Foreign trade is expected to reach US$7.4 billion this year.
Y. T. Wong, director-general of the Board of Foreign Trade, said the figure may be revised upward in June or July.
"I am optimistic despite an increasing protectionist tendency among the major trading nations," Wong said. "Our industrial products, especially light industrial goods, are highly competitive."
Besides trying to increase trade with the United States, the Republic of China will bid for more commerce with countries of the European Common Market and seek preferential treatment on tariffs.
Sino-European trade of US$860 million was predicted for 1973 by Dr. Kie Han Yap, chairman of the Europe Committee of the Free China Europe Industrial Institute. He predicted the trade would break the US$1 billion mark in two years.
In the past, 80 per cent of Taiwan exports to Europe consisted of canned foods. More textile goods are now being sold in the European market. Yap foresees a slow rise in sales of Taiwan plastic, electrical and electronic products.
U.S. satisfied with efforts to cut deficit
David M. Kennedy, U.S. roving ambassador on trade affairs, expressed satisfaction with efforts of the Republic of China to reduce its favorable balance of trade with the United States.
Kennedy came to Taipei for four days and met with Premier Chiang Ching-kuo, Minister of Economic Affairs Y.S. Sun and Director-General Y.T. Wong of BOFT.
Taiwan's trade with the United States totaled US$1,777 million last year.
Exports of US$1,231 million showed an increase of 43.3 per cent and accounted for 40.4 per cent of the export total.
Imports were US$545 million, up by 33.6 per cent and making up 21.6 per cent of the total.
A government source said the Ministry of Economic Affairs and BOFT were launching a six-point plan to narrow the trade gap with the United States. Long-term contracts will be signed for purchase of such farm products as soybeans, wheat and barley.
Taiwan will switch purchases of production equipment from Japan to the United States.
BOFT will open a trade office in Los Angeles. Taiwan products will be more widely shown in the United States.
A publicity campaign will be undertaken to promote Sino-American trade and economic cooperation. U.S. businessmen will be encouraged to come to Taiwan to explore trade opportunities.
The Far Eastern Department Store will promote sales of U.S. consumer goods in cooperation with the U.S. Department of Commerce and the U.S. Embassy in Taipei.
The aim is to provide high quality products for the Taiwan market, help narrow the trade gap and stimulate the manufacture of higher quality retail products in Taiwan.
William H. Gleysteen Jr., deputy chief of mission of the American Embassy, and Y.Z. Hsu, chairman of the Far Eastern Department Store, signed a contract covering the arrangement.
A Far Eastern Department Store team will go to the United States to buy goods for sale at stores in Taipei, Taichung and Kaohsiung beginning next September.
New Taiwan dollar moves up 5 per cent
Finance Minister K.T. Li announced the upward valuation of the New Taiwan dollar by 5 per cent.
The new exchange rate between the New Taiwan dollar and the U.S. dollar is 38 to 1.
K.H. Yu, governor of the Central Bank of China, announced that exchange rates between the New Taiwan dollar and other foreign currencies would be based on the U.S. dollar.
Both Minister Li and Governor Yu expressed belief that revaluing of the New Taiwan dollar would be helpful in maintaining economic growth and stability and export development.
Minister Li said the government made the decision after careful consideration of domestic and international factors.
Governor Yu said exports to the United States will not be reduced, although the export growth rate probably will be slowed. The Taiwan-U.S. trade gap will be narrowed and exports to most other countries increased.
There will be opportunity to shift some imports from Japan to the United States and other countries.
Revaluation of the New Taiwan dollar was too moderate to be of benefit, a newly elected member of the Legislative Yuan said.
Legislator Tsai Wan-tsai whose family is the major stockholder of the Cathay group of companies, said the upsurge of inflation could be attributed to the fact that the upward valuation was only 5 per cent.
The stock market reopened with heavy trading and a marked upward swing following the NT$ revaluation.
Both stock market and foreign exchange transactions were suspended for two days before the change.
Export trade may encounter "minor difficulties" following NT$ revaluation but these "can be overcome," Economic Affairs Minister Y.S. Sun said.
Sun termed the 5 per cent revaluation "most appropriate." It will contribute not only to economic development but to price stability, he said.
Cabinet maps plan to curb inflation
Premier Chiang Ching-kuo outlined a nine-point measure to fight inflation, which he said was touched off by a combination of the increasingly large trade surplus and the international monetary crisis.
He told the Legislative Yuan his administration was doing everything within its power to combat inflation, which reached 4.7 per cent last year.
"We will try to reduce money supply as a means of relieving the inflationary pressure," Chiang said.
Foreign exchange reserves climbed to about US$1.5 billion last year.
The administration has allocated US$400 million to import basic consumer goods, industrial raw materials and production equipment.
"We will, if necessary, use more money from our foreign exchange reserves to help balance supply and demand," Premier Chiang said.
Chiang said there are many reasons why commodity prices have risen. Among these are the price upsurge in the international market, the growing demand for consumer goods, the poor marketing system and "man-made" factors.
Hoarding and speculation are "man-made" factors, he said. "We will do what we can to remove these."
Other price-control measures will include:
- Balancing of the budget: Strict control will be exercised over government spending in this fiscal year and the next.
- Optimum money supply: The supply increased by more than 30 per cent last year. "It will be better regulated."
- Lowered tariffs: Import duties on basic consumer goods will be cut.
- Imports through government agencies: Government agencies will import basic consumer goods themselves, if such imports via private channels are insufficient.
- Improvement of marketing systems at home and overseas: Exploitation of middle men will be combated.
Public enterprises will not raise prices this year, Premier Chiang said.
Present price levels will be maintained even if there is an upheaval in the international price structure, the premier said.
He told legislators the government has been stockpiling soybeans, wheat, maize, petroleum, steel and other essentials.
The cost of living in Taiwan is still relatively low. Revaluation of 5 per cent in the New Taiwan dollar leaves Taiwan second lowest to South Korea in the cost of living index.
People have more confidence in their currency than before.
ROC mission gets investment offers
An investment mission from the Republic of China reported in New York that it had received more offers of investment capital from American banks than it could handle and several commitments for new joint ventures.
The 16-member group led by Dr. Sun I-shuan, president of the Central Trust of China, said the Republic of China was moving toward less trade with Japan and more with the United States.
Sun said revaluation of the Japanese yen had improved the Republic of China's trading position with the United States. In black and white television sets, Taiwan has surpassed Japan to become the largest exporter to the United States.
Sun reported the group was signing a contract with Hercules Inc. of Wilmington, Delaware, for construction of a US$15 million polypropylene fiber plant on Taiwan in conjunction with three Chinese companies.
He said new negotiations were under way with General Motors for a cooperative venture to make automobiles in Taiwan. Sun noted that Ford's joint venture with Lio Ho will begin producing cars in June.
Sun said his country was seeking long-term loans from the United States. He said the Republic of China's Central Bank ultimately would handle all loans of less than five years duration.
The Republic of China is 12th among U.S. trading partners. Sun predicated that by 1976 Taiwan will rank sixth.
Among joint ventures agreed upon or under negotiation the group listed arrangements to make television parts with two U.S. companies, CCA Inc. of Chicago and Twin-County Trans-Video of Allentown, Pennsylvania.
Sun reported negotiations were under way with Saco-Lowell, a manufacturer of textile machinery based in Greenville, South Carolina, for a joint investment to expand an existing textile plant.
Pointing to a better investment climate for U.S. businessmen than almost any other area, Sun said that Taiwan's labor-intensive industry was dwindling while technology-intensive industry was expanding.
U.S. pollution team receives briefing
Members of the U.S. Pollution Control Trade Mission were briefed at the American Embassy on the economic situation of the Republic of China.
Walter P. McConaughy, American ambassador to the Republic of China, was present.
Michael A. Donohue, mission director and deputy director of special activities, U.S. Department of Commerce, said:
"We believe that your govern mental and business leaders are increasingly aware of the importance of pollution control.
"How can you best use your natural resources? How can you continue industrial progress and at the same time save your irreplaceable water and air?
"Our companies will offer you our service and products. We believe they are as fine as any in the world. We look for a mutually profitable partnership."
He said the world "must turn from exploitation to preservation, from growth at any cost to growth for a purpose."
He noted that most countries, particularly the so-called developing ones, are interested in increasing industrial production, a marriage of science and high technology to improve the people's living standard.
"This is a legitimate goal. In this endeavor, the Republic of China has set an amazing record.
"We are all aware of your rapid progress. Unfortunately, along with rapid heavy industrialization comes the problem of pollution."
The United States is now fully alerted, he said, adding:
"Our government is spending huge sums of money - in the billions of dollars. Our industries face very tough pollution laws and are now budgeting pollution control as a regular part of doing business.
"All this means that America is in the front rank in this area and is showing leadership.
"It means that American engineering services and products are the most advanced in the world.
"We are pioneering in many areas."
Short-term bonds absorb idle money
The government floated NT$1 billion worth of short-term bonds March 26 to remove pressure from the increasing currency supply.
This was the third batch of short-term bonds to be floated in the current fiscal year. The first two issues were of NT$1 billion.
The bonds mature in six years and carry tax-free interest of 8.8 per cent per annum.
The new bonds were sold primarily to private citizens with a view to absorbing idle capital.
Issuance of the bonds had nothing to do with government spending. Minister of Audit Chang Tao-min told the Legislative Yuan the Central Government registered a budget surplus of NT$1,921 million (US$55.10 million) in fiscal 1972. This was the ninth consecutive surplus.
Controls lifted on 2,367 imports
The Board of Foreign Trade has ended import controls on 2,367 items, BOFT Deputy Director-General Wei-te Liu announced.
Liu said only 463 items remain under control.
Controls were ended to stabilize commodity prices, stimulate production and to serve the convenience of commercial and industrial sectors.
Still controlled are military items, national defense and communication products, gold, poisonous chemicals, drugs, monopoly items, jewelry and jewelry materials, antiques and ships.
Liu expressed confidence that domestic industry can compete without controls.
Controls were lifted on farm products, seafood, animals, minerals, foods, textiles, leather products, paper products, glass products, fuels, chemicals, machinery, plastics and decorative items.
Rail electrification will start this year
The long-heralded electrification of the 880-kilometer north-south west coast railway will begin late this year.
Foreign currency to buy machinery and equipment will be loaned by financial institutions of the United States. Total cost is estimated at US$130 million.
Loans will be made available in the form of a "package deal." The Chinese government will organize the whole project and work out dates for repayments.
U.S. companies will seek out financial support from banks.
Loans will be at 6 per cent interest for a period of 20 years.
The government earlier had obtained agreements to loans from four European banks.
But upward revaluation of the currencies of European countries led to an increase in the prices of European equipment. The government was forced to look for new loans and suppliers.
Electrification will take five years.
The time for a one-way trip from Taipei to Kaohsiung will be cut by an hour. The fastest train now takes five hours to cover the distance.
Irving Trust Co. opens Taipei branch
Gordon T. Wallis, chairman of the Irving Trust Company of New York, and Mrs. Wallis came to Taipei for a week's visit and opening of lTC's first Asian branch.
The Wallis were accompanied by William F. Graff, senior vice president; Ernest D. Shaw, regional vice president; and Robert O.P. Yu, vice president, and their wives.
Robert McBride and Steven Driscoll are in charge of Irving Trust's Taipei branch.
Central American trade group visits
A 124-member Central American trade mission came to Taipei for a three-day visit.
El Salvador Ambassador to China Lic. Walter Beneke Medina escorted the mission to Taipei from Tokyo. He is concurrently ambassador to Japan.
Beneke Simon, chairman of the National Chamber of Commerce of El Salvador, headed the mission, which included representatives from El Salvador, Costa Rica, Guatemala and Panama.
Two-way trade with the four countries totaled US$68 million during the last half of 1972.
Philip Chang, vice chairman of the Council for International Economic Cooperation and Development, said the Republic of China is planning to export machinery to Central America on a deferred payment basis.
Other exports are machine tools, motorcycles, bicycles, electrical appliances and textiles.
Imports from Central America are coffee, cotton, beef, leather, timber and minerals.
CIECD is encouraging private enterprises to invest in Central America.
Sino-Central African ties to be reviewed
Central African Foreign Minister Joseph Potolot said a joint committee would be formed to review progress of technical co operation between his country and the Republic of China.
In a joint communique signed with Foreign Minister Shen Chang-huan, Potolot said the committee will meet in Taipei and Bangui alternately once a year. The foreign ministers emphasized the importance of trade. Taiwan will send an economic and trade mission to Bangui "in the nearest future," the joint communique said. The Republic of China has agreed to hold a trade fair in Bangui.
Potolot met with Vice President C.K. Yen and Premier Chiang Ching-kuo and visited economic development projects.
VACRS to help develop special crop zones
The Vocational Assistance Commission for Retired Servicemen, the jack of all trades of industry and services, has been asked to help develop special agricultural crop zones in southern Taiwan.
Chao Chu-yu, chairman of VACRS, reported the Taiwan Provincial Department of Agriculture and Forestry had requested his agency to develop 1,000 hectares of land for miscellaneous farm crops in the Chiayi-Tainan farm belt.
VACRS later will be asked to develop another plot of 5,000 hectares in the same area.
Chao said the provincial authorities made the request in view of VACRS's assistance to the Taiwan Sugar Corporation and to eastern Taiwan in cultivating farmlands.
The job will be carried out by VACRS's Agricultural Machinery Service Department, which also renders repair and maintenance services.
VACRS operates 14 farms on marginal and reclaimed lands. Annual yield amounts to 45,000 tons of rice and other crops.
VACRS is developing a silkworm zone in mountainous eastern Taiwan.
The VACRS chairman disclosed that dam builders at Tsengwen Dam and Reservoir will be moving to Taichung to help build the projected international port. The reservoir project is nearing completion.
Premier pledges boost in output of farms
The government will help farmers boost productivity through the introduction of new and high quality crops and the improvement of production techniques and facilities.
Premier Chiang Ching-kuo said the government is especially concerned about the living condition of fishermen, salt workers and farmers in coastal areas. Improvement of their living standard is a priority target in the two-year rural reconstruction program which began this year.
The premier said farmers have concentrated on a few export crops. The result is overproduction and low prices.
The government has divided farming regions into special crop zones so as to gear production to demand.
Premier Chiang praised the diligence of Taiwan's farmers and expressed his admiration for their ability to absorb new agricultural know-how.
The government will help them obtain new and better plantings and to improve production techniques and facilities with a view to boosting unit yield, he said.
Economists predicted two decades ago that Taiwan agriculture could not keep up with the population.
They were wrong. In fact, there always has been a surplus for export.
Agriculture has grown at an average annual rate of 5 per cent, far surpassing the population growth of around 2.5 per cent.
Agricultural production totaled NT$56,229,640,000 (US$1,405,741,000) last year, an increase of 5.05 per cent. Exports totaled US$550 million, up 42 per cent.
There has been a slowdown in agricultural growth in the last half decade because of a persistent drain on the island's farm labor force and the rising cost of production, both touched off by rapid industrialization.
Industry grew 26 per cent last year, boosting the island's economic growth to 11 per cent despite the slowdown in agriculture.
To shore up agriculture, the Taiwan Provincial Government has decided to put NT$1,820 million (US$47,894,000) into a loan fund to expedite farm mechanization, streamline marketing systems and improve rural economic organizations.
The loan fund is in addition to Premier Chiang Ching-kuo's nine-point rural reconstruction program, which got under way January 1.
Loans will be extended by farmers' associations throughout the island. The money will come from the Sino-American Joint Commission on Rural Reconstruction (JCRR) and four banks.
A total of NT$1 billion (US$26,315,000) will be contributed by the Land Bank of Taiwan, the Farmers' Bank and the Cooperative Bank of Taiwan.
Another NT$300 million (US$7,894,000) will come from the Central Bank of China, while the rest will be raised by JCRR.
Short-term loans, bearing annual interest of 9.5 per cent, will be repaid in a year. Long-term loans will be for seven years at interest of 6 per cent.