Economic growth reached a record 12.8 percent last year. The Ministry of Economic Affairs said per capita income was US$l,304.
The ministry's preliminary estimates of last year's economic performance also included the following figures:
- Foreign trade of US$23.4 billion with a favorable balance of US$l.6 billion.
- Foreign and overseas Chinese investment of US$208 million.
- Domestic investment of NT&$153 billion (about US$4,250 million).
- Industrial growth of 25 percent.
- Agricultural output down by 1.5 percent.
- Wholesale prices up 3.3 percent and consumer prices up 5.7 percent.
Economic Minister Chang Kwang-shih predicted 1979 economic growth will be 8.5 percent despite oil price hikes and severance of diplomatic ties with the United States.
The ministry's projection for 1979 includes US$25.5 billion in two-way trade, per capita income of US$l,400 and a 5 percent rise in commodity prices.
Minister Chang predicted that domestic investment will continue to expand while foreign and overseas Chinese investment remains at the 1978 level.
The industrial structure will undergo rapid transformation with sophisticated industries taking root.
Commenting on prospects for U.S.-mainland trade in the wake of "normalization," Minister Chang said there is little possibility of a big increase.
The Chinese Communists cannot afford to pay for large imports, he said, noting that the regime has foreign exchange re serves of some US$2 billion compared with free China's more than US$6 billion.
Peiping's export capability is also weak, Chang said.
Per capita income to reach US$1,631
Per capita income will reach NT$58,733 (about US$1,631) in 1979, the Executive Yuan predicted.
The gross national product will reach NT$1,020 billion (about US$28 billion) and the economic growth rate will be around 8.5 percent.
Other projections are as follows:
- Population growth, 1.8 percent.
- Government revenues, NT$257,700 million (about US$7,100 million), and expenditures, NT$638,500 million (about US$17,736 million) up 15 percent.
- Imports of commodities and services, NT$625,300 million (about US$17,370 million), up 27.7 percent.
- Wholesale prices, up 5 percent. The government will relax import curbs, lower duties, establish a foreign exchange market and implement a flexible exchange rate system.
- Production increases of 1.9 percent in primary industry, 11.3 percent in secondary industry (mining 16.7 percent, manufacturing 11.6 percent, construction 10.2 percent and utilities 11.3 percent) and tertiary industry, 6.9 percent.
- Private consumption, US$504,200 million (about US$14, 006 million), up 7.9 percent in real terms and accounting for 49.2 percent of the gross domestic product, and government consumption, NT$181,200 million (about US$5,028 million), up 7.6 percent in real terms and accounting for 17.7 percent of the gross domestic product.
Investment spurs economic growth
Economic growth, industrial production and foreign trade reached new highs in 1978, a government survey indicated.
Investment projects accelerated growth of the economy and modernization of industry.
Major investments included:
- Third naphtha cracking plant of Chinese Petroleum Corporation. Production began last March with these targets: thylene, 230,000 metric tons; propylene, 102,000 tons; and butadiene 35,000 tons.
- Taiwan Fertilizer Corporation Miaoli plant. Annual capacity includes 300,000 tons of anhydrous ammonia and 186,000 tons of urea.
- Industrial Technology Institute Electronic Center providing electronic plants with integrated circuits.
- Chang Chua Chemical Company hydrogen peroxide plant with annual capacity of 10,500 tons.
- Taiwan Aluminum Corporation's third expansion project with annual capacity of 36,000 tons of ingots.
- First nuclear power plant's first generator with installed capacity of 636,000 kilowatts.
- Philips Electronics Industries (Taiwan) TV color tube plant.
- Tung Lien Chemical Company ethylene glycol plant with annual capacity of 125,000 tons.
- North-South Freeway opened to traffic in October.
- Suao Harbor first-stage construction with annual capacity of 2.76 million tons of shipping.
Domestic investment up by 3.61 percent
Domestic investment and expansion projects approved by the government last year shot up 36.1 percent to reach NT$152.4 billion (about US$4.2 billion), according to the Investment Commission of the Ministry of Economic Affairs.
The commission said the figure does not include foreign and overseas Chinese investments or government loans.
The commission said 33,993 new companies were incorporated last year, up 63.1 percent over 1977.
Because the nation is stressing the development of capital and technology-intensive industries, in vestments will continue to climb rapidly this year, the commission said.
Manufacturing industries led the way in capital spending with NT$64.2 billion (about US$1,783 million), up 43.1 percent from 1977, followed by forestry, fishery, and livestock, NT$2.3 billion (about US$66.7 million), up 69.9 percent; mining, NT$933 million (about US$25.9 million), up 30.9 percent; and other industries, NT$84.9 billion (about US$2,358 million), up 30.7 percent.
US$212 million comes from abroad
Foreign and overseas Chinese investments totaled US$212,929,000, an increase of about 30 percent over 1977, the Ministry of Economic Affairs said.
US$136,719,000 was invested by foreigners and US$76,210,000 by overseas Chinese.
Electronics, electrical appliances, chemicals and service industries attracted the lion's share of capital.
A breakdown showed:
A. Foreign investments:
- U.S., US$69,765,000.
- Japan, US$50,336,000.
- Europe, US$4,468,000.
- Other areas, US$l2,150,000.
B. Overseas Chinese investments:
- Hong Kong, US$16,511,000.
- Japan, US$4,533,000.
- Other areas, US$55,176,000.
The ministry approved 110 technical cooperation projects between Chinese and foreign firms.
Foreign and overseas Chinese investments in the last 27 years totaled US$1,923 million, MOEA announced.
US$594.5 million was invested by overseas Chinese and US$1,328.5 million by foreigners.
Investment cases approved by the government since 1952 number 2,504, of which 1,386 were from foreigners.
Services have attracted the bulk of investments from overseas Chinese during the 27 years with US$135 million in 93 cases, followed by construction (US$86 million in 139 cases) and nonmetal manufacturing with US$63 million.
Electronics and electrical appliances topped the list of foreign investments with capital of US$615 million in 286 cases, followed by the chemical industry with US$209 million in 144 cases and the machinery and instruments manufacturing industry with US$131 million.
The United States was the leading foreign investor with US$585 million, followed by Japan with US$321 million, European countries with US$226 million and other areas with US$195 million.
Trade just under US$24 b. last year
Foreign trade was worth US$23,727.3 million in 1978, an increase of 32.8 percent over 1977, the Directorate General of Budget, Accounting & Statistics reported.
Exports totaled US$12,704 million, an increase of 35.7 percent. Imports rose by 29.5 percent to US$11,022.4 million. The favorable balance set a record of US$1,682 million.
Exports of industrial products surged to US$11,324 million, accounting for 89.1 percent of the total, up from the 87.5 percent of the previous year. Exports of agricultural products and processed agricultural products totaled US$1,380.6 million or 10.9 percent, down from the 12.5 percent of 1977.
Raw materials accounted for the bulk of imports, totaling US$7,546 million or 68.5 percent. Capital goods accounted for 24.7 percent at US$2,722 million.
Textiles remained the No. 1 foreign exchange earner. Volume was up 29.5 percent to US$3,190 million, or 25.1 percent of all exports.
Then came electrical machinery at US$2,016, a gain of 35.6 percent and 15.9 percent of the total.
Exports of machinery and metal products ranked third at US$1,340 million and grew by 47.8 percent.
Crude petroleum accounted for 14.2 percent of imports at US$1,560 million. Then came electrical machinery at US$1,334.8 million.
The huge surplus with the U.S. and the deficit with Japan remained the major problems in trade.
Exports to the U.S. last year leaped 37.5 percent to US$5,001 million, accounting for 39.4 percent of the total. Imports from the U.S. grew by only 21.3 percent to reach US$2,383 million, or 21.6 percent of the total. The trade surplus with the U.S. was US$2,618 million.
Imports from Japan accounted US$3,682 million or 33.4 percent of the total for growth of 39.3 percent. Exports to Japan were up 41.7 percent to reach US$1,586 million or 12.5 percent of the total. The deficit was US$2,095 million.
Hong Kong was third in exports with volume of US$862 million, or 6.8 percent. Saudi Arabia was the third largest supplier at US$636.1 million, or 5.8 percent.
Despite the severance of diplomatic relations, trade between the United States and the Republic of China is expected to reach US$9,000 million this year.
The two countries will lower tariff rates. Free China is taking steps to reduce the imbalance.
In 1977, the Republic of China was the 11th ranking trade partner of the U.S. It took eighth place last year.
Trade is expected to rise 14 percent to US$27 billion this year, H.K. Shao, director general of the Board of Foreign Trade, predicted.
Trade of US$10 billion with the United States is expected in a year or two, he said.
Shao forecast a 10 percent rise in exports and an 18 percent increase in imports for 1979.
Export zone volume nears US$1 billion
Shipments from three export processing zones amounted to US$938 million in 1978, an increase of 23 percent compared with the US$761 million of 1977.
Imports of raw materials and capital goods reached US$568 million, up 43 percent.
The zones are at Kaohsiung, nearby Nantze and Taichung. KEPZ was set up in 1966 and the other two in 1971.
The 267 factories of the three zones have attracted investment of US$255.7 million and employ 73,387 workers.
Eighty-two plants are engaged in the electronics industry, 28 in metals, 30 in plastics, 22 in garments, and 20 in knitwear.
The three zones have exported US$4,300 million worth of products to markets in 121 countries and areas since 1966.
Exports of electronic products have amounted to US$2.5 billion. Other leading earners include garments at US$520 million, plastic products at US$250 million and leather products at US$200 million.
Development plan revised by council
Per capita income may reach US$2,923 by 1996, the Council for Economic Planning and Development said.
The projection is contained in a revised plan for development of Taiwan. The population is expected to be 22,356,000 in 1996.
The revised plan notes that past development has been concentrated in the Taipei area in northern Taiwan and the Kaohsiung area in southern Taiwan, pushing land prices sky-high and creating such woes as traffic congestion, a housing shortage, pollution and insufficiency of public utilities. Farms are short of labor.
The revised plan divides Taiwan into northern, central, southern and eastern areas. Population growth and economic activity will be encouraged in central and eastern Taiwan.
Industrial output rises by 25 percent
Industrial production chalked up a record gain of 25.4 percent in 1978, the Directorate-General of Budget, Accounting and Statistics said.
The manufacturing sector was up by 27.8 percent with heavy industry showing an advance of 39.1 percent and light industry up by 15.1 percent. Heavy industry made up 57.5 percent of the manufacturing index in 1978 compared with 52.9 percent in 1977.
Public utilities showed an increase of 16.4 percent, construction 13.8 percent and mining 2.8 percent.
Products showing the greatest growth were calculators, 113 percent; rolled steel and steel bars, 78.2 percent; automobiles, 74 percent; motorcycles, 59.4 percent; and TV sets, 44 percent.
Price increases modest in 1978
Wholesale prices rose 3.53 percent and retail prices 5.77 percent in 1978, the Directorate General of Budget, Accounting and Statistics reported.
These figures were higher than those of Japan and West Germany but lower than those of the United States and South Korea. Whole sale prices rose 11.48 percent and retail prices 14.63 percent in South Korea.
"The main factors behind Taiwan's moderate wholesale price inflation last year," the directorate-general said, "were brisk exports and vigorous industrial growth in the wake of domestic and international economic recovery."
A major inflationary force was the 15.2 percent rise in labor costs.
Price increases for capital goods averaged 6.2 percent com pared with 3.1 percent for consumer goods.
Inflation reached a peak in the summer and early fall, then tapered off in November and December.
Yue Loong invests in plant expansion
Yue Loong Motor Company Ltd., the biggest automaker in Taiwan, is investing US$65 million to boost production.
Vivian Wu, managing director and executive vice president, said US$28 million will be spent to build an engine shop, a foundry and a forge at its new plant at Sanyi in Miaoli County this year.
Shops will be completed in the first half of 1980. Production of engines will be 6,000 annually.
Another US$37 million will be invested in assembly, transmission and other facilities by 1981.
Production of sedans and light trucks will be increased from nearly 40,000 in 1978 to 70,000 in 1981.
Yue Loong expects to sell 53,000 cars this year.
Tatung makes bid for U.S. TV market
Tatung Company, Taiwan's largest electrical equipment maker, will assemble color television sets in Los Angeles, using its own chassis and American picture tubes and cabinets, Business Week reported.
The company plans to sell and service its products through a chain of manufacturer-owned stores, the magazine said.
The company started construction in December of an 82,000-square-foot plant in Los Angeles. "The plant will save on freight costs and circumvent a 365,000-set annual import quota on Taiwanese sets," Business Week said, adding that this year's output will be 60,000 color sets.
According to the report Tatung's electric fans are now top sellers in the United States, thanks to the energy crunch in 1973. The company plans to make 500,000 fans in Los Angeles this year with 35 per cent of parts from the U.S.
Tatung has three stores in Southern California. The company's next targets are San Francisco and Dallas. It is also signing up dealers - 80 so far in California, Texas and New Jersey, the magazine said.
Export-Import Bank opened in Taipei
The Export Import Bank of China was inaugurated at 100 Kirin Road in Taipei. C.C. Chao is president.
During the initial stage, the bank will have capital of NT$2.5 billion (about US$69 million) funded by the national treasury. Its capital later will be increased to NT$10 billion (about US$278 million).
The bank is accepting applications for export financing; providing guarantees on machinery, equipment, capital goods and services; and assisting importers of raw materials, machinery and parts.
Regulations governing export insurance are being drafted by the Ministry of Finance.