Economic development in the first half of 1962 was marked by steady expansion and stable commodity prices.
Industrial production was on the increase and bumper harvests were reported.
Overseas Chinese and foreign investment continued to pour in despite the Taiwan Straits crisis.
The government imposed surtax assessments for defense in May. But this did not lead to inflation. The hike in the general commodity price level was negligible.
The government promulgated regulations for the establishment of bonded warehouses and factories in June to stimulate export processing. Foreign trade maintained a favorable balance if U. S. aid arrivals were not counted.
The first capital market in free China, the Taiwan Stock Exchange, started operations in February. Through this channel, private savings have been going directly into productive industries.
Construction of an industrial district at Liutu between Taipei and Keelung is near completion. Sale of land has begun. So far 23 investors have applied.
At the invitation of the government, experts from the Stanford Research Institute in the United States completed a three-month study of Taiwan investment opportunities. The team saw good prospects for the development of steel, natural gas, artificial fiber, electronics and timepiece industries.
Economic Cooperation
The first half of 1962 also saw intensification of economic cooperation with other countries.
The Republic of China and Vietnam held their second economic cooperation conference in Taipei February 26 to March 3. China offered to give assistance in exploration of iron ore deposits, erection of sugar mills, preparation of military rations, survey of ground water and development of agricultural industries.
Two economic officials from Thailand visited Taiwan in March. They were Minister of Finance Sunthorn Hongladarom and Under-secretary of Economic Affairs Lt. General Amphorn Chintaganonda. Their visit brought a broad agreement in various fields of economic cooperation, especially that of trade promotion.
The Republic of China and Paraguay signed a 10-year treaty of trade and economic cooperation May 11. The agreement says that Paraguay will welcome private capital from China and provides that China will send specialists and selected farmers to operate a demonstration farm in the South American country.
Cooperation with African countries was outstanding. Chinese farm demonstration teams are working in Liberia and Libya. A group of farm technicians from 11 African countries is studying rice growing, upland crops and farm extension in Taiwan.
The Taiwan Sugar Corporation in June sent five technicians to the Congo (Leopoldville) to help operate a sugar mill in Kivu province. Four technicians of the Civil Aeronautics Administration are in Leopoldville at U.N. invitation to maintain aeronautic communications facilities.
Never Brighter
The outlook for increased trade and investment in Taiwan was described by the United States Department of Commerce as "never brighter."
In a recent issue of Economic Reports, the department said the dynamism of the last several years and the sharp increase of output in every sector of the economy has paved the way for the island's take-off into a self-sustaining economy.
The Department says that Taiwan's 19-point Program for Accelerated Economic Development was primarily responsible for the "meaningful portent of Taiwan's economic prospects."
It noted that "the aggregate effect of these comprehensive reforms was the virtual remaking of Taiwan's business and investment climate into one of the most liberal in the entire Pacific area.
"Domestic confidence in the future stability of Taiwan's economy manifested itself in a 34.7 per cent increase in bank deposits, principally private savings deposits.
"Even more marked was the phenomenal upsurge in the number of foreign and overseas Chinese investment cases submitted to the Chinese government for approval. The government approved a total of 100 such cases in 1961, compared with only 60 in 1960, an increase of 67 per cent," the periodical said.
Free Trade
K.Y. Yin, chairman of the Foreign Exchange and Trade Control Commission declared on July 13 that the Chinese government will not change its free trade policy.
Yin was commenting on a report that the government may impose trade controls in view of the rapid increase in imports.
He pointed out that most of the imports were capital goods and industrial raw materials. While the government is seeking to accelerate economic development, it has to import machinery and equipment as well as raw materials.
He noted that there has been an appreciable reduction in the import of consumer goods for the first five months of this year. Between January and May, he said, such imports were US$11 million as against US$21 million in the same period of 1961.
"And most important, free trade is an established policy of the Chinese government. We do not want to change this policy just because of temporary increase of imports, and there is no such a necessity," he added.
Yin also said he hopes the United States will allow a free flow of goods from aided countries. He said any obstacle to the free flow will slow down the economic development of the recipient countries and the United States will have to increase its aid.
He expressed this opinion in connection with U.S. moves to impose a quota on textile imports from Taiwan.
Exports to U.S.
Exports from Taiwan to the United States have attracted world attention because of U.S. restrictions.
Such exports increased sharply in recent years. In 1959, the amount was only US$14 million. In 1961, it had climbed to a record of US$45 million.
Major items were sugar, timber and its products (mainly plywood), textiles, canned pineapple, citronella oil, tea and chemicals.
Sugar exports jumped from US$1.2 million in 1959 to US$17 million in 1961. This was a result of the U.S. special sugar quota for Taiwan after it stopped procurement in Cuba. Under the new sugar act recently passed by the Congress, the United States has granted Taiwan a quota of 35,000 metric tons for fiscal 1963.
Plywood is a new industrial product of Taiwan. Ever since production began in 1958, the United States has been the largest customer. Exports in 1959 were US$2.3 million and US$7.2 million in 1961.
Textile exports to the United States did not show as sharp an increase as sugar and plywood. But this item, amounting to US$5.1 million in 1961, has been most in the news.
The United States and the Republic of China opened negotiations on textile imports from Taiwan on July 19, hoping to find a successful settlement.
The United States, with its pineapple-growing state of Hawaii, has been the biggest buyer of Taiwan's canned pineapple. The United States bought US$3.7 million worth in 1961, amounting to a third of the island's production for export.
Tourist Hotels
Construction of new tourist hotels proceeded at a whirlwind pace. Investors hope more tourists will visit Taiwan in 1963 and especially in 1964, when the Olympic Games will be held in Tokyo.
The Grand Hotel in Taipei is building a three-story palace-style annex of 53 rooms. Facilities will include presidential suites for distinguished visitors. Cost is estimated at US$400,000.
The Sino-Thai Guest House will have 432 rooms and an auditorium seating 1,000 persons. Financed by an overseas Chinese in Thailand, it will cost US$2.s million.
Under a Sino-Japanese project, a contract was signed in June to build a 14-story building in downtown Taipei. It will include a 500-room hotel, department store, swimming pool, skating rink and night club. Two basement levels will provide parking.
The Taipei Hotel Association says at least two other tourist hotels are under construction.
Taiwan already has 19 tourist hotels totaling more than 500 rooms. Most are airconditioned.
Mushroom & Shrimp
The Foreign Exchange and Trade Control Commission reported that in the period from January to May, 1962, Taiwan exported US$6.5 million worth of canned mushrooms.
This is a 533 per cent increase over the same period last year. Major buyers are the United States and West Germany.
The Joint Commission for Rural Reconstruction said 63 townships and 74 farmers' associations in Taiwan have joined in mushroom growing and 78 canneries are doing the packing.
Exports in 1959 were only US$3,000, This year the total is expected to reach US$10 million.
Another new export item is frozen shrimp. The China Fishery Corporation reported in June that it had received an order from the United States for 400,000 kilograms.
The beginning was last March, when 5,000 kilograms were shipped to France. According to the Joint Commission for Rural Reconstruction, frozen shrimp is expected to have an "almost unlimited market."
Turkish Fair
More than 40 items of Taiwan products were shipped in July to the Izmir Trade Fall' in Turkey. Dates are August 20-September 20.
Y. T. Hsieh, Ministry of Economic Affairs official, left for Turkey to handle the exhibition.
Turkey enforces import controls. To encourage participation in the Izmir Fair, the Turkish government has authorized Taiwan a US$500,000 quota for its exhibits. Sale proceeds within this quota can be remitted to Taiwan.
Trade Missions
Chinese trade missions have been contacting commercial leaders in Australia and Canada.
The mission to Australia, led by Wilfred Ling of the Central Trust of China, also went to New Zealand. Inquiries have been received from both New Zealand and Australia asking about cotton textiles, plastic goods and hardware.
The mission to Canada is headed by Fred Wong, president of the Kaohsiung Ammonium Sulphate Corporation. It has toured Canada for more than a month. Orders have been received for gourmet powder, canned food and plywood.