Testifying before the Legislative Yuan's economic affairs committee, P. Y. Hsu, chairman of the Foreign Exchange and Trade Control Commission, disclosed that the nation's foreign exchange reserves exceed US$150 million.
Hsu told lawmakers that the government's future trade policy will be guided by the need to expand exports, the amount of economic assistance received, and the efforts to stabilize commodity prices.
Analyzing the nation's foreign exchange and trade development from January to August, 1963, he made these points:
Foreign exchange reserves of US$157 million as of August 31, 1963, represented an increase of US$94 million over those of December 31, 1962. The increase is attributed to the expansion of export trade and reduction of imports.
From January to August, exports totaled US$251 million, US$86 million more than in the corresponding period last year. Imports with government-owned foreign exchange totaled US$145 million for the same months, a decrease of US$14 million. U.S. aid-financed imports totaled US$57 million, a decrease of US$2 million.
Foreign exchange earnings from other sources amounted to US$23 million from January to August, US$5 million more than in the corresponding period of 1962.
Despite the conspicuous decrease in imports, commodity prices showed no signs of upsurge.
The eight-month period also was marked by an increase in outward and inward remittances.
Outward remittances were US$51 million, representing an increase of US$8 million over the corresponding period last year and attributed to increased exports.
Inward remittances amounted to US$24 million, an increase of US$1 million resulting from export of services, including ocean freight income.
Greenbacks and gold fell to a new low in the black market during the period. U.S. banknotes were quoted at US$1 to NT$46.60 at the end of 1962. This had fallen to a new low of US$1 to NT$40.70, compared with the official selling rate of US$1-NT$40.10, by August.
Views of Parsons
Howard L. Parsons, director of the U.S. AID mission to China, reported in a recent article published in Hongkong that the indicators of economic progress contradict the thought of Taiwan as an underdeveloped area. In fact, he said, Taiwan "now stands ready for self-generating economic development."
The article, published in the influential British weekly Far East Economic Review, reported Taiwan has become attractive to investors in Southeast Asia and "is gradually improving its competitive position in external trade."
"Particularly significant have been the developments in export trade. This began with the implementation in 1958 of a series of trade and exchange reforms which unified the exchange rate, relaxed trade controls, eliminated considerable red tape, and provided incentives, for exports", Parsons wrote.
He expressed confidence in Taiwan's continued growth, which, he said, stems from three basic considerations:
"Taiwan has the human resources base, the capital stock base for self-generating growth, and the people of Taiwan are operating below their top ceiling of capability."
Concluding, Parsons said: "I do not know of any other area where the use of United States economic assistance funds has been as effective as in Taiwan .... All Americans should feel happy, as I am, for the opportunity to work with its people in the achievement of outstanding progress toward self-generating economic growth."
Favorable Balance
Free China's favorable trade balance for the first nine months of 1963 was US$113,994,000. Including delivery of U.S. aid commodities, exports for the period still exceeded imports by US$51,707,000.
Sugar was mainly responsible for the increase. Its export value exceeded that of the corresponding period last year by US$59,373,000.
According to statistics released by the Foreign Exchange and Trade Control Commission November 10, exports totaled US$272,567,000 in the nine-month period and imports US$158,573,000.
Compared with exports of US$181,375,000 in the corresponding period of 1962, the increase was more than 50.3 per cent. Imports were reduced by 9.4 per cent compared with US$174,985,000 in the corresponding period of 1962.
Since the favorable trade balance for the first nine months of 1962 was only US$6,390,000, this year's increase is nearly 1,800 per cent. Additionally, the first nine months of 1962 showed a favorable balance only if import of US$63,471,000 U.S. worth of aid commodities was excluded.
Short-term Bonds
The NT$300 million (US$7.5 million) second issue of fiscal 1964 short-term treasury bond floated by the government November 11 was sold out in three days.
An analysis by the Ministry of Finance indicated that more and more bonds are being bought by private investors. On November 11, the Central Bank of China sold more than NT$8 million of bonds to private investors.
This, the MOF pointed out, reflects an increase in private floating capital in the local money market and of increased confidence in the bonds.
Bearing an interest rate of 12 per cent per annum, or 1 per cent per month, the bonds are in denominations of NT$1,000, NT$5,000, NT$10,000, and NT$50,000. Half of the face value of the bond will be redeemed in 18 months and the remaining 50 per cent in another 18 months. Buyers enjoy tax exemption and other privileges. The first issue was floated on September 11.
Overseas Investments
Overseas Chinese and foreign investments totaled US$10,992,975 in the first seven months of 1963, the Industrial Development and Investment Center of the Council for International Economic Cooperation and Development announced.
Foreign investors provided US$9,622,143 for machinery, equipment, and raw material for investors' use, US$569,832 for imported commodities to be sold locally and the proceeds used as investment funds, and direct remittances of US$774,000.
Delivery of machinery and equipment amounted to US$8,997,075, or 82 per cent of the approved amount. This, the IDIC pointed out, is a proof to refute the claim that overseas investments are mostly realized in the form of consumer goods.
During the first eight months of this year, the total of overseas Chinese and foreign investment approved by the Chinese government was US$21,386,760, including US$11,610,430 of overseas Chinese investments and US$9,776,330 of investments from other foreign sources.
Tachien Project
The U.S. government has agreed in principle to grant US$40 million in development loans for construction of the Tachien dam and reservoir in central Taiwan, the Council for International Economic Cooperation and Development announced.
As repaid, the loan funds will become available for other power development projects on the island.
Chinese and American experts are engaged in discussion of how to use the loans most effectively in meeting the increasing demand for power.
One possibility is construction of the Tachien reservoir in two stages. In the first stage, a hydropower station would be constructed on the lower Tachia river.
Because construction of the dam would take several years, part of the money would be used for a 300,000 kw thermal power station to cope with power shortages.
Farm Products Grant
The U.S. government will make another grant of farm products valued at NT$100 million (US$2.5 million) to the Republic of China as part of economic aid under Public Law 480.
In a press release November 3, the Council for International Economic Cooperation and Development said the grant will include 16,800 metric tons of wheat, 765 tons of edible oil, and 115 tons of tallow. These products will be sold on the local market and the proceeds used as partial payment of wages for more than 50,000 workers on 10 economic development projects.
Six of the projects are sponsored by the Taiwan provincial government and Joint Commission on Rural Reconstruction. They include irrigation, flood control, reclamation of wasteland, development of fishing harbors, water and soil conservation, and forestry development. The remaining projects of fish culture and vocational, medical, and nursing training are sponsored by the Vocational Assistance Commission for Retired Servicemen.
The Chinese government will make a counterpart contribution of US$2.5 million in addition to allocation of land and supply of technical services.
A similar grant was made by the U.S. government in October, 1961, to help finance 30 economic development projects.
Metal Center
Establishment of the Metal Industries Development Center in Kaohsiung will lead Taiwan's industries into a new era and contribute significantly toward the further development of small and medium industries.
Secretary General K. T. Li of the Council for International Economic Cooperation and Development made this statement October 23 after signing an agreement with the United Nations Special Fund on behalf of the Chinese government. The U.N. contribution is US$996,700 and the first such project on Taiwan.
Li said the center will reduce Taiwan's dependence on foreign machinery and tools, which now constitute some 36 per cent of total imports. A large force of skilled workers and technicians will be trained, he said.
A non-profit foundation, the center will serve processors of basic metals and manufacturers of metal products. It will strive for improvement of basic metal, metal processing, machinery, transportation equipment, and electric appliance manufacturing industries. It also will seek to create more employment opportunities.
Li said the U.N. donation will be used for workshop equipment and facilities for the center's research and testing laboratories, for experts brought from abroad, and to finance overseas training of center personnel. Contribution of the Chinese government will include buildings, land, part of the equipment, and operating expenses of the center for the first five years.
Plywood Exports
Exports of plywood will reach US$20,000,000 in 1963, a 33⅓ per cent increase over last year, according to the Joint Commission on Rural Reconstruction.
Taiwan imports wood from the Philippines for processing and re-export to foreign markets. With abundance of labor, the industry is growing rapidly. Plywood manufacturers recently have imposed self-restriction to prevent overproduction and dumping in foreign markets.
The United States is the biggest buyer. The U.S. industry reportedly is asking Washington to limit the imports from Taiwan.
A new plywood product made of Taiwan hemlock may win a market in the United States, the forestry division of JCRR announced. A private firm has succeeded in manufacturing hemlock plywood, and a plan for mass production has been submitted to the Council for International Economic Cooperation and Development, JCRR, and the Taiwan Forestry Bureau.
Sweetest Stock
The price of Taiwan Sugar Corporation common stock has soared to NT$284 and only a few thousand shares are for sale. Face value of the stock is NT$50.
Since the government decided to sell 3,000,000 shares of TSC common, the stock has become the most active in Taiwan. At the first sale last April 8, the price was NT$81 per share.
Up to November 20, 2,210,000 shares had been sold. Market specialists attributed the skyrocketing price to:
1. The continuous rise in the international sugar price.
2. Reports of a dividend payment of NT$60 per share.
3. Influx of capital from central and southern Taiwan.
4. Revaluation of TSC assets from some NT$1,500 million to NT$3,000 million.
5. Reports TSC stock will be listed on the New York stock market.
Citrus Sales
Four hundred thousand cases of citrus fruit may be exported this year, compared with 260,000 in 1962. Revenue is expected to reach US$900,000.
Two-thirds of citrus exports go to Singapore and Malaya. Another major buyer is Okinawa, which takes 20 per cent. Average fob price is US$2.20 per case.
Fruit exporters are expecting stronger competition from Chinese mainland fruit in the Malaysia market. As a result of the Moscow-Peiping dispute, the Chinese Communists may switch exports from Russia to East Asia.
Mushroom Company
A joint export company organized by all 78 mushroom canners on Taiwan was inaugurated October 26 to handle. Taiwan sales at a unified price.
Chairman Ku Shih-chi said the company will integrate production and sales, improve quality, and stabilize prices and the market.
The Foreign Exchange and Trade Control Commission, which was instrumental in organizing the company, said the government will do its best to help the mushroom industry. Aid will include export loans, introduction of improved varieties, and provision of market information.
Capitalization of the company is NT$2,200,000 (US$55,000) and comes from the 78 canners in proportion to the individual export quotas allocated to them.
With an export target of 1,464,605 cases for the production year, the company plans to sell 659,072 cases, or 45 per cent, to the Americans; 732,303 cases, or 50 per cent, to Europe; and the remaining 73,230 cases to other areas.
About 70 per cent will be shipped between December 1, 1963, and June 30, 1964, and the remaining 30 per cent by October 31, 1964.
Economic Trends
Free China's economic progress in recent years has been marked by diversified trade, more investment from abroad, and wider export of technical assistance to African, South American, and Asian countries.
These trends were reported in the October issue of Industry of Free China, a monthly publication connected with the Council for International Economic Cooperation and Development.
According to the periodical, Taiwan has entered into trade agreements with France, the Philippines, Spain, Italy, Lebanon, Morocco (agreement expired), Greece, Korea, Paraguay, and Brazil.
South Vietnam was the first nation to enter into technical and economic cooperation with free China, followed by Niger and Cameroun last year, the magazine said.
Influx of foreign capital and technical help began in January of 1960. Up to June of 1963, foreign and overseas Chinese businessmen had invested about US$90 million in Taiwan.
The Industry of Free China noted that the Industrial Development and Investment Center was activated December, 1959, to coordinate investment promotion and provide general services to investors.
A total of 2,565 Chinese technicians and specialists were trained under the U.S. aid training programs. Taiwan also has been receiving technical assistance from the United Nations.
Local manufacturers have found it advantageous to invest in Southeast Asian countries as the nation's trade and industry continue to expand, the periodical said. China has dispatched many specialists and technicians, including farm demonstration teams, to friendly nations around the world, the article declared.
Training of foreign technicians under the third nation training program of U.S. aid began in 1954. Subsequently, a series of agricultural seminars have been held to help Africa as well as Southeast Asian countries. The magazine listed countries receiving Chinese technical help and training a Liberia, the Ivory Coast, Dahomey, the Ryukyus, Saudi Arabia, Brazil, the Dominican Republic, Cameroun, Malagasy, Ethiopia, Niger, Gabon, the Central African Republic, Rwanda, Senegal, the Congo (Brazzaville), the Congo (Leopoldville), Mauritania, Togo, Chad, Kenya, Upper Volta, Zanzibar, Nyasaland, and Southern Rhodesia.