue, except pay- ments frcm government enterprises; for instance,tax revenues declined from 11.6% to 9.7%. Receipts from government enterprises were bolstered in FY's 1964-65 and 1965-66 by windfall profits of the Taiwan Sugar Corpora- tion. However, net government receipts from these enterprises appear to be relatively low in general, considering the contributions which have been made by government to their capital formation. This is due in part to the low rates which some enterprises charge for their services. Thus revenues do not always reflect ratios to invested capital commensurate with going rates of interest, currently 14.4% on commercial bank loans. For example, - 15 - the government railways are limited by law to a return between 7% and 8% on the historical value of invested capital; the Taipei municipal bus service is earning insufficient revenues to cover capital replacements, and power rates are being kept down on the grounds of maintaining low costs of production, even though power is a relatively small cost item to all but one or two major sectors, such as aluminum, cement and fertilizers. China cannot afford such subsidization of consumers in view of the chronic and increasing budgetary imbalance. 38. Expenditures also have declined relative to GNP from 20.6% in FY's 1958-59 and 1959-60 to 18.9% in FY's 1963-64 and 1964-65 but have been consistently higher than revenues. Defense, administration and internal security accounted for 60% of total expenditure in FY 1965-66 and has been growing at a rate of 12% per annum. A portion of this is due to the increase in salaries of civil servants and in the pay of the military forces. The periodic adjustments granted to public servants, though sizable, have been sufficient only to keep up with the advance in wages and incomes in the urgan private sector. Since government salaries were originally low as compared with private sector equivalents, the discrepancy has remained largely unchanged. 39. Expenditure on education and social services constituted 18.4% of the total in FY 1965-66 and has been increasing at an annual rate of 12.7%. In education this reflects largely the general rise in costs plus the growth in the number of students in elementary schools. Delays in implementing the proposal to provide additional years of middle schooling under the Fourth Plan have avoided significant increases in expenditure for this purpose. 4O. Data on defense expenditure are not available as a matter of policy but defense outlays are estimated at about 70% of central government expenditure and at least 10% of the total. Another problem is that ac- counting and budgetary procedures of the Central, Provincial and local governments do not permit a reasonably accurate division between current and capital expenditures. All line items of expenditure represent a mixture of the two. Therefore, it is not possible to link up planned public capital formation with actual expenditure with any degree of accuracy. The capital formation estimates used for national accounting purposes thus merely represent broad approximations. Based on the national accounts, however, an estimate of gross fixed capital formation in the public sector during 1961-64 would be about NT$2.2 billion, excluding public enterprises or 17% of the total. The budgeted deficits for FY 1965-66 and FY 1966-67 are likely to be greater than the amounts expended on capital formation; current expenditures appear not to be covered by ordinary revenues. 41. The use of central bank credit as a primary means of financing budget deficits had to be given up in the 1950's due to its inflationary consequences, and,more recently,the use of counterpart funds for this pur- pose has been losing importance. Instead, the covering of the budget gap - 16 - has been becoming more and more dependent upon the sale of bonds. The ordinary four-year bonds at present bearing on interest rate of 10.4% are primarily acquired by the commercial banks. In addition, importers when applying for foreign exchange are obligated to buy 4% patriotic bonds in the amount of 2.5% of the foreign exchange applied for. The impact of government finance on the money supply has no longer been expansionary on balance over the past four years; there was in fact a small contractive effect: expanding claims on government have been more than offset by deposits of the Treasury and government agencies, predominantly held with the Central Bank of China and the Bank of Taiwan. Net receipts from bond issues increased sharply after 1961; in calendar year 1965 net receipts were NT$1,042 million. Moreover, the policy of large scale bond issues by the government is reducing the availability of capital badly needed by the private sector thus forcing it to rely still more on the banking system. 42. Credit expansion to public enterprises has on the whole been an expansionary factor in money supply. This was particularly true in 1961 and 1962 when increases of 26% and 28% occurred. In 1963, repayment of bank loans by the Taiwan Sugar Corporation from windfall profits on exports resulted in a reduction of 14%. Increases in 1964 and 1965 have been relatively modest at 10% and 8% respectively. 43. The Private Sector - Continued growth in gross output in agri- culture and a substantial rate of increase in industry have put severe financial strains on the private sector for fixed capital formation, inventory accumulation and general operations. The situation as regards long-term capital sources is particularly acute in view of the lack of a substantial capital market. The practice of financing budgetary deficits by floating increasing amounts of public bonds represents - as shown above - an aggravating factor. Hopes for the stock market, which was established as a means of increasing sources of equity capital, were dashed following the speculative boom of 1962 and its collapse in 1963-64. The only institu- tions for long-term finance are the private China Development Corporation and the government-owned Bank of Communications. The inability of enter- prises to acquire adequate loan funds, as well as the general lack of equity capital, is seen in the high debt/equity ratios of numerous firms, particularly local enterprises which are in the process of growth. 44. The availability of short-term credit to the private sector is also inadequate and interest rates are high. Again aggravating factors are the practice of mandatory purchase of government bonds by banks and the credit preference granted to public enterprises. It is understood that many private firms are using short-term credit for purposes of capital expansion on a cumulative basis,thus adding to the demand for money over and above requirements for normal transaction purposes and inventory. Credits extended to private enterprises and other private borrowers have been increasing at an annual rate of 29% since 1960 but this has been largely offset by the growth in time and savings deposits. - 17 - 45. Overall Monetary Development - Money supply has consistently increased over the past 13 years and now stands at 13.5% of GNP. This is relatively low as compared with 18% for Thailand, 26% for Malaysia and 35% for Japan. The effect on prices has continuously lessened. Long-Term Money and Price Movements (billion NT dollars) Average Average Average 1953-56 1957-60 1961-63 1964 1965 Annual increase in Money supply 0.47 0.72 1.36 3.23 1.41 Quasi-money 0.20 1.13 3.18 4.21 3.56 As a percent of GNP Money supply 9.2 11.0 11.5 13.1 a/ 13.5 a/ Quasi-money 4.4 8.9 16.8 19.2 a! 21.2 a! Percentage increases per annum in the period Money supply 25.0 17.3 18.6 31.7 10.5 Quasi-money 22.5 43.0 17.7 27.2 18.1 Wholesale prices 9.4 8.3 4.2 2.5 - 4.7 a/ Calculated from new national account series. Money supply at an average. of 18.6% during 1961-63, as compared with 17.3% in 1957-60 and the remarkable increase in quasi-money augmented the ability of the banking system to expand its lending operations, but'the rise-in wholesale prices was only 4.2% or half the.8.3% in the previous four-year period. General price increases have been practically absent in the past two years. Several causal factors, are ihvolved.. Continuing stable govern- ment and rapid economic growth havebeen successful in allaying fears of a recurrence of inflation prevalent in the 1950's. The demand for money for transactions purposes and for-financing ap ever-growing inventory, which are associated with a developing.economy of increasing complexity, has expanded. The monetization bf portions of the rural sector required more.money. Finally, the lack of long-term capital sources and the need for capital expansion has forced the private sector to rely more and more on revolving short-term financing from commercial banks. 46. The major factor expanding the money supply over the past few years has been the foreign sector which accounted for-75.4% of the gross increase in_.161-65. This resulted from 1arge forei aid disbursements in 1961 and windfall prices on sugar in 1963 and 196* Credits to the private sector. accounted for 16.7% and claims on government, including public enterprises and counterpart, 7.9% of the growth. Small general reductions - 18 - in interest rates,which occurred during 1960-63, are largely the result of the subsidence of inflation, but rates, e.g. 14.04% per annum on secured commercial bank creditsand 21.6% on free market secured loans, remain high. Factors Affecting the Money Supply, 1961-65 (billion NT dollars) 1961 1962 1963 1964 1965 Public sector 1.41 0.60 -1-37 0.21 -0.05 Private sector -0.67 0.36 -0.51 0.30 -2.20 Foreign sector 1.75 -0.70 -4.40 2.62 -0.48 Capital and Misc. Accounts -1.23 0.32 -0.24 0.10 -0M26 Total 1.23 0.59 2.2 3.23 11 47. - The money market has been very tight over the two years beginning in mid-1964, particularly in 1965. This may be attributed to a number of factors. On the demand side Government has been an important borrower, largely through the continuously expanding net issues of bonds. Borrowings by the private sector rose by 28% both in 1964 and again in 1965. Govern- ment enterprises, though less important, have been steady net borrowers. On the supply side partial offsets occurred: in the foreign sector, with the decline in sugar prices toward the end of 1964 and with the substantial increase in imports in 1965 attributable to the more liberal release of loreign exchange by the Foreign Exchange and Trade Commission, and, in the domestic sector,with the continued growth in savings and time deposits. There were, moreover, reductions in the commercial banks' lending capacity, relatively,due to the decline in the growth in savings and time deposits to 18% in 1965 as compared with 27% in the previous year, and absolutely, due to the practice of some government agencies in substantially increasing their deposits in the Central Bank and the official Bank of Taiwan rather than in the commercial banks. Deposits in the central banking system were thus being made at a time when the Ministry of Finance was seeking funds by the issue of bonds. The result was the occurrence of negative reserves and penalty payments as the commercial banks, in attempting to meet the growing demand for credit, were forced to obtain accommodations from the Central Bank and the Bank of Taiwan. In January 1966, the monetary authorities acted to reduce moderately the guarantee reserve ratios for demand and time deposits. This however, has so far not altered materially the negative reserve position of the banks. 48. The record of government fiscal operations during a period of transition,when external aid has been declining,raises some questions as to appropriateness. At this time an expansion in savings,both absolutely and relative to GNP,is desirable as a means of partially replacing external aid as a source of investment funds and of minimizing recourse to more conventional means of external financing. The issuance of domestic bonds of increasing volume rather than higher levels of taxation - 19 - on consumption is having an aggravating effect on the already tight domestic money and capital markets: on the demand side it resulted in a syphoning of funds away from the private sector and on the supply side it was constrictive on the growth in savings to the benefit of an already rapid growth in consumption. The need for adjustments in fiscal policy to a changed situation has apparently not been recognized. The need has been there for some time with the actual and perspective decline in foreign aid, but it was masked, no doubt, by the export boom in 1963 and 1964. - 20 - V, FUTURE DEVELOPMENT AND ASSOCIATED PROBLEMS 49. The economic performance of the Republic of China over the past 5 years represents a progress from the solid base established with U.S. aid during the 1950's. Growth at an annual average rate of 8.8% has been some- what higher than the 8% long-term average. Per capita real incomes have risen sharply at a rate of about 5.5%. Significant progress has been made in transforming the economy from one largely agricultural to one in which light industry plays an equivalent role. Within agriculture adjustment to more highly valued crops for domestic consumption and export has taken place, Dependence on two main agricultural exports has been replaced by a balanced composition of both agricultural products and manufactured commodities. Proof of the Republic's ability to compete on export markets has been established and favorable progress has been made in replacing U.S. external aid with more conventional means of external financing. Although these developments have occurred largely as a result of initiative in the private sector, they may be partially attributed to favorable government support and promotion programs in both the domestic and external spheres. For example,adjustments in agriculture have been furthered by research, extension and credit programs; new domestic industries have been fostered by technical assistance and tax incentives and foreign capital has been attracted by favorable investment legislation. An exception to this favorable performance is the fiscal practice of maintaining a growing budgetary deficit financed increasingly with bond issues. This has led to a tightening of domestic money and capital markets. In addition, a slowdown in government expenditure on certain non-military economic and social services may have occurred in a desire to hold down the size of the deficits. 50. The forecast rate of growth in the Fourth Plan of 7% for 1965-68 will likely be exceeded in view of the relatively high rate of 10% in 1965 and good prospects for 1966. The mission's view is that for 1966-70 an annual rate of 7.5% may reasonably be assumed. This is based on an average rate of capital formation of 22% of GNP. Although marginal capital-output ratios must be regarded largely as illustrative, due to the deficiencies in the basic data, a figure of 2.9 has been used for the forecast as compared with 2.5 for 1961-65. This higher ratio has been taken in view of the likelihood of a more intensive use of capital associated with agriculture and the intermediate stages in industrial development in such fields as petrochemicals and metal manufactures. Given an import surplus of -2.3% of GNPPsavings of 19.7% are required and a consumption of 80.3% is possible. These magnitudes would require a reduction in the relative level but not the absolute level of consumption as compared with the previous five years. A total trade estimate of 40% of GNP compares with 32.6% for the previous 5 years. Expenditure Patterns for 1961-65 and Estimates for 1966-70 Average Estimated average 1961-65 1966-70 At constant price of 1965 GNP (NT$ billion) 90 137 Percent of GNP Gross capital formation 19.3 22.0 Import surplus -3.2 -2.3 Savings 16.1 19.7 Consumption 83.9 80.3 Public 18.0 Private 65.9 61.8 - 21 - 51. This rate of growth of 7.5% may. be expected to be achieved under norma ci-rcumstances without any major institutional changes providing that there is no outbreak of hostilities and that foreign trade conditions remain favorable. Over the long-run, however, more attention will need to be given to gradual improvement in production and market organization as a means to further export expansion. Over the shorter-run,the process of development would be enhanced by government fiscal policies which would facilitate the growth of savings and capital expansion. 52. Production and Marketing Efficiency - The Republic's remarkable success in development to date may be attributed to two factors, apart from external aid and political stability: the core of technical and industrial expertise, which transferred from the Mainland, and the local supply of intelligent and hard-working but cheap labor. These two basic ingredients were adequate to complete the first stage of industrial development involving largely import substitution with tariff protection and to embark on the initial entry into export markets. Inefficiencies in the form of small-scale operations, old equipment and technical direction, unspecialized management and marketing organization and indifferent quality and standardization have not so far outweighed the advantages of cheap labor in enabling the Republic to gain access to international markets. This net advantage will become increasingly less effective in future as newly developing countries with even cheaper labor move into export markets and as the Republic's new export lines will increasingly have to face more effective competition frcm established exporting countries, such as Japan. The problem is not immediate but will take on added importance each year. 53. A comparison of the Republic's current stage of development with Japan's of a few decades past is not legitimate on at least two grounds. Firstly, the lead time before competition from other developing countries, such as Korea and Malaysia, will appear is likely to be considerably shorter. Secondly, Japan had a much larger domestic market in which operations on a scale adequate for technical production efficiencies could be attained at a time when processes were not as advanced and as specialized as today. The Republic will have to move much more quickly than Japan in the rationalization of her industrial organization and in the acquisition of the specialized management necessary to meet competition in those products where cheap labor is not the only prerequisite. 54. Government policies and programs designed to foster such organiza- tional changes are only in the beginning stages. Here, as in the case of some progressive private firms, concentration has been on the training of the technical and lower management skills. These are necessary and the institu- tions developed for this purpose, such as technical schools and special training programs to meet specific needs, should be expanded. Further coordinated effort between government and the private sector will be necessarl in order to provide a sound basis for organizational improvement and innova- tions. An example is the cooperation through the Ministry of Economic Affairs in the development of the petrochemical industry. Possibilities for rational- ization need to be examined and ways found to encourage amalgamation of existing firms. Such attention may now be required in a number of industries such as monosodium glutamate, the paper industry and bicycle manufacture. - 22 - Implementation may well involve a good deal of attrition as unabsorbable firms are wiped out. The Government may also assist through facilitating financial reorganization and acquiring outside managerial aid and guidance. Another role would be to explore ways and means to avoid overexpansion in new and immediately profitable fields which in the recent economic history of the Republic has caused great difficulties in some sectors such as monosodium glutamate, textiles, and several canning operations. 55. An item of immediate importance for export market development is quality control. Lax methods, hereto followed in the domestic market, are inappropriate for highly competitive export markets. Although the lesson has been learned in the canning industry, where effective measures are being instituted, it has not as yet been adequately extended to other industries as, for instance, textiles. In some potential export industries, such as pharma- ceuticals, quality control is an essential prerequisite. A related problem of immediate importance exists in bananas where, although quality controls have been instituted at the point of shipment, the commodity thereafter is apparently subject to deterioration and spoilage. 56. Import Requirements and Export Expansion - Further industrial develop ment during 1966-70 will call for an increased volume of imports estimated by the mission at 87% higher than the 1961-65 level. The realistic emphasis on light industrial consumer goods development dictates a reliance on overseas supplies for capital equipment. This will be bolstered by the initiation of investment in some intermediate stages of production, notably in petrochemicals and metal products,where the ratio of imported capital goods to total invest- ment is high. An increase in imports of capital goods at a ratio of 38% to gross fixed capital formation is thus expected for 1966-70 as compared with 32.4% in 1961-65. Similarly, given the paucity of unused domestic raw materials, the ratio of imported raw materials to total value added in produc- tion is expected to rise to 16% as compared with 14% in 1961-65. The volume of consumer goods imports should also increase but the ratio to total consumption is expected to fall to 1.5% as compared with 2.1% in 1961-65. Estimates of requirements for 1966-70 call for an expansion in total imports at an average annual rate of 9.7%,which is considerably lower than the rate of 17.1% in the previous five-year period,due to the much higher base. The foreign exchange requirements for imports, however, will increase 59% over 1965 to US$885 million. Imports, 1961-65 and Projections, 1966-70 1/ (million US dollars) Total Total 1961-65 1966 1967 1968 1969 1970 1966-70 Capital goods 526 180 197 221 248 274 1,120 Raw materials 1,24 368 409 453 496 549 2,275 Consumer goods 185 47 49 51 56 62 265 Total 1,95 _9_ __ 725 U00 ___ 1/ Based on customs data. - 23 - 57. It should be emphasized that expansion in exports is necessary to maintain continued economic growth in view of the restricted size of the domestic market and the limitations imposed by the scarcity of unused natural resources available in the Republic. The outlook for exports is generally encouraging, in spite of the slowdown in 1965 and the first half of 1966, as the Republic's basic cost position still provides ample opportunities for expansion in numerous lines; care must be taken, however, not to oversupply specific markets to the point of invoking retaliation. Thus quotas have been imposed on textiles in the US market, voluntary restrictions on exports of canned mushrooms to German markets have been annouced and Japan has tried unsuccessfully to limit banana imports by high tariffs in order to protect her fruit growers. Similar potential restrictions are possible, particularly in high labor cost countries, where established industries are being threatened by imports, such as plywood, wearing apparel, shoes, electric appliances, etc. 58. No radically new export lines may be developed in the foreseeable future, in view of the wide range of light industrial products now being produced, but additions to existing lines are looked for as each sector develops further. Leadership is likely to be assumed by a wide range of metal products including ironware, general machinery and prime movers, electrical appliances and equipment. A somewhat less significant expansion could develop in chemical products with emphasis on plastics and synthetic fibers. Further growth in plywood could occur, if US markets remain open. Supplementary expansion in new blended textile fabrics and apparel, paperboard, and handi- crafts may be expected. Increases in agricultural products are likely to be limited to canned goods, bananas, some vegetables, fresh and frozen, and miscellaneous minor products. The rate of increase in total exports is fore- cast at 9.6% per annum for 1966-70 as compared with 23.5% in the previous 5 years. Industrial products may increase at a rate of 13.4% as compared with 32.2% and agricultural products at 5.9% as against 18.3%. Exports, 1961-65 and Projections, 1966-70 1/ (million US dollars) Total Total 1961-65 1966 1967 1968 1969 1970 1966-70 Industrial products 785 255 285 325 375 4l5 1,655 Processed agric. products 663 160 175 195 210 220 960 Agricultural products 1 101 110 120 128 136 595 Total 1,761 70 05 713 771 3,210 Net services 41 10 10 10 10 10 50 Total goods and services 1 802 2 723 781 0 Trade and services gap 6-9 7 _ f _77 1Oh _700 1/ Based on customs data. 59. Some changes in the pattern of export trade can be anticipated. Future growth in the trade with Japan is likely to be less than in other markets due to the relatively limited rates of growth in production in raw materials and foodstuffs in the Republic, which Japan normally imports; the - 24 - already considerable growth in banana exports will continue but at a reduced rate. In addition, it is unlikely that a substantial trade in light industrial products will be developed, given the degree of protection now accorded to Japanese light industry. Comparatively greater growth is expected in exports to Southeast Asia and to the developed areas of North America and Europe, along with modest further gains in the African and South American markets. The expansion in these markets will come in the industrial products into which the Republic has been expanding: highly labor intensive consumer goods and canned foodstuffs in the case of the developed countries, and miscellaneous consumer goods and some raw materials in the case of developing countries, where the Republic has a competitive advantage over other suppliers on these markets. The possible cessation of hostilities in Viet Nam, which is currently bolster- ing the Republic's trade, may have an adverse effect before 1970. This may in part be offset by ensuing reconstruction expenditure. 60. The overall import trade gap of US$400 million, which emerges from the estimates of trade development, indicates that export expansion will be insufficient to meet import needs and that external financing will be required. The size of the gap, averaging US$80 million or NT$3.2 billion, is about the same as the average of 1961-65 at NT$3.3 billion, which, however, was reduced due to the two favorable years for exports in 1963 and 1964. If these years are omitted, the gap is distinctly smaller than the average of NT$5.1 billion for the more normal years of 1961, 1962 and 1965. The magnitude of the import gap and the level of imports is directly related to the levels of exports previously estimated because of the high import content of exports. Should the postulated rate of growth in exports not be attained, there would occur a downward adjustment in the level of imports. 61. Domestic Savings and Fiscal Policy - The main issue concerning the achievement of an adequate level of capital formation, estimated at 23o of GNP for 1970, is the possibility of attaining a sufficient increase in the volume of domestic savings of 19.4% of GNP which compares with the 1965 savings ratio of 17.2%. This involves a restriction in consumption of 79.7% of GNP as compared with 81.1% in 1965. A resolution of this issue would go far towards the attainment of the existing growth potential. 62. There is little possibility of reducing the rate of growth in public expenditure; conversely, it is likely to increase to 19.4% of GNP as compared with 17.2% in 1965. Defense expenditure will rise as US military assistance will be reduced; public salaries need to be increased to make them more comparable with the growing salaries in the private sector; annual expenditure on education and social affairs will probably accelerate in line with the programs of the Fourth Plan, and there is a need for expansion of power, trano- portation and communications. 63. The needed reduction must take place, therefore, in private consump- tion. A restriction in the annual rate of growth by one-half of one percent to 60.3% of GNP is necessary by 1970. Some reduction may take place voluntar- ily, as the long-term trend in the consumption ratio has been downwards, but this decline has been largely arrested in the past 3 years. Should this continue, a likely ratio of private consumption to GNP would be about 61.5%, which would not produce an adequate level of savings. - 25 - 64. It is suggested that the best solution to this problem would be a fiscal policy designed to reduce the budget deficit by means of higher charges by some public enterprises for services, improvements in tax collection and higher levels of taxation. An argument for additional taxation can be based on several grounds. Sufficient increases in government revenues will not accrue automatically from the present tax system, which is not adequately responsive to economic growth. Moreover, continued financing of the deficit by means of substantial bond issues will aggravate the scarcity of capital funds available to the private sector. It is unlikely that Government will raise its capital and recurrent expenditure to desired levels at the risk of even larger deficits in future due to the danger of a revival of inflation; additional revenues are thus needed to create the necessary fiscal atmosphere. What is required are further tax measures which will reduce the rate of growth of private consumption rather than savings. This could be accomplished with- out any great sacrifices as, with a rate of growth in GNP of 7.5% and popula- tion increase of 2.8%, the necessary reduction in private consumption would still permit an increase in per capita consumption of 3.hfo per annum. If this recommendation were to be officially acceptable, any implementation would be felt only after some time lag; hence,necessary steps toward such fiscal reform should be taken as early as possible. - 26 - VI. EXTERNAL FINANCING REQUIRE1ENTS 1966-70 65. The extent of external financing required during 1966-70, as estimated by the mission,amounts to the trade gap of US$h00 million plus additions to cover external debt service and an increase in foreign.exchange reserves to a level equivalent to 6 months' imports. The maintenance of foreign exchange reserves at this level is an objective of Government which would appear reasonable in view of the Republic of China's expected growing reliance on imported capital goods and raw materials. Required External Financing 1966-70 (million US dollars) Capital requirements 400 External debt service 170 a/ Increase in foreign exchange reserves 150 Total 720 a/ Including service on all short and long-term debt, public and private. 66. Current possibilities for borrowing include Japan and Italy as well as the United States and the Bank plus private sources. The total to date is US$632 million, leaving a balance of US$88 million to be found elsewhere. It would appear, therefore, that during the next five years The Republic will have successfully made the transition from dependence on US aid to more conventional means of financing, although as yet no recourse has been made to issues on foreign private capital markets. Possible External Sources of Funds (million US dollars) In Under To Be Pipeline Negotiation Negotiated Total IBRD 32.5 - 126.8 159.3 US development loans 56.3 - - 56.3 PL480 20.6 20.0 30.0 70.6 Eximbank .-1 26.2 27.6 979 Japan 150.0 - - 150.0 Italy - 12.5 - 12.5 Total 30377 17 Private investment and transfers - -- 85.0 Grand total 303.7 777 631.6 67. Annual debt service by 1970 will amount to US$41 million or 5% of the expected merchandise exports. By 1975 it is likely to reach 8.5%. As- suming no considerable step-up in military imports or major trading diffi- culties in international markets the contraction of additional debt required for continued expansion should not constitute a serious burden on the economy. APPENDIX I Energy Materials Requirements and Supplies 1. The known energy resources of the Republic of China may be described as modest. Deposits of coal are not large and are uneconomically located. Natural gas reserves have increased recently with new discoveries but they are not extensive. There are negligible known reserves of petroleum and some undeveloped reserves of hydropower. No known deposits of nuclear fuels exist. About half of the total energy produced comes fron non-commercia fuels including firewood, bagasse and vegetable wastes. The possibility fcr growth in power material sources remains largely with the conventional, commercial fuels. Estimates of Energy Materials Supply and Demand (thousand metric tons coal equivalent) 1961 1964 1968 Total consumption 5,317.1 7,165.8 10,708.6 Net imports (crude oil) 1,033.5 1,568.3 3,033.9 Production from domestic sources 4,283.6 5,597.5 7,674.7 From coal 3,962.0 5,02B.0 6,000.0 From crude oil 2.9 13.9 1i.6 From water power 274.7 313.5 321.5 From natural gas 35.2 235.1 1,241.6 From alcohol 8.8 7.0 7.0 Source: Energy Study and Planning Group. 2. The domestic consumption of commercial fuels materials has been expanding at an annual rate of 7.h% or slightly lower than GNP over the past several years. The increase has been from 5,317 thousand tons in 1961 to 7,166 thousand in 1964 in terms of coal equivalents. Production of fuels from domestic sources, however, has expanded by only 6.9% and its proportion to consumption has fallen from 80.5% in 1961 to 78.0% in 1964. The share of imported fuels has thus increased from 19.5% to 22.0% or at a rate of growth of 10.9%. Estimated requirements and supplies for 1968 indicate an expansion in consumption by 49.5% or at a rate of 10.60 of which domestic fuels are expected to supply 71.6% and imports 28.h% in 1968. These trends indicate the growing dependence of the Republic on outside sources of energy supply. 3. Domestic coal production in 1961 represented 74.5% of total consumption but had fallen to 70.2% in 1964; a further fall to 56.0% is expected by 1968 as the growth rate of mining slows down. Output could be expanded as recoverable deposits are estimated at 240 million tons. However, the steep slope of the coal seams, their irregular nature and narrowness with workable beds ranging from 35 to 60 centimeters in thickness practically rules out mechanization to any considerable extent. b. The 310 or so producing mines are small scale operations on the average. About one half the coal is produced by 42 mines including the 6 - 2 - publicly owned. There is no open cast mining and vertical shaft operations have not been undertaken due to the high initial capital cost and complicated geological structure of the coal beds. Labor productivity at 14% of that of West Germany, 16% of the United Kingdom and 70% of India attests to the low level of output per worker which is economically possible only with low wages. The expansion in output of 7.2 million tons in 1964 is about 75% above prewar levels. In order to expand capacity, however, fixed capital assets have been increased over 700% since 1954. A large part of the funds came from US aid. 5. It is estimated that further increases in output can be realized up to a ceiling of 7.5 million tons with annual increases in labor productivity in a range of 3 to 7%. Average investment per ton of coal produced would probably need to be increased 15%. Average costs of production might rise as much as 28% by 1974 whilst the cost of imported fuel oil is likely to remain constant. An important policy decision thus needs to be taken as to the extent to which such further increases in capacity are to be encouraged and what form such encouragement should take. 6. Water power in 1961 represented 6.4% of total domestic energy resources; by 1968 the proportion is expected to fall to 4.2%. This relative decline reflects the restrictions on the further utilization of unused hydro- power resources. The limitations are many. There is a highly seasonal rainfall distribution centered on June-September with a concentration in thundershowers and typhoons leading to heavy runoff rates. This combined with the relatively small drainage basins and steep and narrow canyons provides only small reservoir capacity in any one area so that the water cannot be adequately stored. Steep slopes and erodible soils result in a heavy debris movement and silting in streams and reservoirs. For these reasons hydropower plants are relatively small and numerous, installed capacity is a relatively low multiple of theoretical capacity, peaking capacity is much less than installed capacity and in dry years services has had to be curtailed. 7. Overall growth in electric power generating capacity has increased at a rate of 11.2% in toto and only 6.7% for hydro as compared with more than 23% for thermal. For reasons given above, the major expansion has occurred in thermal capacity which represented 15.8% of the total in 1954 but increased to 44.4% in 1964. The thermal plants consist of about one-half steam and one-half diesel. The principal stations are designed to burn coal but some units are convertible to oil. 8. Electricity is currently available to 95% of the population and complete coverage is expected soon. Industry accounts for 80.3% of total consumption. The chemicals and metals and machinery industries represent 58% of industrial consumption. Demand which was 4,362 GWA)h in 1962 is expected to reach 10,100 GWh by 1968 and 33,300 by 1980. 9. Natural gas has heretofore been a minor source of energy materials produced from shallow wells. The testing of deeper formations in the Chinsui field by the China Petroleum Corporation resulted in a rapid expansion in production. Beginning in 1958, further discoveries in the Chuhuangkeng field has sharply increased estimated reserves to 19.6 billion cubic meters. Current production of 310 million cubic meters may be expected to rise considerably in -3- future. A large proportion of this new resource, however, will be utilized as non-energy raw material. However, if all sources of potential utilization are included, irrespective of their final use, annual production should increase to 1.2 million cubic meters. APPENDIX II Industrial Development 1. The Republic of China's manufacturing has advanced along a wide front mainly in the field of light industry during the past five years. In the process, a more complex and integrated pattern is developing in which private enterprise and foreign participation is becoming more marked. Whereas in 1952 public enterprise accounted for 57.7% of output, in 1965 this share had fallen to 36.3%. Value of Output and Growth in Manufacturing Value of Production Production Index 1965 Rate of Growth (mil.NT$) (percent) 1962 1963 1964 1965 1961-65 Food, Bevs. and Tobacco 14,875 28.3 105 108 135 150 10.7 Textiles and Apparel 10,304 19.6 111 117 143 151 10.9 Wood, Paper and Prods. 4,748 9.0 115 131 188 206 19.8 Chemicals and Prods. 6,182 11.7 132 160 235 311 33.0 Petroleum and Coal Prods. 3,049 5.8 149 149 159 192 17.7 Non-Metallic Mineral Prods. 3,488 6.6 116 129 143 152 11.1 Metals and Metal Prods. 3,035 6.0 108 127 154 158 12.1 Machinery and Appliances 3,424 6.5 114 1Lo 187 223 22.0 Transport Equipment 1,h43 2.7 142 138 165 230 23.0 Miscellaneous 2,022 3.8 116 121 157 171 14.4 Total 32,570 100.0 113 127 15 IFO 7 .7 2. The early-established agricultural processing and textile industries produce about half the value of manufactured goods but their annual rates of growth are the lowest of all groups. The domestic market is limited and generally exploited; future increases are largely dependent upon expansion in the export markets. The canning industry has developed through a growing output of pineapple, other fruits, mushrooms and vegetables, of which asparagus is a new and important item. Mushrooms are currently encountering marketing difficulties in the important German market due to poor quality and asparagus is suffering from overproduction. Production of flour is rising with a growing domestic demand but overcapacity exists. Sugar output has recently increased with the expansion in cane acreage following high 1963-64 prices. The Taiwan Sugar Corporation's capacity of one million tons in 25 mills is sufficient for future foreseeable demands, given a 750,000 ton export quota. Procurement of adequate quantities of sugarcane, two-thirds of which come from private farmers, might become difficult due to a tendency to shift to more profitable crops. The monosodium glutamate industry, which recently enjoyed a boom in exports, now suffers severely from overcapacity. 3. The textile industry is overextended temporarily in cotton products and is now in the process of adjusting output to the more popular blends with synthetic fibres. The apparel industry has also encountered a decline in demand for similar reasons. Once this adjustment is completed a resumption of growth may be expected. This is likely to occur primarily on export - 2 - markets (which absorbed 26.4% of output in 1964 as compared with 3% in 1956) provided reasonable access to such markets may be maintained. 4.. Forest products have been enjoying a favorable growth rate of 19.8% particularly in plywood and paperboard, but the industry in general is faced with some difficult problems. Although cheap power and water resources exist, there is a shortage of domestic pulping materials, such as bagasse, rice straw and coniferous timber, which is forcing the pulp and paper industry to rely more and more on high-cost imported pulp. The 72 pulp and paper manufactur- ing mills include only 3 of any substantial size and only 2 have reasonably efficient pulping facilities. This plethora of firms is the result largely of a protected domestic market. High cost of operation in general reflects small-scale production, old equipment and unsatisfactory productive efficien- cy. Exports are probably possible as long as high prices and profits can be obtained on the domestic market as a compensating factor. Although some market progress has been made in developing the export potential of the furniture industry, modernization of design and styling and a lessening of dependence on manual labor would appear necessary for substantial progress. 5. Some of these weaknesses are absent from the export dominated, high- ly profitable and expanding plywood industry, but operations reflect a consid- erable degree of inefficiency in throughput design and technical management. Low labor costs are sufficient, however, to make this industry competitive as compared with Japan on export markets. Further considerable gains may be expected, though not necessarily at the h% annual rate of 1961-65. 6. Considering the small beginnings of the chemicals and chemical products industry in the 1950ts with the electrolytic processing of salt, growth in 1961-65 at a rate of 33% per annum has achieved the remarkable result of raising the sector to third rank in 1965 accounting for 11.7% of the total value of manufacturing production. The increasing demand for chlorine generated by the plastics industry, beginning in 1957, and for soda ash for glass production has resulted in a considerable expansion in capacity and output of these basic chemicals but also in a surplus of caustic soda. A likely further expansion in demand for chlorine and soda ash for the 19 exist- ing plants will result in an additional increase in the caustic soda surplus which will accrue to the non-integrated, government-owned Taiwan Alkali Company which provides two-thirds of the output. 7. In the petrochemicals field expansion in the China Petroleum Corporation's Kaohsiung refinery and natural gas facilities is developing a heavy industrial complex which is providing increasing amounts of feedstocks, and thus backward and forward linkages to supply the textile industry with synthetic fiber and basic petrochemical raw materials from refinery feed- stocks. The surplus of heavy fuels, which has formerly been exported, is beginning to disappear with growing domestic demand and better crude oil processing facilities thus giving the industry an opportunity to withdraw from the highly competitive international market. 8.. The growing output of plastic powder plus imports now provides the raw material for some 300 plastics producers and processors who are manufac- turing a wide variety of products for domestic use and export. Expansion in - 3 - this field has been rapid with output growing at a rate of 39% per annum in 1961-65. Further increases in capacity are currently being developed. The expanding world market for these products is not as limited as is the market, for example, for monosodium glutamate, where demand is largely static, nor for traditional products, such as textiles, where established interests in import- ing countries oppose any significant expansion in imports. Even so, plastics capacity is being rapidly developed in such important markets as the United States; hence, marketing difficulties may later arise. 9. Fertilizer production is about in balance with consumption, except for potassium which has to be imported as no domestic raw material is avail- able. Growth in output of 26% per annum in 1961-65 attests to the extraordi- nary increase in domestic consumption, which now stands at approximately 233 thousand tons in terms of nutrient content. The use of the new natural gas resources may make nitrogenous fertilizers internationaly competitive. 10. Output of non-metallic mineral products, such as brick, tile and cement, has responded steadily to the growth in construction. Cement has also enjoyed a strong export market in South East Asia during the past year or so. Production of the 13 cement plants is now at capacity levels of 2.4 million tons with a 1961-65 growth rate of 12.8%. The glass industry has also achieved substantial advances with annual rates of 12.1% and 19.8% respective- ly. Further expansion will probably require a large-scale sand glass process- ing plant. Efficiency of operations may have to be improved for more effective penetration of export markets as external competition is keen. 11. Production of metal products includes a wide variety of manufactures of cast iron and steel and aluminum but the more common light products such as wire, nails, pipe, reinforcing bars, small sections and light rods predominate. Expansion in output of 12.1% over the past four years is more than satisfacto- ry but some basic problems exist. There are over 50 small-scale iron and steel plants but only two are equipped with smelting and rolling facilities. Iron and steel scrap are the main raw materials. There is overcapacity and price instability as the industry is not sufficiently competitive to export. The existing aluminum facilities of the tariff protected, government-owned Taiwan Aluminum Corporation is an integrated operation with an ingot capacity of 20,000 tons using imported bauxite. Although it operates on cheap power it also is small-scale and high cost. There is an opportunity to produce a wider variety of iron, steel and aluminum products, provided existing facilities are rationalized and improvements made in technology and manage- ment. The proposed integrated iron and steel mill may be necessary for further expansion but there are questions as to the restricted size of the domestic market and the ability to compete on export markets, which need careful study. The recently established Metal Industry Development Center, if adequately staffed and equipped, could be useful in analyzing scme of these problems. 12. Growth in the production of machinery and appliances at an annual rate of 22.0% during 1961-65 is outstanding, in view of the small and medium size of the 500 or so manufacturers and the inadequacies in equipment, tech.- nology and management. There are four big concerns in machinery, shipbuilding and engineering but they are largely repair and assembly operations producing a small but growing number of component parts. Most large machinery is imported and exports are limited. Even in the smaller products, such as electrical appliances, production is still predominantly oriented to the domestic market. The sole Japanese controlled automobile assembly plant is too small and high cost to operate, except in the protected domestic market. The 12 small motorcycle assemblers are excessive in numbers for efficient operations. The plethora small workshops which produce bicycles provide low cost but poor quality products. There is thus a need for more specialization and integration to achieve a higher level of volume and also to prepare the way for standardization and increased production of component parts. Marketing connections with overseas manufacturers would also be desirable in order to engage in the manufacture of particular components for export. 13. Cottage industries produce a wide variety of products largely bamboo and rattan furniture, dolls and toys, jewelry, embroidery and hand-made garments. Exports of US$10.8 million in 1965 represent a substantial growth rate but the volume is modest in terms of Japan's trade. There are good possibilities for further expansion with a better organization, which may be accomplished with assistance from the Taiwan Handicrafts Promotion Center. STATISTICAL APPENDIX Table No. External Medium- and Long-Term Public Debt Outstanding Including Undisbursed as of December 31, 1965 with Major Reported Changes January 1 - February 28, 1966 1 Estimated Contractual Service Payments on External Medium- and Long-Term Public Debt Outstanding Including Undisbursed as of December 31, 1965 with Major Reported Changes January 1 - February 28, 1966 2 Population Data 3 Growth of Gross National Product - 1953-1965 4 Industrial Origin of National Income at Current Prices 5 Expenditure on Gross National Product at Current Market Prices 6 Gross Fixed Capital Formation by Industrial Use 7 Employment (age 12 and over) 8 Indices of Production 9 Estimates of Energy Supply and Demand 10 Agricultural Area 11 Production of Principal Agricultural Crops 12 Area Planted to Principal Crops 13 Timber Production 14 Fisheries: Number of Vessels and Production 15 Output of Principal Mining and Industrial Products 16 Transportation 17 Composition of Trade 18 Imports by Countries of Origin 19 Exports by Countries of Destination 20 Value of Principal Imports 21 Value of Principal Exports 22 Exports of Major Commodities to Principal Countries of Destination in 1965 23 Balance of Payments 24 Foreign Assistance - U. S. AID 25 Gold and Foreign Exchange Reserves 26 Summary of Private Overseas Investment by Years 27 Consolidated Budget of all Levels of Government 28 Actual Revenues from Taxes and Monopolies 29 Internal Debt of Central Government 30 Consolidated Statement of Conditions of the Monetary System 31 Factors Affecting the Money Supply 32 Statement of Condition of The Central Bank of China 33 Reserve Conditions of Banks other than The Bank of Taiwan 3)4 Interest Rates 35 Price Indices - Wholesale Prices at Taipei 36 Price Indices - Major City Consumers' Prices 37 Table 1 External Medium- and Long-Tern/ Public Debt Outstanding Including Undisbursed as of December 31, 1965 with Major Reported Changes January 1 - February 28, 1966 Debt Repayable in Foreign Currency (In thousands of U.S. dollar equivalents) Debt outstanding Major reported Item December 31, 1965 changes Net of Including January 1 - undisbursed undisbursed February 28, 1966 TOTAL EXTERNAL PUBLIC DEBT L16,444 574,396 - 253 Loans not in service 192,740 192,740 - World War II intergovernmental debt 61.307 61,307 - $150,000,000 Sino-Soviet loan, 1939 46,128 46,128 - L70,859,000 Sino-British loans, 1939 and 1941 15,179 15,179 - Post-World War II debt 131,1433 131,433 - U.S. Goverrment loans 77,458 77,458 - Export-Import Bank-/ 27,387 2",387- Other 51,071 51,071 Canadian Government loans 53,975 53,975 Loans with repayment terms not settled 91,949 91,949 - World War II debt 22,859 22,859 - L50,000,000 Sino-British loan, 1944 22,859 22,859 Post-World War II debt 69,090 69,090 79,081,782 U S. Government Surplus Property credits 69,090 69,090 - Loans currently in service 131,755 289,707 - 253 Privately-placed debt 29,351 30,636 - Suppliers' credits 28,996 30,281 Private bank credits 355 355 - IRD loans 9,854 42,800 - 253 IDA credits 12,905 13,202 - U.S. Government loans 75,020 153,903 Export-Import Bank 1,3414 35,327 AID 47,999 56,886 Department of Agriculture 25,677 61,690 (Continued on next page) Table 1 (cont'd) External Medium- and Long-Terml/ Public Debt Outstanding Including Undisbursed as of December 31, 1965 with Major Reported Changes January 1 - February 28, 1966 Debt Repayable in Foreign Currency (In thousands of U.S. dollar equivalents) Debt outstanding Major reported It em December 31, 1965 changes Net of Including January 1 - undisbursed undisbursed February 28, 1966 Loans from other governments 4,625 49 166 - Export-Import Bank of Japan - Gk,51- Canadian Government loan 4,625 4,625 1/ Debt with an original or extended maturity of one year or more. 2/ Excludes all pre-World War II debt consisting almost entirely of publicly- issued bonds, the exact value of which is not definitely established. 3/ Excludes renegotiated portions of three Export-Import Bank loans, included below as currently in service. Statistics Division IBRD-Economics Department November 14, 1966 Table 2 Estimated Contractual Service Payments on External Medium- and Long-Term Public Debt Outstanding IncLuding Undisbursed as of December 31, 1965 with Major Reported Changes January 1 - February 28, 1966 1/ Debt Repayable in Foreign Currency (In thousands of U.S. dollar equivalents) Grand Total Privately-Placed Debt - Total (including Suppliers' Credits) Debt Outst* Debt Outst. (Begin of Period) Payments During Period (Begin of Period) Payments During Period Including Amorti- Including Amorti- Year Undisbursed zation Interest Total Year Undisbursed zation Interest Total 1966 244,795 11,156 3,679 14,835 1966 21,737 6,918 708 7,626 1967 233,386 6,438 4,958 11,396 1967 14,819 3,863 465 4,328 1968 226,948 7,953 6,429 14,382 1968 10,956 2,679 283 2,962 1969 218,995 13,189 8,123 21,313 1969 8,277 1,712 144 1,856 1970 205,806 20,102 7,875 27,977 1970 6,565 6,079 55 6,135 1971 185,704 14,059 7,204 21,263 1971 486 48 28 76 1972 171,645 14,445 6,518 20,963 1972 438 24 26 50 1973 157,201 14,523 5,845 20,368 1973 414 24 24 49 1974 142,678 14,324 5,171 19,494 1974 389 24 23 47 1975 128,354 14,423 4,484 18,907 1975 365 24 22 46 1976 113,932 14,530 3,798 18,328 1976 341 24 20 44 1977 99,402 14,258 3,110 17,368 1977 316 24 19 43 1978 85,144 10,300 2,494 12,794 1978 292 24 17 41 1979 74,844 9,648 2,065 11,713 1979 268 24 16 40 1980 65,197 8,910 1,675 10,585 1980 243 24 14 39 (See footnote at end of table) (Continued on next page) 2 (Table 2 conttd) Supplierst Credits IBRD Loans Debt Outst, Debt Outst. (Begin of Period) Payments During Period (Begin of Period) Payments During Period Including Amorti- Including Amorti- Year Undisbursed zation Interest Total Year Undisbursed zation Interest Total 1966 21,483 6,789 707 7,496 1966 42,800 248 668 916 1967 14,694 3,738 465 4,203 1967 42,299 822 1,179 2,001 1968 10,956 2,679 283 2,962 1968 41,477 1,329 1,794 3,123 1969 8,277 1,712 144 1,856 1969 40,148 2,355 2,199 4,554 1970 6,565 6,079 55 6,135 1970 37,793 2,605 2,029 4,634 1971 486 48 28 76 1971 35,188 2,656 1,899 4,555 1972 438 24 26 50 1972 32,532 2,667 1,726 4,393 1973 414 24 24 49 1973 29,865 2,686 1,572 4,258 1974 389 24 23 47 1974 27,179 2,752 1,418 4,170 1975 365 24 22 46 1975 24,427 2,773 1,259 4,032 1976 341 24 20 44 1976 21,654 2,800 1,099 3,899 1977 316 24 19 43 1977 18,854 2,718 939 3,657 1978 292 24 17 41 1978 16,136 2,678 784 3,462 1979 268 24 16 40 1979 13,458 1,936 646 2,582 1980 243 24 14 39 1980 11,522 2,015 546 2,561 (Continued on next page) - 3 - (Table 2 cont1d) IDA Credits U.S. Govt. Loans - Total1 Debt Outst. Debt Outst. (Begin of Period) Payments During Period (Begin of Period) Payments During Period Including Amorti- Including Amorti- Year Undisbursed zation Interest Total Year Undisbursed zation Interest Total 1966 13,202 98 98 1966 117,890 3,990 1,992 5,982 1967 13,202 - 99 99 1967 113,900 1,753 2,148 3,901 1968 13,202 - 99 99 1968 112,147 3,104 2,332 5,436 1969 13,202 - 99 99 1969 109,043 3,568 3,188 6,757 1970 13,202 - 99 99 1970 105,475 5,864 3,469 9,333 1971 13,202 - 99 99 1971 99,611 5,801 3,227 9,028 1972 13,202 130 99 229 1972 93,810 6,070 2,987 9,056 1973 13,072 130 98 228 1973 87,740 6,549 2,741 9,291 1974 12,942 130 97 227 1974 81,191 6,704 2,494 9,199 1975 12,812 130 96 226 1975 74,487 6,783 2,241 9,023 1976 12,682 130 95 225 1976 67,704 6,863 1,988 8,850 1977 12,552 130 94 224 1977 60,842 6,672 1,733 8,406 1978 12,422 130 93 223 1978 54,169 6,759 1,488 8,247 1979 12,292 130 92 222 1979 47,410 6,849 1,241 8,089 1980 12,162 130 91 221 1980 40,561 6,032 994 7,026 (Continued on next page) (Table 2 cont'd) US Govt. Loans - EXIM US Govt. Loans - Other Debt Outst. Debt Outst. (Begin of Period Payments During Period (Begin of Period) Payments During Period Including Amorti- Including Amorti- Year Undisbursed zation Interest Total Year Undisbursed zation Interest Total 1966 35,327 149 156 305 1966 82,563 3,841 1,836 5,677 1967 35,178 554 262 816 1967 78,722 1,199 1,886 3,085 1968 3A,624 544 480 1,024 1968 77,523 2,560 1,852 4,412 1969 314,080 5354 1,422 1,956 1969 74,963 3,034 1,766 4,801 1970 33,546 2,765 1,798 4,563 1970 71,929 3,099 1,671 4,770 1971 30,781 2,635 1,654 4,289 1971 68,830 3,166 1,573 4,739 1972 28,146 2,506 1,514 4,020 1972 65,661- 3,564 1,473 5,036 1973 25,640 2,506 1,375 3,881 1973 62,100 4,043 1,366 5,410 1974 23,134 2,506 1,239 3,745 1974 58,057 4,198 1,255 5,454 1975 20,628 2,506 1,099 3,605 1975 53,859 4,277 1,142 5,418 1976 18,122 2,505 963 3,468 1976 49,582 4,358 1,025 5,382 1977 15,617 2,231 828 3,059 1977 45,225 14,41 905 5,347 1978 13,386 2,231 705 2,936 1978 40,783 4,528 783 5,311 1979 11,155 2,231 583 2,814 1979 36,255 4,618 658 5,275 1980 8,924 2,231 460 2,691 1980 31,637 3,801 534 4,335 (Continued on next page) (Table 2 conttd) Loans from Japa Canadian Govt. Loan Debt Outst* Debt Outst. (Begin of Period) Payments During Period (Begin of Period) Payments During Period Including Amorti- Including Amorti- Year Undisbursed zation Interest Total Year Undisbursed zation Interest Total 1966 44,541 - 213 213 1966 4,625 - - 1967 44,541 - 1,067 1,067 1967 4,625 - - 1968 44,541 - 1,921 1,921 1968 4,625 841 - 841 1969 44,541 4,713 2,493 7,206 1969 3,784 841 - 841 1970 39,828 4,713 2,222 6,935 1970 2,943 841 - 841 1971 35,115 4,713 1,951 6,664 1971 2,102 841 - 841 1972 30,402 4,713 1,680 6,393 1972 1,261 841 - 861 1973 25,689 4,713 1,409 6,122 1973 420 420 - 420 1974 20,977 4,713 1,138 5,851 1975 16,264 4,713 867 5,580 1976 11,551 4,713 596 5,309 1977 6,838 4,713 325 5,038 1978 2,125 708 112 820 1979 1,417 708 71 780 1980 708 708 31 739 1/ Includes only debts currently in service as shown in Table 1, prepared April 6, 1966. Does not include service on the following loans: Loans for which repayment terms are not available: Suppliers' creditst $8,798,000 outstanding Loans whose repayment is dependent on delivery dates: Private bank credits: $100,000 outstanding US Surplus Agricultural Commodities loans: $36,013,000 outstanding Statistics Division IBRD-Economics Department November 14, 1966 Table 3 Population Data Population (000's) 1/ Crude Rates Total Males Females Growth Births 2/ Deaths 2/ Natural End of: _ _ Rate (%) Increase (%) 1955 9,078 4,647 4,431 3.8 45.3 8.6 3.7 1956 9,390 4,796 4,594 3.4 44.8 8.0 3.7 1957 9,690 4,942 4,748 3.2 41.4 8.5 3.3 1958 10,039 5,121 4.,918 3.6 1.7 7.6 3.4 1959 10,431 5,336 5,095 3.9 41.1 7.2 3.4 1960 10,792 5,525 5,267 3.5 39.5 7.0 3.3 1961 11,149 5,715 5,434 3.3 38.3 6.7 3.2 1962 11,512 5,902 5,610 3.3 37.L 6.4 3.1 1963 11,884 6,098 5,786 3.2 36.2 6.1 3.0 1964 12,257 6,295 5,962 3.1 34.5 5.7 2.9 1965 12,628 6,492 6,137 3.0 32.7 5.5 2.7 / Excluding Armed Forces and foreign nationals. / Per thousand of population. Source: Provincial Department of Civil Affairs "Household Registration". Table L Growth of Gross National Product 1953 - 19TT5 (million NT dollars) At current prices At constant prices of 1952 Index Link- Index Link Period GNP (1952 = 100) Index GNP (1952 = 100) Index 1953 721, 134.63 173773 17,434 110,71 110.71 1954 23,154 147.04 109.22 18,896 120.00 108.39 1955 27,885 177,08 120,3 20,314 129.00 107.50 1956 32,297 205,10 115.82 21,129 134.18 104.01 Average of the First Four-Year Plan 107.65 1957 37,986 241.23 117.61 22,596 143.49 106.94 1958 1,650 264.49 109.65 214,074 152.88 106.54 1959 48,675 309.11 116.87 25,864 164.25 107.44 1960 59,929 380.57 123.12 27,876 177.02 107.78 Average of the Second Four-Year Plan 107.18 1961 66,334 421.25 110.69 30,111 191.22 108.02 1962 72,375 459.61 109.11 32,021 203.35 106.34 1963 82,248 522.31 113.64 34,143 216.82 106.63 1963 1/ 67,290 75.17 2/ *.. 90,661 3/ 8.46 2/ 1964 T/ 102,492 100.00 7/ 117,42 102,492 7/ 100.00 T/ 113.05 Average of the Third Four-Year Than 108.51 1965 / 109,993 107.32 2/ 107.32 112,722 3/ 109.98 2/ 109.98 Average 1953 - 1965 107,95 5/ 1/ Beginning 1963 new series. 7'/ For new series index 1964 w 1000 "/ At constant prices of 1964. 77/ Preliminary estimates. 3/ Calculated on the basis of the revised series. Source: Monthly Statistics of the Republic of China, March 1966, and calculations by DGBAS. Table 5 Industrial Origin of National Income at Current Prices (million NT dollars) 1952 1956 1960 1961 1962 1963 19631/ 1961/ 196511g/ Lgriculture, forestry, hunting and fishing 4,595 8,557 16,390 16,993 17,262 18,076 18s844 23,510 24,177 L.ning and quarrying 273 598 1,096 1,209 1,406 1,471 1,489 1,559 1,840 fanufacturing 1,935 4,468 8,381 9,624 11,010 14,556 13,817 17,090 17,669 onstruction 634 1,338 2,221 2,501 2,539 2,772 2,773 3,154 3,648 aectricity, gas, water and sanitary services 88 242 647 879 1,083 1,162 1,165 1,475 1,579 Yansportation, storage and communication 591 1,110 2,050 2,711 2,751 2,970 2,970 3,470 3,998 Fholesale and retail trade 2,190 4,296 7,315 7,966 8,766 10,811 10,956 13,394 13,897 Waking, insurance and real estate 164 472 816 901 1,075 1,291 1,291 1,694 2,182 )welling ownership - - - - - - 4,767 5,209 5,661 lablic administration and national defense 1,489 3,202 5,671 6,548 7,229 7,756 8,562 9,787 10,615 ther services 1,091 1,763 3,426 4,274 5,368 5,882 3,653 4,501 5,272 batistical Discrepancy - - - - - - 303 - -- let domestic product at factor cost 13,050 26,046 48,013 53,606 58,489 66,747 70,590 84,843 90,538 let factor income from the rest of the world -3 -5 -5 -75 -122 -146 -146 _-1L -157 [ational income 13,047 26,041 48,008 53,531 58,367 66,601 70,444 84,686 90,381 epreciation ) 1,767 4,039 4,616 4,640 5,284 5,737 6,579 7,278 hdirect tax net of subsidies )42,700 _7,89 7,882 8,187 9,368 10,363 11'109 11,227 12.334 ross national product at market prices 15,747 32,297 59,929 66,334 72,375 82,248 87,290 102,,492 109a993 / New series, not comparable to preceding years. / Preliminary figures. ource: DGBAS. Table 6 Expenditure on Gross National Product at Current Market Prices (million NT dollars) 1952 1956 1960 1961 1962 1963 19631/ 1964/ 196591/ A., Consumption Expenditure 13 647 29,164 51 544 56 739 61 618 67 073 72 685 82 749 89 369 1. Private 10,9) 23,032 1U 588 66,763 689 E 5 70,1 2. Government 2,693 6,132 10,856 11,976 12,722 14,044 15,877 17,089 18,968 B. Gross Capital Formation 2 881 4858 12,989 14,608 15,249 15,861 15,226 19,248 24,468 1. Gross fixed capital formation 2,019 4,007 10,598 11,748 11,945 13,480 13,102 14,451 18,520 a) Private (1,107) (1,777) (5,L135) (5,746) (6,150) (7,299) (7,096) (8,635) (12,084) b) Public enterprises ( 532) (1,581) (2,937) (3,687) (3,368) (3,600) (4,225) (3,601) ( 4,062) c) General government ( 380) ( 649) (2,226) (2,315) (2,427) (2,581) (1,781) (2,215) ( 2,374) 2. Increase in stocks 868 851 2,391 2,860 3,304 2,381 2,124 4,797 5,948 C. Expenditure on Total Available Product (A + B) 16,534 34,022 64,533 71,347 76,867 82,934 87,911 101,997 113,837 D. Net Imports of Goods and Services 773 1,667 4,693 4,877 4,)05 475 475 - 390 3,687 E. Statistical Discrepancy - 11 - 53 94 - 61 35 . 65 262 - F. Expenditure on GDP (C,D+E) 15,750 32,302 59,934 66,409 72,497 82,394 87,436 102,649 110,150 G. Net Factor Income Payments from the rest of the world - 3 5 - 5 - 75 - 122 - 146 - 146 - 157 - 157 H. Expenditure on GNP (F + E) 15,747 32,297 59,929 66,334 72,375 82,248 87,290 102,492 109,993 I1 Revised new series. Preliminary figures. Source: DGBAS. i Tablo 7 Gross Fixed Capital Formation by industrial Use (million NT dollars) 192 1956 1960 1961 1962 1963 19631/ 19661/ 19651/ Agriculture, forestry and fisheries 566 872 1,908 1,212 2,128 2,301 2,290 2,606 2,714 Mining and quarrying 21 46 207 220 217 208 231 120 170 Manufacturing 341 974 2,428 2,670 2,966 3,089 2,863 4,299 5,h49 Construction 6 59 36 66 48 42 42 91 104 Electricity, gas and water supply 218 558 1,159 1,368 1,762 1,667 1,667 1,044 1,876 Transportation, storage and communication 311 464 2,021 2,301 1,866 2,130 1,996 2,237 2,836 Trade 171 214 385 401 537 722 722 967 1,285 Ownership of dwellings - - 1,413 1,274 1,252 1,887 1,887 1,424 1,864 Public administration 160 310 826 931 816 785 755 963 1,286 Others 225 510 215 305 353 650 649 700 936 Total 2,019 ,007 10,598 11,748 11,945 13,480 13,102 14,151 18,520 I/ New series. 2/ Preliminary figures. Source: DGBASo Table 8 Employment (age 12 and over) Personal Government End of: Total Agriculture Industry Commerce Transportation Services Professions Services Other (000 persons) 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 L5 1961 3,429 1,912 387 307 101 316 122 237 47 1962 3,504 1,936 404 310 106 324 130 250 44 1963 3,617 1,972 424 322 114 334 139 268 44 1964 3,710 2,010 439 329 117 341 146 286 42 1965 3,755 2,017 449 336 121 339 151 298 44 (percent) 1955 100.0 59.9 9.8 8.4 2.6 8.9 2.8 5.9 1.7 1956 100.0 59.9 9.9 8.4 2.6 8.9 2.9 5.9 1.5 1957 100.0 58.2 10.4 8.4 2.8 9.4 3.0 6.2 1.6 1958 100.0 57.1 10.9 8.7 2.8 9.5 3.1 6.4 1.5 1959 100.0 56.6 11.1 8.8 2.9 9.4 3.3 6.5 1.4 1960 100.0 56.1 11.3 8.9 3.0 9.3 3.4 6.7 1.3 1961 100.0 55.8 11.3 9.0 2.9 9.2 3.5 6.9 1.4 1962 100.0 55.3 11.5 8.9 3.0 9.2 3.7 7.1 1.3 1963 100.0 54.5 11.7 8.9 3.2 9.2 3.8 7.4 1.2 1964 100.0 54.2 11.8 8.9 3.2 9.2 3.9 7.7 1.1 1965 100.0 53.7 12.0 9.0 3.2 9.0 4.0 7.9 1.2 Source: Provincial Department of Civil Affairs "Household Regi3tration". Table 9 Indices of Production (1956 = 100) Agriculture Fisheries and Forestry I n d u s t r y General General Electricity Year Index Crops Livestock Fisheries Forestry Index 1/ Mining Manufacturing Gas and Water 1957 110 110 113 108 113 114 111 115 110 1958 120 115 128 119 140 122 120 123 120 1959 122 117 127 127 154 138 129 141 135 1960 122 116 122 133 155 157 145 160 153 1961 13 126 135 161 169 174 158 177 166 1962 136 126 143 167 170 196 169 202 189 1963 141 131 144 179 166 216 178 222 200 1964 155 142 162 193 201 272 192 285 236 1965 169 161 168 195 210 313 205 325 256 . Including building construction. Sourcer. Ministry of Economic Affairs. Table 10 Estimates of Energy Supply and Demand Actual Units Coal Equivalent (000 Tons) Item Unit 1960 1964 198 1960 1964 1968 Domestic Consumption 5,317.1 7,165.8 10,708.6 Imports 1,736.3 2,157.2 3,376.9 Production 4,283.6 5,597.5 7,674.7 Exports 702.8 588.9 343.C Doostic Consumption Coal (000 mt) 3,710.0 4,932.0 6,000.0 3,710.0 4,932.0 6,000.0 Crude Oil 1/ (000 kl) 930.4 1,212.0 2,266.7 1,288.4 1,678.2 3,138.5 Water Power (Gwh) 2,074.8 2,367.8 2,428.8 274.7 313.5 321.5 Natural Gas (Mil cu m) 25.4 170.0 896.7 35.2 235.1 1,241.6 Alochol (000 kl) 11.0 8.8 8.8 8.8 7.0 7.0 Total 5,317.1 7,165.8 10,708.6 Imoorts Crude Oil (000 kl) 1,254.0 1,558.0 2,438.92/ 1,736.3 2,157.2 3,376.9 Production Coal (000 mt) 3,962.0 5,028.0 6,000.0 3,962.0 5,028.0 6,000.0 Crude Oil (000 kl) 2.3 10.0 75.0 2.9 13.9 lo.6 Water Power (Gwh) 2,074.8 2,367.8 2,428.8 274.7 313.5 321.5 Natural Gas (Mil cu m) 25.4 170.0 896.7 35.2 235.1 1,241.6 Alonhol (000 kl) 11.0 8.8 8.8 8.8 7.0 7.0 Total 4,283.6 5,597.5 7,674.7 Exports Coal and Coke (000 mt) 252.0 96.0 - 252.0 96.0 - Petroleum Products (000 kl) 325.6 356.0 247.7 450.8 492.9 343.0 Total 702.8 588.9 343.0 1/ Crude oil equivalent of products. 2/ Including fuel oil and diesel oil. / Source of Forecast: The Survey of the Energy Economy of Taiway, 30 September, 1965. Source: Ministry of Economic Affairs. Table 11 Agricultural Area Total Index of Average Acre- Average Acre- Cultivated P a d d y L a n d Upland Total Area Multiple age per Farm age per Farm Year Area Total Double Crop Single Crop of Crops 1/ Cropping 2/ Family Worker (000 ha.) (000 ha.) (000 ha.) (000 ha.) (000 ha.) (000 ha.) (percent) (ha.) (ha.) 1955 873.0 532.7 332.7 200,0 340.3 1,495 171 1.19 0.48 1956 875.8 533.1 331.2 201.9 342.7 1,537 176 1.17 0.48 1957 873.3 533.1 334.5 198.6 340.1 1,563 179 1.15 0.48 1958 883.5 533.7 335.2 198.5 349.8 1,590 180 1.15 0.49 1959 877.7 528.8 332.4 196.4 349.0 1,594 182 1.12 0.47 1960 869.2 525.6 329.1 196.5 343.6 1,595 184 1.11 0.46 1961 871.8 528.1 330.6 197.5 343.6 1,620 186 1.09 0.46 1962 871.9 530.4 331.8 198.6 341.5 1,623 186 1.08 0.45 1963 872.2 528.7 329.3 199.4 343.5 1,592 183 1.06 0.44 1964 882.2 531.8 333.9 197.9 350.4 1,662 188 1.06 0.44 1965 889.6 536.8 337.5 199.3 352.8 1,685 189 1.05 0.44 Total area of all crops produced during the year. Percentage of total area of crops to total cropped area. Source: Provincial Department of Agriculture and Forestry "Taiwan Agricultural Yearbook". Joint Commission on Rural Reconstruction, Table 12 Production of Principal Agricultural Crops (thousand metric tons) Item 1952 1956 1960 1961 1962 1963 1964 1965 Rice (brown) 1,570 1,790 1,912 2,016 2,113 2,109 2,247 2,348 Sweet Potatoes 2,090 2,568 2,979 3,224 3,080 2,148 3,348 3,122 Wheat 17 27 46 44 42 19 20 23 Soybeans 15 26 53 54 53 53 58 66 Peanuts 60 82 102 105 95 91 116 126 Jute1/ 22 17 21 14 11 15 16 17 Tea 12 13 17 18 20 21 18 21 Bananas 107 59 1114 130 135 132 268 408 Pineapples 63 83 167 174 192 163 227 231 Citrus 28 35 53 55 67 79 102 111 Sugarcane 2/ 4,801 6,343 6,736 7,922 6,142 6,507 6,747 9,490 Mushrooms - - - 3 13 39 23 32 Citronella 148 99 73 80 91 133 124 132 Vegetables 619 671 803 814 841 911 974 1,238 Cassava 97 121 159 226 224 217 242 265 1/ Including ambari hemp. 2/ Crop years - production of cane. Source: Ministry of Economic Affairs. Provincial Department of Agriculture and Forestry. Table 13 Area Planted to Principal Crops (000 hectares) 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 Paddy 751 784 783 778 776 766 783 794 749 765 773 1/ 1* Sweet Potatoes 246 230 229 229 227 235 236 234 236 2616- 23- Vegetables 80 82 84 87 90 92 91 98 102 101 104 Peanuts 96 98 104 104 99 101 99 96 98 101 iChr Sugarcane 1/ 78 91 98 102 99 96 100 94 94 95 111 Soybeans 35 38 41 48 54 60 60 55 55 511 53-- Tea 1/ 43 43 45 45 45 46 45 36 36 35 35 Fibre Crops 2/ 24 26 21 27 34 31 24 23 25 26 2- Citronella 1/ 14 16 18 19 16 lb 14 14 18 23 23 Dananas / 11 10 11 14 13 13 15 15 15 18 27 Cassava 1/ 11 11 11 12 12 13 17 18 17 17 13 Citrusi1 5 6 6 7 7 8 9 10 11 13 15 Pineapple 1/ 6 6 7 8 9 10 10 11 10 11 12 Tobacco 6 8 10 9 8 8 8 8 8 10 6 weat 13 16 20 23 23 25 22 20 17 9 11 1/ Harvested area. 2/ Jute, sisal, cotton, flax. Source: Provincial Department of Agriculture and Forestry. Table l Timber Production (000 m3) 1/ Timber Sawn Raw Timber Production at Source Firewood Year Total Conifers Hardwoods L955 481 296 185 37 135 1956 493 247 246 30 161 1957 577 287 291 27 156 1958 719 296 423 17 152 1959 818 50 369 lb 174 1960 822 483 339 8 174 1961 898 583 315 7 179 1962 905 608 297 7 180 1963 879 618 261 3 194 1964 1,070 781 288 2 172 1965 1,117 779 338 2 199 1/ Excluding firewood but including timber sawn at source. Source: Taiwan Forestry Bureau. Table 15 Fisheries: Number of Vessels and Production Fishing Vesse 1 s Fish Production (000 metric tons) Number of Vessels Tonnage (000 tons) Year Total Powered Sampans Rafts Total Powered Sampans Total Deep-Seal/Inshore2/Coastal/Ponds 1955 24,369 2,758 8,083 13,528 54.0 41.4 12.6 180.6 36.4 51.3 47.2 45.7 1956 25,771 3,215 8,283 14,273 60.9 45.6 15.3 193.4 44.0 63.7 43.3 42.5 1957 25,207 3,438 7,672 14,097 65.4 51.1 14.3 208.1 52.2 71.6 38.5 45.9 1958 26,528 4,650 7,035 14,843 76.9 63.3 13.6 229.7 61.2 81.7 38.3 48.5 1959 26,446 4,946 6,266 15,234 80.7 71.6 9.1 246.3 76.4 91.2 32.2 46.5 1960 28,045 5,541 5,917 16,587 87.4 78.3 9.1 259.1 85.2 94.9 30.0 49.0 1961 27,474 5,816 5,652 16,006 93.2 83.6 9.6 312.4 106.1 117.4 31.5 57.4 1962 26,393 6,051 5,536 14,806 94.2 86.6 7.6 327.0 113.6 132.5 32.3 48.6 1963 26,537 6,475 5,416 14,646 100.1 91.5 8.6 350.7 119.9 144.0 36.9 50.0 1964 24,938 7,648 5,332 11,958 110.4 102.0 8.4 376.4 126.8 161.2 32.2 56.3 1965 24,608 8,167 4,871 11,570 124.9 117.9 7.0 381.7 135.9 160.9 30.7 54.2 1/ Fishing with powered vessels of more than 50 tons. Fishing using powered vessels of less than 50 tons. Fishing with unpowered vessels or without vessels. Source: Provincial Department of Agriculture and Forestry, Taiwan Fisheries Bureau. Table 16 Output of Principal Mining and Industrial Products Unit 1961 1962 1963 1964 1965 A. Mining 1. Coal 1,000 mt 4,237 4,554 4,810 5,023 5,054 2. Electrolytic Copper mt 2,251 2,490 1,81 1,605 1,916 3. Sulphur mt 5,824 7,582 8,073 9,317 6,881 b. Pyrite 1,000 mt 48.8 45.5 46.8 46.3 39.3 5. Gold Hectogram 5,480 7,473 9,863 5,493 9,999 6. Natural Gas Million m3 37 38 51 170 310 . Electricity Million Kwh 4,084 4,693 5,019 5,914 6,455 C.- Manufacturing 1. Food Sugar, centrifugal 1,000 mt 852 686 722 904 1, C00 Canned food 1,000 Standard Cases 3,116 3,775 4,085 6,525 8,93 (Pineapples) 1,000 Standard Cases 2,424 2,396 2,055 3,814 3,871 (Mushrooms) 1,000 Standard Cases 246 975 1,334 1,097 1,828 Yeast mt 8,312 7,843 4,370 3,792 4,577 Monosodium Glutamate mt 3,374 4,659 7,106 11,223 11,747 Tea 1,000 mt 15.0 15.9 21.0 20.0 25.6 Soybean Oil 1,000 mt 18.1 15.5 17.1 15.6 18.0 Wheat Flour 1,000 mt 189 209 219 247 261 Alcoholic Beverages 1,000 hl 1,029 1,031 1,015 1,116 1,226 2. Textiles Cotton Yarn 1,000 mt 248.9 52.4 48.1 50.5 60.0 Cotton Fabrics Million m 200 200 221 241 230 Synthetic Yarn 1,000 bales 33 34 33 64 79 Gunny Bags Million Pieces 14.6 16.5 14.9 12.4 13.5 Wool Yarn mt 1,188 1,592 1,964 2,939 2,950 Synthetic Fabrics Million m2 13.1 16.6 18.1 28.9 38.1 Shirts 1,000 dozens 1,039 1,358 2,061 3,942 2,552 Underwear 1,000 dozens 1,357 1,705 1,742 2,461 2,642 3. Non-Metallic Mineral Products Cement 1,000 mt 1,510 1,870 2,246 2,355 2,14 Sheet Glass 1,000 boxes 446 504 412 582 704 Glass products 1,000 mt 48.9 36.7 55.5 57.4 11_.0 Lime 1,000 mt 75.9 75.1 79.5 91.3 103.0 4. Petroleum and Petrochemicals Crude oil refining 1,000 kl 1,375 1,582 1,557 1,675 2,100 Gasoline 1,000 k1 313 318 328 345 357 Kerosene 1,000 k1 35.5 38.8 39.4 39.2 30.1 Diesel oil 1,000 k1 231 256 216 273 3bli Fuel oil 1,000 k1 464 569 612 626 931 Asphalt 1,000 mt 61 68 52 40 '-h Coke 1,000 mt 187 230 233 246 >256 (Tab!3 16 cont'd) Unit 1961 1962 1963 1964 1965 C- General Chemicals Refined salt 1,000 mt 51.6 50.1 58.0 91.7 92.1 Caustic Soda 1,000 mt 36.5 37.9 45.3 57.5 57.4 Soda Ash 1,000 mt 14.4 12.2 12.5 14.8 16.9 Sulphuric Acid 1,000 mt 101.3 116.0 162.7 202.0 289.1 Hydrochloric Acid 1,000 mt 40.0 52.7 56.4 79.4 67.9 Fertilizers: Calcium Cyanamide 1,000 mt 64.4 78.6 64.1 51.5 26.7 Calcium Superphosphate 1,000 mt 130 144 172 185 196 Urea 1,000 mt 44.5 75.4 76.0 137.3 185.0 Ammonium Sulphate 1,000 mt 29.3 70.5 111.4 223.0 279.9 Plastic Powder 1,000 mt 7.3 11.4 16.8 23.2 25.3 Plastic Products 1,000 mt 11.7 22.8 26.4 40.1 L3.9 Soap 1,000 mt 32.0 34.5 37.2 h0.6 39.7 Pharmaceuticals NT$ Million 276 357 450 512 6. Wood Products and Paper Plywood Million m2 18.6 26.3 31.2 66.9 78.8 Bagasse Board 1,000 pieces 3,303 3,488 2,735 3,318 3,27" Pulp 1,000 mt 22.2 25.4 31.9 36.2 38.0 Paper 1,000 mt 99 110 106 126 135 Paper Board 1,000 mt 25.7 28.4 31.8 43.8 50.3 7. Leather and Rubber Products Leather shoes 1,000 pairs 1,374 1,611 1,554 1,544 1,818 Rubber Boots 1,000 pairs 599 636 663 986 1,273 Rubber Canvas Shoes 1,000 pairs 3,146 3,604 3,910 4,356 3,727 Automobile Tires 1,000 pieces 57 111 143 312 437 Bicycle Tires 1,000 pieces 1,188 1,682 1,103 1,194 987 8. Metal Industries Pig iron 1,000 mt 52.8 63.4 53.6 61.8 72.0 Rods, bars and slabs 1,000 mt 185 182 215 236 260 Iron wires 1,000 mt 30.6 32.4 52.5 61.5 h3.5 Aluminum ingot 1,000 mt 9.0 11.0 11.9 19.4 18.9 Aluminum sheet 1,000 mt 4.7 6.2 5.7 8.1 9.2 Aluminum foil mt 733 740 846 757 1,197 Cast iron pipe 1,000 mt 14.0 16.7 33.5 36.4 38.8 General Machinery & parts 1,000 mt 54.5 60.1 67.8 91.8 82.5 Motors 1,000 Units 16.8 19.1 35.5 60.2 5C.5 Prime movers Sets 3,358 4,955 9,302 14,385 24,824 Water pumps 1,000 Sets 31.5 39.2 30.7 23.9 43.3 Sewing machines 1,000 Sets 37.1 38.8 48.2 91.3 79.5 Tillers Units 1,394 1,291 1,477 1,277 2,534 Transformers Sets 3,344 2,008 1,909 8,909 11,358 Insulated wire mt 1,1448 1,714 1,617 1,362 2,4689 Electric fans 1,000 Sets 188 207 185 158 137 Electric cookers 1,000 pieces 24.1 53.2 84.3 107.5 118.8 Household refrigerators Sets 123 1,170 8,843 21,959 3R,123 f( L (Table 16.conniuded) Unit 1961 1962 1963 196b 1965 Fluorescent Lamps 1,000 pieces 1,169 1,711 2,999 2,898 4,111 Ship building 1,000 mt 8.8 13.7 13.3 6.6 12.1 Motor vehicles Sets 1,008 1,752 1,291 1,797 3,261 Bicycles 1,000 Sets 27.3 26.8 23.7 22.7 23.7 Watt-hour meters 1,000 pieces 276.9 171.4 199.6 213.5 189.0 Transistor radios 1,000 pieces 20 30 170 650 Source: Ministry of Economic Affairs and CIECD. Table 17 Transportation 1952 1956 1960 1961 1962 1963 1964 1965 Taiwan Provincial Railwa' Track Length (000 km) 1.76 1.76 1.82 1.83 1.85 1.85 1.85 1.85 Passenger-Kilometers (million) 1,750 2,642 3,406 3,572 3,289 3,367 3,831 4,281 Ton-Kilometers (million) 1,158 1,648 1,913 2,001 1,918 1,977 2,179 2,232 Highways Length (000 km) 15.6 15.7 16.2 16.3 16.3 16.3 16.3 16.3 No. of motor vehicles 1 (000's) 10.7 16.8 48.7 56.8 61.8 68.6 81.1 105.6 Passenger-Kiloneters 2 (millinn)1,010 2,298 3,172 3,420 3,343 3,519 4,322 4,833 Ton-Kilometers million) 64 155 317 367 412 448 521 608 Ocean Traffic Tonnage of Ships (000's) Freighters 468.7 340.0 442.4 526.7 606.5 645.9 722.8 875.7 Mixed Service 48.7 50.8 37.4 44.8 44.7 36.7 36.7 39.1 Ton-Miles (million) 7,055 8,360 11,760 114,764 17,326 15,046 20,994 31,823 1/ Includes motorcycles. ./ Buses. Source: Taiwan Railway Administration. Provincial Department of Communications. Ministry of Communications. Table 18 Composition of Trade 1952 1956 1960 1961 1962 1963 1964 1965 (million U.S. dollars) A. Exports Agricultural Products 1/ 113.8 112.7 115.0 124.1 118.8 205.3 261.2 266.6 Industrial Products 2/ 5.7 17.4 54.9 89.9 119.9 152.2 201.9 221.4 Total 119. 130.1 1 27 .0 2 B. Imports Capital Goods 27.1 55.1 69.5 92.0 84.4 82.9 102.5 163.8 Raw Materials 153.5 155.1 158.8 193.6 211.4 225.6 264.9 348.2 Consumption Goods 26.4 18.0 23.9 38.5 31.7 28.3 43.0 43.4 Total 207.0 2 232.2 O321 327. 3T.7 1T7 5T (percent) A. Exports Agricultural Products 1/ 95.2 86.6 67.7 58.0 49.8 57.4 56.4 54.6 Industrial Products 2/ 4.8 13.4 32.3 42.0 50.2 42.6 43.6 45.4 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 B. Imports Capital Goods 13.1 24.1 27.5 28.4 25.7 24.6 25.0 29.5 Raw Materials 74.2 68.0 63.0 59.7 64.6 67.0 64.5 62.7 Consumption Goods 12.7 7.9 9.5 11.9 9.7 8.4 10.5 7.8 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 1/ Including processed agricultural products. 2/ Including all non-agricultural products. Source: Bank of Taiwan. CIECD. Table 19 Imports by Countries of Origin 1956 1960 1961 1962 1963 1964 1965 (million U.S. dollars) U.S.A. 84.4 102.9 139.8 1h1.7 150.9 139.8 190.4 Japan 79.1 87.2 104.0 106.9 97.1 10.4 206.1 Fed. Republic of Germany 6.7 11.3 12.0 12.2 10.7 14.3 21.5 Philippines 1.9 2.5 4.9 7.0 10.5 10.4 13.7 United Kingdom 6.2 3.9 6.7 5.3 7.4 10.0 11.9 Australia 1.7 3., 6.0 6.0 6.3 9.5 12.3 Kuwait - 7.3 1.1 4.9 9.7 9.6 10.2 Hong Kong 3.2 5.1 3.7 4.6 5.4 6.5 7.8 Singapore and Malaysia 4.0 4.6 5.9 5.8 6.7 8.0 11.3 Saudi Arabia - 2.0 4.6 3.1 2.2 4.0 4.4 Iraq 8.4 - 0.5 0.2 0.3 1.7 4.2 Other 32.7 22.0 34.9 29.8 29.6 56.2 61.5 Total 228.2 252.2 324.1 327.5 336.8 1O0.4 555.3 (percent) U.S.A. 37.0 40.8 43.2 43.3 U1.8 34.1 34.3 Japan 34.7 34.6 32.1 32.7 28.8 34.2 37.1 Fed. Republic of Germany 2.9 4.5 3.7 3.7 3.2 3.5 3.9 Philippines 0.8 1.0 1.5 2.1 3.1 2.5 2.5 United Kingdom 2.7 1.6 2.1 1.6 2.2 2.4 2.1 Australia 0.8 1.3 1.9 1.8 1.9 2.3 2.2 Kuwait - 2.9 0.3 1.5 2.9 2.3 1.8 Aong Kong 1.4 2.0 1.1 1.4 1.6 1.6 1.4 Singapore and Malaysia 1.7 1.8 1.8 1.8 2.0 1.9 2.0 Saudi Arabia - 0.8 1.4 1.0 0.6 1.0 0.8 Ir aq 3.7 - 0.1 0.1 0.1 0.4 0.8 Other 1L.3 8.7 10.8 9.1 8.8 13.8 11.1 sotal 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: Foreign Exchange and Trade Commission. Table 20 Exports by Countries of Destination 1956 1960 1961 1962 1963 1964 1965 (million U.S. dollars) Japan 46.1 63.5 60.9 57.9 118.4 1LO.1 151.6 U.S.A. 6.3 21.2 45.3 58.6 58.2 84.0 97.7 Vietnam 2.7 3.2 12.0 22.1 33.0 38.2 44.5 Hong Kong 9.4 19.6 24.9 23.6 28.7 33.1 28.? Iran 13.2 9.9 3.3 3.4 4.8 21.2 10.1 Singapore and Malaysia 12.6 12.7 9.4 9.0 20.3 20.6 17.2 Federal Republic of Germany 2.4 4.0 5.9 11.2 14.3 18.1 31.6 Thailand 2.2 3.7 9.3 10.9 11.1 15.7 16.9 Republic of Korea 6.8 7.1 6.0 7.0 17.1 6. 6. United Kingdom 2.9 2.8 6.3 2.0 2.6 5.1 4.3 Ryukyus 0.5 2.8 2.8 2.9 4.0 4.3 4.3 'ndia 4.9 0.1 0.2 0.2 0.1 0.3 0.1 Other 20.1 19.3 27.7 29.9 44.9 76.0 75.1. Total 130.1 169.9 214.0 238.7 357.5 463.1 488.0 (percent) Japan 35.5 37.4 28.5 24.3 33.1 30.2 31.1 U,S.A. 4.8 12.5 21.2 24.6 16.3 18.1 20.0 Vietnam 2.1 1.9 5.6 9.3 9.2 8.2 9.3 Hong Kong 7.2 11.5 11.6 9.9 8.0 7.2 5.8 (ran 10.2 5.8 1.5 1.4 1.4 4.6 2.1 jingapore and Malaysia 9.7 7.5 4.4 3.8 5.7 4.5 3.5 Federal Republic of Germany 1.8 2.3 2.8 1.7 1.0 3.9 Thailand 1.7 2.2 4.4 4.6 3.1 3.4 3.4 Republic of Korea 5.3 4.2 2.8 2.9 4.8 1.4 1.3 United Kingdom 2.2 1.6 2.9 0.8 0.7 1.1 0.9 Ryukyus 0.4 1.7 1.3 1.2 1.1 0.9 0.9 India 3.7 0.1 0.1 0.1 - 0.1 - Other 15.4 11.3 12.9 12.4 12.6 16.4 15.6 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 3ource: Foreign Exchange and Trade Commission. Table 21 Value of Principal Imports (million U.S. dollars) 1952 1956 1960 1961 1962 1963 1964 1965 Ores, Metals and Products 16.8 28.7 36.3 44.2 47.5 42.6 62.9 90.6 Machinery and Tools 13.1 35.1 35.7 48.8 51.2 49.o 53.1 84.I1 Raw Cotton 13.2 19.8 20.2 29.8 35.2 26.5 33.2 39.L Wool, Rayon and Products 3.3 7.1 7.8 12.1 15.8 15.4 28.4 30.6 Vehicles, Vessels and Parts 5.7 11.0 20.9 27.1 16.4 18.3 27.3 4O.5 Wheat,, Cereals and Flour 13.7 14.1 17.0 19.9 22.9 29.4 22.5 36.0 Pulses 17.4 9.5 17.0 13.9 10.5 20.7 19.8 18.6 Crude and Fuel Oil 10.0 18.2 11.1 14.5 18.7 20.5 19.1 24.9 Chemicals 2.3 6.8 7.7 10.0 10.3 11.9 15.9 22.3 Ylectrical Materials 6.3 6.2 7.8 10.0 10.3 9.2 13.9 26.9 Pharmaceuticals 8.7 6.7 7.2 12.7 12.7 10.0 13.6 15.6 Forestry Products 1.5 3.3 2.7 4.9 7.8 12.6 12.5 18.5 Oil, Grease and Wax 5.7 6.6 5.6 6.9 8.0 7.5 9.7 10.3 Chemical Fertilizers 35.5 21.2 15.6 17.1 11.5 15.6 9.9 16.2 Rubber and Products 3.8 4.7 4.8 4.8 4.3 3.7 5.7 6.5 Textile Products 17.9 0.2 1.0 0.6 0.8 0.2 0.5 1.0 Other 32.1 29.0 33.8 46.8 43.9 43.7 62.4 72.3 Total 207.0 228.2 252.2 324.1 327.5 336.8 410.4 555.3 hdjusted to Balance of Payments Basis 1/ 208.3 222.1 286.5 330.3 341.0 359.8 14h7.4 573.6 1/ C.I.F. lource: Foreign Exchange and Trade Commission. Central Bank of China. Table 22 Value of Principal Exports (million U.S. dollars) 1952 1956 1960 1961 1962 1963 1964 1965 A. Agricultural Products 113.8 112.7 115.0 124.1 118.8 205o3 261.2 266 6 Sugar 6_97 _777 W-7 -4. h _1-l 9.7 10--7 1357 - I Bananas 6.6 3.1 6.9 10.7 8.0 8.7 33.3 55.3 Rice 23.2 12.8 4.3 10.0 7.4 23.4 18.0 43.0 Canned Mushrooms - - 0.2 1.8 8.5 16.2 15.8 20.8 Canned Pineapples 2.0 6.1 8.5 12.1 10.9 11.6 13.9 19.4 Canned Asparagus - - - - - - 0.4 11.0 Tea 5.7 5.1 6.3 8.9 7.9 8.1 8.4 9.7 Citronella Oil 2.4 5.1 3.4 3.8 5.2 6.9 4.9 5.3 Others 4.2 4.4 11.0 15.7 21.3 24.4 31.1 34.1 B. Forest Products 0.2 1.5 8.0 14.8 21.6 31.1 46.8 49.6 Plywood - 0.2 2.7 7.3 12.1 T8. . Other Timber Products 0.1 0.6 2.8 3.8 5.6 9.2 13.6 15.7 Paper and Pulp 0.1 0.7 2.5 3.7 3.9 3.4 5.0 5.4 C. Mineral and Industrial Products 5.5 15.9 46.9 75.1 98.3 121.1 155.1 171.8 Textiles, Fibres and Products - 3.1 21.2 277 3 .1 _7. _1.1 _7.3 Metals and Machinery 0.7 4.4 6.2 12.1 13.3 22,0 27.6 38.5 Chemicals 0.2 1.1 6.8 15.8 20.6 19.3 23.0 28.8 Cement 0.3 - 1.1 5.6 9.3 14.7 15.4 9.3 Other Building Materials - - 1.2 1.3 2.1 2.4 2.3 3.4 Salt 2.5 2.3 2.5 2.4 1.9 2.3 3.6 2.7 Coal and Asphalt 0.2 2.3 4.1 3.9 3.4 2.9 2.4 1.2 Others 1.6 2.7 3.8 6.2 9.6 13.1 19.7 22.6 Grand Total 119.5 130.1 169.9 214.0 238.7 357.5 463.1 488.0 Adjusted to Balance of Payments Basis 119.5 124.1 164.0 196.2 218.2 331.7 434.5 450.8 Source: Foreign Exchange and Trade Commission. Central Bank of China. fabie 2j Exports of Major Commodities to Principal Countries of Destination in 1965 (million U.S. dollars) Exports to the Fed. Exports 7 countries as Viet- Hong Rep. of Thai- Total to the 7 $ of Total Japan USA nam Kong Germany land Korea Exports countries Exports Sugar 25.50 9.00 1.46 0.52 - 0.13 2.24 67.96 38.85 57.4 Rice 42.96 - - - - - - 42.95 42.95 100.0 Tea 0.56 1.91 - 0.67 0.17 0.37 - 9.72 3.68 37.9 Salt 2.19 0.01 - 0.04 - - 0.13 2.72 2.37 87.1 Citronella Oil 1.12 2.51 0.03 0.01 0.54 - - 5.32 4.21 79.0 Bananas 54.93 - - 0.03 - - - 55.27 54.96 99.4 Coal and Asphalt - - 0.05 0.10 - 0.06 0.18 1.17 0.39 33.3 Canned Pineapple 2.06 8.06 - 0.10 5.86 - - 19.38 16.08 83.0 Cement and Building Materials 0.01 1.52 5.16 2.28 0.06 0.54 - 12.78 9.57 74.9 Canphor 0.13 0.36 0.03 0.03 0.03 - - 0.91 0.58 63.7 Paper and Paperpulp 0.01 0.01 2.05 0.44 - 0.83 0.87 5.35 4.21 78.8 Chemicals, Pharmaceuticals, Cosmetics 1.20 5.08 6.52 2.52 0.14 1.51 0.88 28.79 17.85 62.0 Ores, Metals and Machinery 0.11 2.83 18.79 2.25 0.25 5.01 1.31 38.52 30.55 79.3 Feathers 0.25 1.21 - 0.01 0.56 0.01 - 2.19 2.04 91.6 Hat Lodies 0.12 0.66 - - 0.05 - - 1.36 0.83 61.0 Bamboo Shoots 2.25 0.77 - 0.15 0.03 - - 3.50 3.20 91.5 Rice Paper and Handicrafts 0.84 1.55 0.01 0.10 0.12 0.02 - 3.33 2.64 79.3 Canned Mushrooms 0.05 6.27 - 0.22 11.19 0.05 - 20.80 17.78 85.5 Hard Fibres 0.67 0.24 0.01 0.13 0.06 0.42 0.25 2.53 1.78 70.3 Fresh Fruit 0.82 0.03 0.01 1.11 - - - 3.27 1.97 60.3 Chinese Preserved Fruits 1.64 3.52 0.10 0.33 0.42 0.04 - 7.41 6.05 81.7 Vegetables 3.25 0.45 0.08 0.90 9.38 0.30 - 16.79 14.36 85.5 Chinese Medicine 0.06 0.04 0.06 0.12 - 0.07 0.03 0.42 0.38 90.5 Tinber Products 9.36 24.19 0.24 2.89 0.01 0.01 0.35 44.17 37.05 84.0 Bamboo,Rattan and Products 0.08 1.13 - 0.01 0.09 0.03 - 1.73 1.34 77.5 Cigarettes and Wines 0.02 - 0.02 0.09 1.61 0.01 - 1.95 1.75 89.8 Sea Products 0.75 1.14 - 0.02 - - - 2.00 1.91 95.5 Other Agricultural Products 0.20 1.16 0.01 1.50 0.05 0.10 - 5.34 3.02 57.2 Textile Fibres and Manufactures 0.15 20.13 8.93 10.08 0.55 6.12 0.21 65.27 46.17 70.8 Others 0.29 3.90 0.98 1.57 0.46 1.23 - 15.07 8.43 55.9 Total 151.63 97,68 14.21 28.21 31.62 16.86 6.44 687.96 376.95 77.3 Source: Foreign Exchange and Trade Commission. Table 24 Balance of Paments (mIllion U.S. dollars) 1960 1961 1962 1963 1964 1965 A. Goods and Services -130.0 -130.7 -126.1 -15.5 4.9 -10J4 I. Trade Balance -123.2 -133.9 -123.1 -24.4 -12.5 -123.2 1. Exports f.o.b. 164.0 196.2 218.2 331.7 434.5 450.8 Sgr1 71 717 -T-9 106.0 135.4T 7T- Value at 1958 prices (87.8) (66.6) (68.0) (66,8) (86.7) (76.7) Difference between current value and value at 1958 prices (-13.4) (-5.5) (-18.4) (39.2) (48.7) (-8.7) Rice 1/ 4.3 10.1 7.4 23.4 18.0 43,0 Other edible agricultural products 1 28.2 44.2 46.8 61.1 93.0 125.3 Textiles and textile manufactures 17 21.1 27.8 38.1 44.4 61.1 65.3 Wood and wood manufactures j 5.5 11.1 17.7 27.7 41.8 44.2 Other exports 1/ 36.4 59.7 79.0 94.9 113.8 142.1 Adjustment to customs figures -.9 -17.8 -20.4 -25.8 v28.6 -37.2 2. Imports c.i.f. 286-5 -330.3 -341.0 -359.8 -b47.h -573.6 Commercial imports -l88.h -20.9 -22F.7 -282.8 -32.9 -h92.7 U. S. aid imports - 97.1 -120.7 - 97.8 - 89.6 - 53.3 - 67.C Adjustment for smuggled goods and other . 1.0 - 0.7 - 14.5 12.6 - 11.2 14.0 3. Non-monetary gold - 0.7 0.2 - 0.3 3.7 0.4 - 0.4 II. Net Services - 6.8 3.2 - 3.0 8.9 17.4 21.8 Freight and merchandise insurance 8.8 10.1 10d 23.8 29.4 Other transportation W 6.2 - 8.1 - 10.5 - 3.3 . 8.0 - 6.8 Government, n.i.e. M 8.0 1.4 1.3 3.5 3.0 2.5 Other services - 1.4 0.1 - 3,9 - 2.1 - 1.4 - 3.3 (continued) (Table 24 cont'd) 1960 1961 1962 1963 1964 1965 B. Transfer Payments 88.3 98.4 54.8 44.7 20.2 32.9 1. Private 5.5 14.7 14.6 14.1 12.1 15.2 2. Central government 82.8 83.7 40.2 30,6 8.1 17.7 U.S. grants (84.8) (86.1) (42.4) (36.6) (16.7) (18.4) Other (-2.0) (,2.4) (-2.2) (-6.0) (-8.6) (,0.7) Balance on Current Account (A + B) -41.7 -32.3 -71.3 29.2 25.1 -6e. C. Capital Account 61.8 52.5 56.7 69.3 48.2 48.3 1. Foreign and overseas Chinese investment 5.8 9.5 9.0 18.3 15.6 7.6 2. Other private long-term, net 10.9 6.3 -4.6 -5.2 -2.9 13.6 Loans received, net (10.9) (6.3) (-4.6) (,4.6) (-2.0) (13.9) Import prepayments ( - ) ( - ) ( ) (-0.6) (-0.9) (-c.3) 3. Other private short-term, net 26.5 17,2 14.8 20.1 18.9 -5.0 Trade credits, net (11.8) (-0.2) (21.9) (15.2) (11.1) (-2.6) Loans received, net ( 5.4) ( 7.8) (-8.0) ( 1.0) (-1.3) (-3.2) Other assets, net ( 9.3) ( 9.6) ( 0.9) ( 3.9) ( 9.1) ( 0.8) h. Local government capital, net 1.7 4.9 6.2 7.1 1.2 -0.7 5. Central government capital, net 16.9 14.6 31.3 29.0 15.4 32.8 Loans received, net ( 9.6) (144) (15.2) (30.7) (22.2) ( 4o.7) U.S. government holdings of N.T. dollars ( 6.5) (11.0) (14.4) ( 2.7) (-3.1) (-13.9) Accounts with IBRD and IDA (0.5) (-0.4) (-0.4) (-0.4) (-0.,9) ( 1.5) Import prepayments ( ) ( - ) (-3,3) (-3.0) (-2.8) 7.5) Other assets 0.3) (-10.)0) ( -) ( - ) (continued) (Table 24 concluded) 1960 1961 1962 1963 196h 1965 D. Monetary Movements -22.5 -8.3 17.7 -105.0 -65.6 11.5 1. Commercial bank's assets, net (increase -) 0.1 -75.6 18.3 - 54.2 37.5 19.3 2. Central bank liabilities -22.4 - - 3. Central bank claims (increase -) - 0.2 59.9 - 0.6 - 43.3 -98.8 - 7.8 4. Monetary gold (increase -) - - 2.6 - - 7.5 , 4.3 - E. Net Errors and Omissions 2.4 - 1.9 - 3.1 6.5 - 7.7 8.7 1 Exchange Record figures Source: International Monetary Fund. Central Bank of China. Table 25 Foreign Assistance -- U. S. AID (million U. S. do1lars, Total 1955- 1956- 1957- 1958- 1959- 1960- 1961- 1962- 1963- 1964- 1965- 1951-1966 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1. General Economic Aid A. Defense Support or Development Loan Obligated 864.6 78.7 77.0 53.3 62.2 68.2 45.7 4.2 19.8 68.9 - - Arrivals 819.7 78.7 77.0 53.3 62.2 68.2 45.7 3.1 19.8 25.0 - - B. Technical Coop. or Development Grant Obligated 30.5 3.3 3.4 3.5 2.6 2.5 2.0 2.8 1.8 1.7 0.4 - Arrivals 30.3 3.3 3.4 3.5 2.6 2.5 2.0 2.8 1.8 1.6 0.4 - C. Direct Force Support Obligated 147.7 10.0 6.7 7.8 6.4 3.8 2.4 - - - - - Arrivals 147.7 10.0 6.7 7.8 6.4 3.8 2.4 - - - - - D. Total Obligated 1042.8 92.0 87.0 64.7 71.2 74.5 50.1 7.0 21.6 70.6 0.4 - Arrivals 997.7 92.0 87.0 64.7 71.2 74.5 50.1 5.9 21.6 26.6 0.4 - 2. PL480 Surpluses Obligated 351.8 9.6 21.1 16.9 27.1 8.8 28.0 60.9 98.5 31.0 44.1 2.3 Arrivals 310.9 9.6 21.1 16.9 27.1 6.4 28.0 57.3 93.3 22.6 22.7 2.3 3. Development Loan Fund Obligated 66.9 - - - 30.6 19.7 16.7 - - - - - Arrivals 63.9 - - - 30.5 17.2 16.2 - - - - - L. Total Obligated 1461.5 101.6 108.1 81.6 128.9 103.0 9.8 67.9 120.1 101.6 44.5 2.3 Arrivals 1372.4 101.6 108.1 81.6 128.9 98,1 94.2 63.2 114.9 49.2 23,1 2,3 Balance 89.1 - - 4.9 0.6 4,7 5.2 5214 21.4 - Source: CIECD Table 26 Gold and Foreign Exchange Reserves (million U.S. dollars - end of period) June 1960 1961 1962 1963 1964 1965 1966 Central Bank and official 117 136 114 227 297 300 327 Gold 41 43 43 50 55 55 5 Foreign exchange 76 93 71 177 242 245 272 Commercial banks 10 13 8 19 25 17 18 Total 127 149 122 246 322 317 365 Gold and Foreign Exchange Reserves as percent of imports 1/ in correspond- ing years 43 65 36 68 73 55 58 1/ Imports, c.i.f., as shown in the balance of payments. Source: IMF - International Financial Statistics. Table 27 Summary of Private Overseas Investment by Years (In US$ or US$ equivalent) As of December 31, 1965 E q u i t y L o a n Approved Overseas Chinese Foreign Sub-total Foreign Total Year, Approved Arrived Approved Arrived Approved Arrived Approved Arrived Approved Arrived 1952 1,218,088 816,032 - 1,218,088 816,032 - - 1,218,088 816,032 1953 1,692,046 1,729,531 159,744 159,744 1,851,790 1,889,275 1,881,600 1,881,600 3,733,390 3,770,875 1954 134,999 67,458 70,13 70,134 205,133 137,592 2,000,000 2,000,000 2,205,133 2,137,592 1955 34,960 12,488 374,739 374,739 409,699 387,227 4,136,600 4,136,600 4,546,299 4,523,827 1956 2,736,952 1,935,575 60,000 60,000 2,796,952 1,995,575 949,494 949,494 3,746,446 2,945,069 1957 2,395,455 1,445,230 49,057 49,057 2,444,512 1,494,287 - 2,444,512 1,494,287 1958 2,351,209 1,521,817 563,926 563,926 2,915,135 2,085,743 957,096 957,096 3,872,231 3,042,839 1959 641,957 292,369 201,975 168,638 843,932 461,007 10,000 10,000 853,932 471,007 1960 987,337 938,981 6,492,302 4,686,046 7,479,639 5,625,027 14,166,044 14,166,044 21,645,683 19,791,071 1961 9,385,462 4,091,957 1,448,330 1,347,687 10,833,792 5,439,644 200,000 200,000 11,033,792 5,639,644 1962 1,693,818 507,190 4,504,101 4,339,265 6,197,919 4,846,455 339,750 339,750 6,537,669 5,186,205 1963 10,336,414 5,722,834 4,319,707 3,893,695 14,656,121 9,616,529 5,661,400 3,t93,574 20,317,521 12,710,103 1964 10,458,250 2,152,918 3,928,412 1,303,254 14,386,662 3,456,172 9,121,412 650,ooo 23,508,074 4,106,172 1965 8,358,156 738,330 14,666,655 4,597,719 23,024,811 5,336,049 23,252,235 - 46,277,046 5,336,049 Total 52,425,103 21,972,710 36,839,082 21,613,904 89,264,185 43,586,614 62,675,631 28,384,158 151,939,816 71,970,772 Source: Industrial Dev3lopment and Investment Center, CiECD. Table 28 Consolidated Budget of all Levels of Government (million NT dollars) 961 = July 1- 1960 - June 30, 1961, FY1961 FY1962 FY1963 FY1964 FY1965 FY1966-1/ FY1967Z2/ A. Revenues 12,158 12,837 13,648 16,521 20,146 20,621 21,480 1. Taxes 7,349 7,401 8,372 9,957 11,973 12,910 13,1453 (1) Direct Taxes 1,909 2,046 2,223 2,721 3,196 3,321 3,501 (2) Indirect Taxes 4,408 14,548 5,379 6,341 7,700 8,378 9,195 (3) Defense Surtax 1,032 807 770 895 1,077 1,211 757 2. Revenue from Tobacco and Wine Monopoly 2,286 2,691 2,516 2,846 3,276 3,505 3,579 3. Profits of Public Enterprises and Business Revenues 1,035 1,1457 1,090 2,183 3,109 2,032 1,819 4. Other Revenues from Property 187 194 406 424 465 572 691 5. Fees 350 349 416 516 571 615 634 6. Fines and Indemnities 92 111 130 1-45 197 167 147 7. Contributions and Donations 28 70 62 51 41 46 34 8. Others 831 564 656 399 514 774 1,123 B. Expenditures 14,068 15,414 16,457 18,657 21,917 24,189 25,545 1, Defense and Administration 3,399 8,815 9,524 10,803 12,106 13,459 13,101 2. Internal Security 612 704 764 828 888 979 1,103 3. Economic Affairs and Reconstruction 651 727 800 1,018 1,046 942 921 4. Transportation and Communications 672 579 743 743 696 1,074 1,115 5. Education and Culture 1,916 2,117 2,224 2,411 2,6C0 3,378 3,882 6. Social and Relief Affairs 598 778 822 895 939 1,069 2,161 7. Interest on Public Debt 380 562 399 673 969 794 1,572 8. Investments in Public Enterprises and Public Funds 3465 680 759 770 1,740 1,216 918 9, Other. 376 )452 422 516 853 1,278 772 (continued) (Table 28 concluded) FY1961 FY1962 FY1963 FY1964 FY1965 FY19661/ FY19672/ C. Deficit -1,910 -2,577 -2,809 -2,136 -1,771 -3,568 -4,065 D. Financing of Deficit 1,868 2,203 2,193 2,383 2,331 ,434 3,722 1. Sales of Property 178 651 374 625 354 429 124 2. Bond Issues 400 500 600 800 1,200 2,100 2,800 3. Loans - 160 48 17 265 318 4. Transfers from Counterpart 1,290 1,052 1,060 91) 760 640 480 E. Remaining Surplus or Deficit (+ Surplus, - Deficit) 42 -374 616 +247 +56D -134 -343 1/ Budget figures including Central Government's supplementary budget not yet approved by Legislative Yuan, but excluding supplementary budget of Taiwan Provincial Government and Local Governments. 2/ Budget figures not including supplementary budgets. Total volume may increase by at least 10%. 3/ Including contributions to international organizations. Source: Ministry of Finance. Table 29 Actual Revenues from Taxes and Monopolies FY1961 - July 1, 1960 - June 30, 1961 (million NT dollars) FY FY FY FY FY FY FY 2 1961 1962 1963 196k 1965 19661 1967- "entral Government Taxes 5,001 0 4,751 576 6,663 8 Eg3 8,835 8,977 Cus-oms Duties 1,532 1,641 1,871 2,245 2,897 3,17h 3,103 Ucn-nodity Tax 1,147 1,017 1,455 1,789 2,073 2,266 2,556 Defense Surtax 1,032 807 770 895 1,077 1,211 757 Income Tax 767 789 759 1,125 1,361 1,432 1,584 Stamp Tax 368 343 372 436 510 51 600 Sa3t Tax 1-46 117 138 153 156 155 161 Tax on Securities Transactions 0 - - - 0 40 10 Estate Tax 7 6 9 18 17 1b 15 Mininxg Lot Tax 2 1 2 2 2 2 2 Share in Surtax on Power Rate - - - - - - 189 Provincial Taxes 1,342 1,455 1,668 1,763 2,141 2,437 2,684 Land Tax 363 437 578 560 619 597 ) Land Value Tax 81 74 74 78 227 478 ( 1,027 Lapd Value Added Tax 154 112 104 82 25 13 ) Business Tax 431 477 528 587 696 748 848 License Tax 97 117 123 137 155 157 183 Harbor Dues 216 237 259 319 418 444 500 Shane in Surtax on Power Rate - - - - - - 126 qsien and N)nicipal Taxes 1,006 1,195 1,328 1,531 1,7L9 1,638 1,792 Slaughter Tax 338 388 472 485 555 610 63L Household Tax 270 316 362 411 466 380 411 House Tax 202 240 259 308 336 314 361 Amusement Tax 93 137 118 140 176 178 207 Deeds Tax 63 71 76 136 142 90 100 Feast Tax 40 44 41 51 62 66 79 Total Taxes 7,349 7,1401 8372 9>957 11,973 12,910 13,453 Tobacco and Wine MopLLy Revenue 2,286 2,691 2,516 2,846 37 305 3579 Total Revenue 9Z635 10,092 10,888 12,803 15,248 16,415 17,032 1/ Budget figures including Central Government's supplementary budget not yet approved by Legislative Yuan, but excluding supplementary budget of Taiwan Provincial Government and local governments. 2/ Budget figures not including supplementary budgets. Total volume may increase by at least 101o. Source: Ministry of Finance. Table 30 Internal Debt of Central Government (million NT dollars) End of Total Held by Held by FY Outstanding Other Governments Private Sector 1959/60 655.7 100.0 555.7 1960/61 780.7 100.0 680.7 1961/62 833.6 251.6 582.0 1962/63 1,215.8 731.6 484.2 1963/64 1,545.3 896.0 649.3 1964/65 2,065.1 1,190.0 875.1 Source: Ninistry of Finance. Note: Provincial Government and local governments do not float loans in the market, but obtain credits from the banks. Table 31 Consolidated Statement of Conditions of the Monetary System 1 (million NT dollars - end of year) 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 Assets Net Foreign Assets 903 1,032 2,682 2,487 3,684 5,182 4,480 8,681 11,301 10,823 Claims on Government 2,156 2,467 2,394 2,671 3,246 4,467 4,558 5,305 6,133 7,159 Claims on Government Enterprises 2,717 3,127 3,613 4,022 4,609 5,819 7,472 6,433 7,058 7,621 Claims on Private Sector 2,405 3,415 4,681 6,425 7,350 10,245 13,223 16,079 20,593 26,356 Total 8,181 10,041 13,370 15,605 18,889 25,713 29,733 36,498 45,085 51,959 Liabilities Money Supply 3,229 3,801 5,129 5,570 6,110 7,335 7,923 10,198 13,431 14,845 Time and Savings Deposits 1,417 1,982 3,332 4,515 5,933 9,501 12,115 15,484 19,698 23,259 Demand Deposits of Government Agencies 1,132 1,435 1,384 1,566 1,768 1,800 2,244 2,64" 2,602 4,150 Foreign Currency Deposits of Government Agencies 44 38 111 87 92 271 358 296 292 320 Treasury Deposits 146 279 292 398 280 314 378 363 750 820 U.S. AID Deposits 1,485 1,651 1,553 1,835 2,624 3,404 3,955 4,711 5,614 5,606 Foreign Ebcchange Certificates 24 7 126 222 457 208 202 1 - Unclassified Liabilities and Capital Account (net) 704 848 1,443 1,412 1,625 2,880 2,558 2,801 2,698 2,959 Total 8,181 10,041 13,370 15,605 18,889 25,713 29,733 36,498 45,085 51,959 If Including all banks, credit cooperative associations, mutual loans and savings companies, the credit departments of farmers' associations, and the Directorate General of Postal Remittances and Savings Bank. Squrce: Central Bank of China. Table 32 Factors Affecting the Money Supply (million NT dollars - end of year) Factors 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1. Foreign Transactions Net foreign assets 845 499 876 903 1,032 2,682 2,487 3,684 5,182 4,480 8,681 11,301 10,823 Foreign exchange settlement certificates 1 13 30 24 7 126 222 457 208 202 1 - - 2. Public Finance Claims on governent 1,121 1,621 1,884 2,156 2,467 2,394 2,671 3,246 4,467 4,558 5,305 6,133 7,159 General Treasury receipt deposits 89 151 136 146 279 292 398 280 314 378 363 750 820 Deposits of government agencies 514 673 895 1,176 1,473 1,495 1,653 1,860 2,071 2,602 2,940 2,894 4,470 3. U.S. AID U.S. AID deposits 637 630 1,405 1,485 1,651 1,553 1,835 2,624 3,404 3,955 4,711 5,614 5,606 4. General Banking Operations CiRi on goverment enterprises 1,431 1,711 2,113 2,717 3,127 3,613 4,022 4,609 5,819 7,472 6,433 7,058 7,621 Cisi on private enterprises and others 815 1,292 2,082 2,405 3,415 4,681 6,425 7,350 10,245 13,223 16,079 20,593 26,356 Time, savings and foreign currency deposits 822 1,070 1,290 1,417 1,982 3,332 4,515 5,933 9,501 12,115 15,484 19,698 23,259 5. Capital and Unclassified Accounts (Net) 466 458 644 704 848 1,443 1,421 1,625 2,880 2,558 2,801 2,698 2,959 6. Money Suppy 1,683 2,128 2,555 3,229 3,801 5,129 5,570 6,110 7,335 7,923 10,198 13,431 14,845 Net Changes (.) Decrease in Money Supply. Net foreign assets 271 - 346 377 27 129 1,650 - 195 1,197 1,498 - 702 4,201 2,620 - 478 Foreign exchange settlement certificates - - 12 - 17 6 17 - 119 - 96 - 235 249 6 201 1 - Claims on government 159 500 263 272 311 - 73 277 575 1,221 91 747 828 1,027 General Treasury receipt deposits 48 - 62 15 - 10 - 133 - 13 - 106 118 - 34 66 15 - 387 - 70 Deposits of government agencies - 190 - 159 - 222 - 281 - 297 - 22 - 158 - 207 - 211 - 531 - 338 46 -1,576 U.S. AID deposite - 284 7 - 775 - 80 - 166 98 - 282 - 789 - 780 - 551 - 756 - 903 8 Claims on government enterprises ) 280 402 604 410 486 409 587 1,210 1,653 -1,039 625 563 Claim6 on private enterprises and others ) 477 790 323 1,010 1,266 1,744 925 2,895 2,978 2,856 4,514 5,763 Time, savings and foreign curreoncy deposits - 192 - 248 - 220 - 127 - 565 -1,350 -1,183 -1,418 -3,568 -2,614 -3,369 -4,214 -3,561 Capital and unclassified accounts (Net) 73 8 - 186 - 60 - 144 - 595 31 - 213 -1,255 322 - 243 103 - 261 Money supply 3734 445 27 674 572 1,328 441 540 1,225 588t 2,275 3,25 3 1,415 Percentage increase in money supply 26.0 26.4 20.1 26.4 17.7 34.9 8.6 9.7 20.0 8.0 28.71/32/1.72 10.5 Money supply as a percent of GNP 7.9 9.2 9*2 10.0 10.0 12.3 14.2 10.2 11.1 11.0 11.71-13.12/ 13.5 Percentage increase in wholesale prices 8.8 2.6 14.0 12.9 7.1 1.3 10.9 14.0 3.2 3.0 6.5 2.5 - 4.6 Source: Central Bank of China. New series for GNP. / 12.4% under the old series. Table 33 Statement of Condition of The Central Bank of China (million NT dollars - end of year) 1961 1962 1963 1964 1965 Assets Gold and Silver 1,774 1,785 2,085 2,256 2,238 Foreign Assets 1,558 1,582 3,312 7,264 7,576 Accomodations to Banks 1/ 636 2,526 a' 2,933 3,812 6,239 Overdrafts - Treasury and Gov't. Organizations 3,288 3,111 3,491 3,712 3,417 Cash in Vault 5 - 1 2 5 Other Assets 1,239 1,262 a/ 1,943 2,174 2,661 Total 8,500 10,266 13,765 19,220 22,19C Liabilities and Net Worth Note Issue 3,390 3,767 4,497 5,706 6,.458 Guarantee Reserves 2/ 1,286 1,395 1,731 2,094 2,21= Deposits by Banks 1,623 1,558 1,591 2,300 2,868 Transferred Deposits from other Banks - - - 1,730 1,650 Deposits - Treasury and Gov't. Organizations 1,508 1,243 1,180 1,129 1,512 U.S. AID Deposits - 1,192 2,656 4,o9 5,152 Other Liabilities 376 781 1,775 1,874 1,992 Net Worth 317 330 335 338 343 Total 8,500 10,266 13,765 19,220 22,190 1/ Including the Bank of Taiwan. and the deposits in the various Treasury Agents made by the Treasury Department of the Central Bank as revolving fund (NT$ 10.05 million by the end of 1965). The 1965 figure also included accommodations to the Taipei District Mutual Loans & Savings Conpany(NT$10.00 million). 2/ Against deposits carried by banks. a/ 902 million of accomodations to the Bank of Taiwan secured by sugar warehouse receipts were transferred from "other assets" to "accommodations to banks" to conform to practices in 1963. Source: Central Bank of China. Table 34 Reserve Conditions of Banks other than The Bank of Taiwan (million NT dollars - end of pcriod) Reserves Related Items Accomodations Time Deposits Net Year Actual Required Excess From CBC From BOT Total in BOT Position 1961 1,453 1,216 237 14 ho 54 N.A. N.A. 1962 1,432 1,359 73 986 12 998 266 -659 1963 2,000 1,774 226 129 - 129 606 +703 1964 2,264 2,223 41 173 307 480 60 -379 1965 2,398 2,532 -134 546 - 5h6 lb -666 June J966 2,554 2,604 - 50 616 - 616 63 -603 Source: Central Bank of China. Taiwan Financial Statistics Monthly. Table 35 Interest Rates (percent per annum) 1/ L o a n a Deposits Bank of Taiwan Other Banks Free Market Time Savings Rediscounts to Government Export Secured Taipei, Deposits Deposits End of Central Bank Call Loans 2/ Enterprises 3/ Advances Loans Secured Loans 3 months 1 year 1952 36.00 21.60 36.oo 66.co 21,6 - 1953 21.60 14.40 - 27.00 42,00 12.6 24.00 1954 21.60 11.88 - 23.40 37.20 10.8 19.20 1955 21.60 11.88 - 21.60 43.20 10.8 19.20 1956 18.00 10.80 11.78 - 21.60 39.60 - 21.60 1957 - 18.00 10.80 , 11.78 11.88 19.80 36.00 10.2 19.80 1958 - 18,00 10.80 - 11.78 11.88 19,80 36.00 10.2 19.80 1959 18.00 10.80 - 11.78 11.88 18.00 39.60 9.0 17.04 1960 18.00 10.80 - 11.78 11,88 18.00 39.60 9.0 17.04 1961 14.40 16.20 10.80 - 16.20 11.88 16.2) 28.80 7.2 14.40 1962 12.96 15.84 10.80 11.78 7.50 15.84 28.80 6.5 13.32 1963 11.52 14.04 10.80 - 11.78 7.50 14.04 25.20 6.0 12.00 1964 11.52 14.04 10.80 - 11.78 7.50 14.04 21.60 6.0 10.80 1965 11,52 14.04 10.80 - 11.78 7.50 14.04 21.6D 6.0 10.80 1966 (June) 11.52 14.04 10.80 11.78 7.50 14,04 21.60 6.0 10.08 Rates except for time deposits are monthly rates converted to annual rates. Bank of Taiwan rate through 1960; Central Bank of China rate thereafter. 3/ Other than textile industry. Source: Central Bank of China, "Taiwan Financial Statistics Monthly". Table 36 Price Indices - Wholesale Prices at Taipei (1956 100) Fuel and Metals Bldg. Rubber Wood Pulp Chemicals Period General Food (Rice) Clothing Elec- and Timber Mate-& Rubber and & Chemical Misc. Index _ _ tricity Mfgrs. _ rials Products Paper Products. 1957 1958 111 114 110 96 119 110 114 84 91 108 111 127 1959 123 130 119 105 139 113 109 97 94 111 115 137 1960 140 157 161 107 142 121 108 109 108 129 120 136 1961 145 163 182 105 139 117 95 92 111 135 130 142 1962 149 167 176 lo8 146 112 89 88 113 133 137 142 1963 159 183 180 111 151 110 90 87 117 129 137 139 1964 163 191 185 111 152 113 89 88 113 129 133 1'1 1965 155 178 187 109 161 113 99 92 112 126 131 143 1965 Jan, 159 184 188 111 157 116 90 89 112 128 132 143 Feb. 155 178 189 111 158 118 90 88 112 128 133 143 March 156 180 190 111 159 120 91 89 111 128 133 143 April 155 177 191 110 159 118 94 92 111 128 133 146 May 153 172 188 110 159 116 96 95 111 127 133 147 June 153 173 186 110 159 115 98 99 112 127 133 145 July 154 175 186 109 162 114 102 101 112 125 133 144 Aug. 155 176 186 108 162 112 105 95 112 124 132 142 Sept. 154 177 188 108 162 109 105 92 112 124 130 141 Oct. 156 180 188 108 165 108 106 91 112 124 129 142 Nov. 157 182 183 108 165 107 107 90 112 124 128 141 Dec. 156 181 182 107 165 107 108 89 112 124 128 142 1966 Jan. 156 180 185 106 165 1c6 111 87 111 124 128 143 Feb. 15 178 188 106 165 110 111 88 111 124 128 145 March 1H 176 190 106 165 111 112 88 111 124 128 144 April. 155 179 192 105 166 109 113 88 111 124 129 143 May 153 174 190 105 167 108 116 94 111 124 129 143 June 155 177 194 104 168 107 118 98 111 124 129 141 Soutrce: Taiwan Monthly Ccr.modity Price Statistics. Table 37 Price Indices - Major City Consumers' Prices (1956 = 100) Education Period General Food Clothing Housing Communica- Medical and Misc. Index tions Recreation 1957 1958 114 11 108 116 112 134 111 110 1959 126 127 118 124 116 151 115 115 1960 149 157 122 128 133 208 121 129 1961 161 163 121 130 137 341 129 135 1962 165 159 123 134 149 431 135 147 1963 168 162 125 138 146 445 136 152 1964 168 166 127 137 141 389 136 150 1965 168 170 127 140 141 335 138 151 1965 Jan. 167 167 128 139 141 351 137 151 Feb. 166 166 127 139 141 351 140 151 March 166 166 127 139 141 340 138 151 April 166 166 127 140 141 346 140 151 May 167 168 127 140 1-41 346 138 151 June 168 169 127 140 141 345 137 151 July 168 170 127 140 141 336 139 151 Aug. 169 172 127 141 141 327 139 150 Sept. 170 174 127 112 143 322 137 150 Oct. 169 172 127 142 143 322 139 150 Nov. 169 172 127 142 143 321 139 150 Dec. 170 174 127 142 142 319 137 150 1966 Jan. 170 173 127 141 142 316 139 152 Feb. 167 170 127 141 142 313 138 152 March 167 170 127 141 142 308 138 152 April 168 171 127 142 1142 308 140 153 May 168 172 127 142 142 306 137 153 June 172 179 127 142 142 300 138 153 Source: Taiwan Monthly Commodity - Price Statistics.