Japan and the United States continue to be Taiwan's principal trading partners. The two countries bought 52.53 per cent of 1961 exports totaling US$124 million. Of imports totaling US$192 million, excluding U. S. aid arrivals, they supplied 67.12 per cent.
Although still first in importance to Taiwan's trade, Japan is gradually losing its predominant position. Exports to Japan dropped from 60.2 per cent in 1955 to 37.3 per cent in 1960 and to 28.46 in 1961. Imports declined from 64.4 per cent in 1955 to 40.43 per cent in 1960 and 38.98 per cent in 1961.
The United States, on the contrary, was gaining. Exports of America rose from 12.48 per cent in 1960 to 24.07 per cent in 1961, and imports went from 26.54 per cent to 28.14 per cent in the same period.
Asia still is the prime trade area. In 1961, trade with Vietnam and Thailand was up sharply. Second to Japan within the region was Hongkong.
The Federal Republic of Germany and Britain are top buyers and suppliers in Europe, but their overall share of Taiwan trade runs only 10-15 per cent.
Trade with African and Latin American countries is small. But Morocco is the largest buyer of Taiwan tea, and the Chinese government is strengthening technical cooperation ties with countries of Africa and Latin America, especially in agriculture.
Treaty with Paraguay
The Republic of China and Paraguay signed a 10-year treaty of trade and economic cooperation May 11.
The treaty says that Paraguay will welcome "private capital" from China to develop its resources. It stresses technical cooperation, including the dispatch of missions.
China has offered to send specialists and selected farmers to operate a demonstration farm.
The treaty was signed by Foreign Minister Shen Chang-huan on behalf of China and Foreign Minister Raul Sapena Pastor for Paraguay. It will be ratified by both countries in accordance with their constitutional procedures and will come into force from the date of the exchange of instruments of ratification at Asuncion.
In signing the treaty, Dr. Sapena said Paraguay welcomes immigrants from the Republic of China and will, offer them facilities for agricultural reclamation.
African Projects
The Republic of China reached technical cooperation agreement with two African countries in May. On May 15, it signed an accord with the Republic of Chad and on May 20 with the Republic of Dahomey.
The agreement with Chad was contained in a joint communique issued in Taipei by Yang Chi-tseng, China's minister of economic affairs, and Mahamat Kriga, Chad's minister of information and tourism. It said the Chinese government will welcome four agriculturalists from Chad in a 1963 farm seminar, and that China soon will send agricultural technicians to Chad to examine possibilities for further cooperation.
In cooperation with Dahomey, China agreed to send technicians to help grow rice and sugar cane. Definite arrangements are under study.
Tsai Yuan, a Chinese agricultural expert who returned May 16 after a five-month observation tour of many African countries, said prospects are excellent for free China to strengthen economic relations with Africa by providing technical aid.
He noted that economic development of African countries has been slowed by the exodus of European technicians. Congolese officials were quoted as saying they want Chinese specialists to fill the vacuum left by departure of the Belgians.
Shihmen Dam
Construction of the Shihmen Dam and Reservoir in northern Taiwan will be completed by the end of 1963.
The reservoir, with capacity of 316 million cubic meters of water, will irrigate 58,000 hectares of paddies and boost rice output by 74,000 metric tons annually. The project will add some 90,000 kilowatts to power output and reduce flood damage by an estimated US$500,000 a year.
The area around the huge reservoir will be transformed into a tourist resort. The Taiwan Provincial Government already has drawn up plans for a new town. An engineering college using facilities of the Shihmen Development Commission will be established.
The dam is located in Taoyuan county, an hour's ride from Taipei. Construction was started in 1955 and total cost will be US$80 million. By April, 63 per cent of the project was completed.
The dam will be 730 foot high and 1,700 foot wide at the base.
The irrigation waterway will have 61 tributaries extending more than 171 miles. Connecting irrigation ditches will have a length of 621 miles.
After completion of the dam, US$10 million worth of heavy machinery will be moved to Tachia in central Taiwan where another gigantic dam is under construction.
New Freighters
The Ingalls-Taiwan Shipbuilding and Drydock Company laid keels of two 12,500-ton class freighters May 12. The ships, ordered by the China Merchants Steam Navigation and the Taiwan Navigation Company, will be completed by the end of March, 1963.
Ingalls-Taiwan is the largest shipbuilder on Taiwan with plants at Keelung (Chilung) harbor. Financed by Sino-American interests, it has 180 staff members and 1,000 workers. Its board of directors consists of six Chinese and five Americans.
The Company delivered its first 36,000-ton super oil tanker S.S. Faith to the General Tanker Corporation in November, 1959, and completed construction of another tanker, S.S. Freedom of the same tonnage, in September, 1960. Each tanker has four engines and a speed of 17.75 knots.
In July, 1961, Ingalls-Taiwan built two 2,840-ton oil tankers, the S.S. Hai Tung and the S.S. Hai Hui, for the China Merchants Steam Navigation Company.
Hualien Harbor
Hualien on the east coast of Taiwan will become the island's third international port in October.
Construction of a deep water wharf has been completed and the harbor is being dredged.
Ships of 10,000 tons will be able to tie up at the wharf.
Hualien is expected to promote the business prosperity of the eastern part of the island. Keelung in the north and Kaohsiung in the south are Taiwan's two other international ports.
A modern runway at the Hualien airport was completed in May to assure undisrupted air traffic between eastern Taiwan and the outside world during the typhoon season.
At the same time, the Hualien plant of the Taiwan Cement Corporation went into operation.
The production of about 60,000 metric tons a year is expected to speed up construction work in eastern Taiwan.
Lubricating Oil
The Chinese Petroleum Corporation began production of lubricating oil in May.
Taiwan has been importing 60,000 to 70,000 barrels a year.
CPC will turn out 48 types, including high-grade automobile, heavy duty, circulation, cylinder and machine oils.
Production will be 100,000 barrels a year.
CPC is a government enterprise. It has three major production units: the Kaohsiung refinery, the Chiayi solvent works and the petroleum exploitation office at Miaoli.
Its products include gasoline, aviation fuel, kerosene, diesel oil, asphalt, natural gas, solvent, and such petrochemical products as benzene, toluene and xylene.
Aluminum Output
Under a contract recently signed with the Super Chemicals Corporation of the Philippines, CPC will supply machinery and equipment as well as technical assistance for setting up an acetic acid plant.
The Taiwan Aluminum Corporation (Talco) in May completed an expansion project that will enable it to turn out 15,000 metric tons of aluminum ingots a year. Production in 1961 was registered at 9,016 metric tons.
Expansion is marked by adoption of a Pechiney design of French license to build 86 100,000-ampere vertical stud cells to retire its old potline. The project is being implemented in two stages. So far, Talco has started operation of 60 new potlines. By the end of this year, 30 more will be added to increase its annual production capacity to 20,000 metric tons.
A government enterprise, Talco is producing aluminum sheets, foils, castings, structural shapes, prefabricated buildings, doors, windows, tanks, bus bodies and a great variety of other finished aluminum products.
Raw material for production, bauxite, is imported. In 1961, 40,000 metric tons of ore came from Sarawak.
The production season for sugar and canned mushrooms ended in May with output of 723,000 metric tons and 610,000 cases.
Sugar Output Down
Sugar production was down from 1961. The reduction resulted from shrinkage of sugar cane plantings from 68,000 to 60,500 hectares and also from damage caused by Typhoon Pamela last year.
Canned mushroom production marked a sharp increase compared with the 400,000 cases in 1961. It is a new but rapidly rocketing industry. In 1959, Taiwan exported only 200 cases, earning about US$3,000. This year, the export total is estimated at 580,000 cases and will earn about US$7 million.
Half a million people are involved in the production of sugar, mostly in planting. The Taiwan Sugar Corporation operates 25 sugar mills, employing 17,000 persons.
The Joint Commission for Rural Reconstruction estimated that 63 townships and 74 farmers' associations joined in mushroom growing and 32 canneries engaged in packing.
Showroom of Products
A showroom to exhibit Taiwan exports was opened in Hongkong May 25. The exhibition is sponsored by the Taiwan Provincial Supply Bureau and is handled by its representative in Hongkong, Po Lung Hong. It is located on the second floor of the Li Po Chun Building, Queen's Road, Central.
In the display are 199 items of Taiwan exports, including agricultural processed goods and industrial products as well as handicrafts. The exhibition is on a permanent basis and exhibits will be replenished and changed from time to time.
In addition to exhibition, Po Lung Hong also will handle exports from Taiwan to Hongkong and other pound sterling countries, especially those having no diplomatic relations with the Republic of China. Transactions may be financed by a letter of credit, or on the basis of consignment or collection.
A Sino-Malayan trading company, duly registered with the Malayan government, has been established in Kuala Lumpur.
Sponsored by an overseas Chinese leader there, the company also will have an exhibition center of Taiwan products to expand exports to Malaya and Singapore.
The Kuala Lumpur center is expected to be officially opened in October.
Investment Projects
Charles Pfizer and Company of New York, the first entirely U. S.-owned manufacturing plant in free China, is expected to begin operations in December.
Pfizer, with an investment of US$750,000 in its Taiwan plant, is the second U.S. pharmaceutical manufacturer to establish a plant in Taiwan. The other is the American Cyanamid Company, which has entered into a joint venture with the Taiwan Sugar Corporation for the manufacture of antibiotics and animal feed supplements.
Pfizer's Taiwan plant will produce antibiotics and veterinary pharmaceuticals, using American patents.
Mitsubishi Rayon Co. Ltd., Takeda Pharmaceutical Corp. and Nippon Electric Co. are Japanese companies whose investment plans have been approved this year by the Chinese government. Mitsubishi will invest US$400,000 in the artificial fiber industry, Takeda US$300,000 for the establishment of a pharmaceutical plant and Nippon Electric Co. US$100,000 in the telecommunications equipment industry.
A group of overseas Chinese is investing US$2,500,000 in a large housing project at the resort town of Peitou near Taipei. More than a third of the money will be used during 1962 for building 170 houses. The Overseas Chinese American Investment Inc., representing the investors, is planning to build 500 houses in three years.
IDA Projects
Four important development projects are being financed with loans from the International Development Association, an affiliated agency of the International Bank for Reconstruction and Development. The projects are:
*Taipei regional water supply project (US$4.4 million)—designed to serve more than one million residents in Taipei and eight neighboring communities with 215,000 cubic meters of water per day.
*Ground water development project (US$3.7 million)—drilling and installation of 765 deep wells to provide additional irrigation water for 84,000 hectares (207,564 acres) of rice fields along the western and southern coasts of Taiwan. Rice production will be increased by 130,000 metric tons annually.
*Maintenance and dredging of the three commercial harbors of Keelung, Kaohsiung and Hualien in the next ten years (US$2.2 million).
*Development credit of US$5 million to the China Development Corporation for long-term financing of private industries in Taiwan.