Every segment of the economy did well except agriculture, which recorded a gain of only 1.3 per cent largely because of adverse weather conditions. The value of industrial production exceeded that of agriculture for the first time. , Industry produced 36.6 per cent of the net 'domestic product, compared with 15.7 per cent for agriculture. In the industrial sector, heavy and chemical industries were responsible for 54 per cent of productive value. Previously dominant light industry moved down to second place.
Yet 1972 was the year of visits to Peiping by President Richard Nixon of the United States and Prime Minister Kakuei Tanaka of Japan. Tanaka's accession to Japanese administrative leadership resulted in that country's recognition of the Peiping regime and severance of relations with the Republic of China. Even this sorely difficult problem was not allowed to damage the Republic of China economically. The ROC and Japan established organizations and offices of a quasi-governmental level to carry on economic, consular and other essential relations.
Similar relationships were worked out with other countries which sought to relax tensions with the Chinese Communists by sending ambassadors to Peiping. The Republic of China took the diplomatic initiative wherever and whenever it could. Formal ties were maintained with a large number of countries. Those with the United States were strengthened despite President Nixon's endeavors to make friends with the Peiping regime. The Chinese Communists accepted a liaison office relationship with the United States early in 1973 but the ambassador of the Republic of China was still there. Peiping had said it would never countenance the dispatch of an official mission to a country where the Republic of China was represented, but this is precisely what the Chinese Communists did in agreeing to send a liaison representative to Washington.
Figures of the Central Bank of China based on foreign exchange settlements showed that Taiwan came close to its first US$6 billion trade year in 1972 with exports of US$3,114 million and imports of US$2,843 million for a total of US$5,957 million. The export increase was from the US$2,135 million of 1971 and imports were up from US$1,990 million. Lower figures based on customs statistics showed an export gain of 48.1 per cent, import gain of 37.2 per cent and total growth of 42.9 per cent.
Nor was there any softening of exports because of diplomatic developments. January and February of last year showed export figures of around US$200 million, while November and December were at the US$300 million level. Industry and business did not pause because of Nixon or Tanaka. People went about the business of making a better life for Taiwan and the free Chinese people.
Exports were paced by textile, leather, wood and related products at a volume of US$1,308 million. Rising fast were metal products at US$727 million, including electrical machinery apparatus earnings of nearly US$500 million. Other leaders were foods and beverages at US$305 million, miscellaneous manufactures at US$297 million, agricultural, forestry and fishing products at US$221 million, basic metals at US$107 million, nonmetallic mineral products at US$83 million and chemicals and chemical and pharmaceutical products at US$50 million.
Metal products led the way for imports at US$1,132 million. Then came agricultural, forestry and fishery products at US$436 million, chemicals and chemical and pharmaceutical products at US$383 million and textile, leather and wood products at US$289 million.
Regionally, trade with North America (the United States and Canada) came close to exceeding that with Asia. The North American total was US$2,256 million and that with Asia US$2,373 million. These were regional export and import figures in US$ millions:
| Exports | Imports | |
| Asia | 1,020 | 1,353 |
| Middle East | 63 | 118 |
| Africa | 90 | 61 |
| Oceania | 59 | 93 |
| Europe | 369 | 273 |
| North America | 1,411 | 845 |
| Latin America | 58 | 55 |
By country, the United States continued to be Taiwan's best customer and Japan its leading supplier. Exports to the United States totaled US$1,272 million; US$822 million worth of goods was purchased from that country. Japan took US$406 million worth of goods while selling US$1,080 million worth. Hongkong was the third ranking trading partner with US$230 million in Taiwan exports and US$58 million in imports. West Germany was fourth. US$140 million worth of products went to that European country and imports stood at US$116 million.
Trade patterns were not expected to change drastically in 1973, although the government hoped to increase purchases in the United States and reduce the deficit with Japan. The government sent a high-level trade and investment mission to the United States in March. One of Taiwan's biggest department stores dispatched a buying mission to the United States and planned to offer extensive lines of American merchandise this fall.
David Kennedy, the U.S. roving ambassador on trade affairs, visited Taipei in March and expressed satisfaction with efforts of the Republic of China to reduce its surplus in commerce with the United States. The Board of Foreign Trade unveiled specific plans to buy more American products. Long-term contracts will be signed for the purchase of such farm products as soybeans, wheat and barley. More machinery will come from the United States and less from Japan. A trade office will be opened in Los Angeles and participation in U.S. trade fairs stepped up.
Predictions of 1973 trade volume range from US$7.4 billion to US$7.5 billion. Exports are expected to rise by 40 per cent and imports by 30 per cent. The first 40 days of 1973 showed trade of US$559 million, a gain of US$113 million over the same period in 1972. Exports were US$313 million and imports US$246 million. The government said that tariffs would be reduced, if that was necessary to cope with price changes resulting from international monetary fluctuations. Duty on bulk imports was slashed by 50 per cent for a period of six months. The products included milk powder, grains, scrap iron and steel and ships for breaking. European trade was encouraged. Sales at the European Industrial Machinery Exhibition in early 1973 totaled US$18.4 million.
The Republic of China's government was one of the few in the world without serious fiscal problems. The budget for fiscal 1972 ended last June 30 showed a surplus of more than US$50 million. Fiscal operations for the current year are as successful or even more so. Government revenues of all levels reached an estimated NT$64.4 billion (US$1,610,000,000) in fiscal 1972, an increase of 13.9 per cent. Taxes made up 62.4 per cent of the total and showed an increase of 17.2 per cent. Income tax revenue was up 35 per cent and made up 15 per cent of the tax yield.
Expenditures were NT$62.9 million in fiscal 1972. The categories of general administration and national defense were the biggest but had declined in relative size. Government revenues amounted to 18.2 per cent of the gross national product and 23.1 per cent of national income.
Premier Chiang Ching-kuo announced government functionaries would receive a pay increase in fiscal 1974, which begins July 1. He did not announce a figure but the amount was expected to be about 20 per cent with lower echelon employees receiving bigger increases than those in the higher pay brackets. Such fringe benefits as housing and social security also will be increased. Premier Chiang said this is in keeping with the government's insistence that its employees "live to work and not work to live."
Value of the New Taiwan dollar was revalued upward in February after the official devaluation of the U.S. dollar by 10 per cent. The amount of the upward revaluation was 5 per cent, which made the rate NT$38 to US$1. Exchange rates with other currencies were based on the new U.S. dollar rate. Finance Minister K. T. Li said the decision was made in the light of the domestic price situation as well as to promote trade. ,
Money supply rose rapidly in calendar 1972. The supply stood at NT$60,808 million at the end of 1972, compared with NT$45,676 million at the close of 1971. The index (100 = 1966 average) stood at 389.6 on December 31, 1972, compared with 292.6 a year before. A further increase to NT$66,790 million took place in January. Major factors leading to the rise were increased claims on private enterprises and others, the inflow of foreign assets and a decrease in government deposits. Deposits of the entire banking system rose from NT$123,287 million at the end of 1971 to NT$164,564 million at the end of 1972. Bank interest rates were adjusted as of July 1, 1972. On the average, interest on deposits was lowered by 0.5 percentage points and interest on loans by 0.75 percentage points. Excess reserves of the banking system rose so rapidly that in August of 1972 the Central Bank began to sell certificates of deposit to banks.
Taipei got its sixth American and ninth foreign bank with the establishment of the first Asian branch of the Irving Trust Company of New York. Irving joined American Express International Banking Corporation, Bank of America, Continental Bank of Chicago, First National City Bank and Chase Manhattan Bank. The other foreign banking institutions are of Japan, Thailand and the Philippines. Foreign banks were given permission to receive deposits in New Taiwan dollars.
Inflation has not been a serious problem ·despite Taiwan economic growth of about 10 per cent annually for more than a decade. However, wholesale and retail price levels increased by nearly 5 per cent in 1972. For the first two months of 1973, the retail price rise exceeded 8 per cent. This was related to international monetary changes but the government showed deep concern and moved on several fronts to protect the stability which has enabled Taiwan to keep wages under control and its export prices competitive.
The stock market showed signs of overheating. Transactions were setting day-to-day records. Shares of many companies rose substantially. The Ministries of Finance and Economic Affairs joined with the Central Bank to defuse market speculation. Banks were instructed not to make loan based on stock shares as collateral and to review loans already made on this basis.
Premier Chiang Ching-kuo told the Legislative Yuan that further measures would be taken to control inflation. Curtailment of the money supply will be included. Foreign exchange reserves, which are climbing toward the US$2 billion mark, will be used for basic imports as required. Tariffs may be lowered. Government agencies will import necessities if private sources fail to do so. The Premier said that public enterprises will not raise prices in 1973. Quantities of soybeans, wheat, maize, petroleum and steel have been stockpiled in response to the worldwide inflationary trend.
US$200 million was made available to businessmen as loans for the import of daily necessities and essential raw materials for industry. Six-month loans will bear interest of 5 per cent; extensions of up to three months are possible. Imports will be of grains, scrap iron, wool, cotton, synthetic material and logs.
Finance Minister Li said the government would issue flexible bonds to sop up idle capital.
Monetary uncertainties did not have any important dampening effect on foreign and overseas Chinese investment in the Taiwan economy. Investment for 1972 was US$126 million. This was down from 1971 's US$163 million but largely because of the VOEST steel mill investment of US$63 million in that year. The biggest 1972 investment was that of the Ford Motor Company of the United States in a joint venture with the Lio Ho Automobile Industry Corporation. Several big American companies were studying Taiwan projects. Investment money was turning to housing to solve the growing shortage. Seven American contracting firms expressed interest in plans to build US$150 million worth of apartment units.
Government undertook a two-year US$50 million program to assist ailing agriculture at the start of 1973. For 1972, crop output was down 0.8 per cent and forestry 6.3 per cent. The 1.3 per cent growth rate of agriculture as a whole resulted from the 8.5 per cent gain of livestock and the 6.8 per cent upward movement of fisheries. The rice-fertilizer barter system is being abolished. Farm mechanization will be stepped up. The farm tax burden will be eased and easier credit made available.
Quality of farm exports is carefully checked.(File photo)
Premier Chiang told legislators that farm output would be raised by introducing improved techniques and by changing over to crops more remunerative than traditional rice. Special crop zones will be established to guard against the overproduction of export products.
Not all of the agricultural story was discouraging. The combined yield of crops, forestry, fisheries and animal husbandry was NT$56,230 million in 1972 for an increase of 5.05 per cent over 1971. Farm products stood at NT$29,714 million, a decline of NT$191 million. The fisheries catch was up NT$1,729 million to NT$10,077 million and livestock climbed by NT$1,670 million to NT$13,887 million.
Mechanization of farms made progress in 1972. Another 1,125 power tillers were put in service with the help of government loans. Government has helped farmers buy 11,500 of the machines. This is about a third of machinery placed on farms since start of the mechanization program in 1958. Some 200 mechanized teams had been established throughout the island. These performed services in 136 townships and counties. Nearly 700 farmers were given special training in new agronomic techniques.
The Vocational Assistance Commission for Retired Servicemen pledged its assistance in setting up special agricultural zones. VACRS already operates 14 farms on marginal and reclaimed lands and is striving to expand silk production in the mountainous areas of eastern Taiwan. The Joint Commission on Rural Reconstruction pledged assistance in raising the output of bamboo, which is in increasing demand all over the world. Use of chemical fertilizers is expected to double the output of the tree-like grass.
Government showed awareness that the potential for increased export of processed and unprocessed agricultural products has been only partially explored. For example, the export of frozen fish, pork and vegetables alone rose to US$40 million in 1972, a gain of US$12 million. Nearly US$6 million worth of citrus was exported in January and February of this year. But the frozen food industry is in an embryonic state and the raising of citrus is still regarded as more of a domestic than an export enterprise.
Agronomists and food specialists of the National Science Council, Ministry of Economic Affairs and Council for International Economic Cooperation and Development suggested that agriculture and industry can join in improving the production and marketing of many new and old products for both domestic consumption and export. Specifically cited were frozen foods (better facilities and packaging are needed), canned foods (technical improvements and joint production and marketing), confectionery (higher quality products), preserved foods (modernization and improved packaging and labeling), soft drinks (consolidation of producing companies and the canning of fruit juices for export), seasonings (improved quality of powders and sauces), dehydrated foods (development of breakfast and instant foods) and baby foods (development of high quality products to replace imports).
Industrial growth exceeded 26 per cent in 1972. Building construction set the pace at nearly 32 per cent. Then came manufacturing at close to 28 per cent, public utilities at 16.5 per cent and mining at 7 per cent. All gains were higher than those of 1971. Increases of more than 30 per cent were chalked up by the electrical machinery, machinery, plywood and chemical industries.
Taiwan is expected to become one of the world's leading petrochemical suppliers within a few years. Natural gas is a raw material for such basics as methane and ethane. Finished 'resins and plastics are made from methanol, formaldehyde and formaldehyde resins. Crude oil imported and refined in Taiwan will yield such intermediates as DMT (26,400 metric tons annually) and PVC (60,000 metric tons annually). The DMT will be further processed into polyester fibers and the PVC into plastics. At the end of the petrochemical line are such products for domestic use and export as resins, plastics, fertilizers, solvents, beverages, MSG, acrylic fiber, synthetic rubber, plasticizer, detergents and synthetic fibers.
By 1976, Taiwan will need these quantities of petrochemicals annually: DMT, 52,800 metric tons; caprolactam, 57,300 tons; acrylonitrile, 35,000 tons; vinyl chloride monomer, 360,000 tons; styrene, 45,100 tons; DOP, 114,000 tons; ABS, 47,000 tons; methanol, 97,000 tons; and acetic acid, 40,000 tons.
Another sign of Taiwan's industrial maturity was the decision of the U.S. government and Northrop Corporation to license the manufacture of F5E fighter planes in the Republic of China. Part of the production will be for export.
Southeast Asia's first integrated copper mill will be built in Taiwan within the next two years. The US$42 million plant will refine at least 30,000 tons of copper ore a year. The Taiwan requirement is 28,000 tons a year and growing at a rate of 15 per cent annually.
A testimonial to Taiwan's progress came from Robert B. Alexander, president of Ford Asia-Pacific Inc. Making his first visit to the Republic of China since forging of the Ford-Lio Ho partnership, Alexander said Taiwan has "a great future." The first locally made Ford, a Cortina, will come from the Chungli plant in mid-1973. Installation of assembly line machinery has already begun.
Small and medium-size business and industry also was receiving Taiwan attention. Inauguration of the Asian Small and Medium Enterprises League was scheduled for March. Thirteen countries and areas are participating. Establishment in Taipei of an Asian trade center was proposed as well as the opening of an Asian Small and Medium Enterprises Bank.
Shipbuilding continued to advance in the heavy industrial sphere. Plans for a new shipyard at Kaohsiung were nearing fruition. The additional yard would build supertankers of around 300,000 tons and large bulk carriers. At Keelung in the north, the Taiwan Shipbuilding Corporation yard has orders which will keep it busy through the 1970s. Fifteen vessels of from 28,000 to 50,000 tons have been contracted. Nine other vessels will range in size from 58,000 to 130,000 tons. Ship repairing will total 1.5 million tons or more annually. TSBC has moved from the building of small fishing boats in 1948 to rank as the world's 15th biggest ship builder. Five tankers of 100,000 tons have been launched and a sixth will go down the ways this year. Two 59,000-ton bulk carriers have been built.
The island has ample workers but not enough skills. Minister of Education Y.S. Tsiang revealed a five-year plan to accelerate and improve vocational training. The effect will be to put six of every ten students of high school level into vocational rather than academic courses. Vocational junior colleges will enroll 20,000 new students in five-year courses annually. Colleges and universities will increase their technological, industrial and marine course offerings. Graduate work will be expanded and the number of students increased.
Electric power generation has kept up with the requirements of industry and will continue to do so The 17,465 million kilowatt hours produced in 1972 represented an increase of 15.1 per cent. Power from hydro generators was up 17.8 per cent because of adequate rainfall. A partial curtailment of industrial power was required in September and October because of thermal shutdowns for maintenance. Installed capacity rose to 3,520,000 kilowatts at the end of 1972 with completion of the second unit at Linkuo and additional generators at Talin. Both are thermal plants. Taiwan will turn to atomic power by the mid-1970s and is expected to have four nuclear generators in operation by the end of the decade.
Transportation and communications infrastructure expansion was not neglected. The principal international harbors of Kaohsiung in the south and Keelung in the north were engaged in expansion programs. Construction of Kaohsiung's second harbor entrance is on schedule and will be completed before 1976. Natural conditions will permit almost limitless expansion of berthing at Kaohsiung. Keelung has built-in geographic limitations, however, and the construction of a third big port on the west central coast at Wuchi, 14 miles from Taichung, will begin November 1.
Export zone juts into port area at Kaohsiung.(File photo)
International tenders will be called in July for construction of 2,000 meters of breakwater, 800 meters of silt control bank and 2,000 meters of seawall at Wuchi. The port will be able to handle 2.8 million metric tons of cargo by 1977 and 10 million tons by 1985. Total cost will be in excess of US$100 million. Establishment of the new port is expected to encourage industrialization around Taichung, a city of 500,000.
Another large-scale infrastructure project to be started in 1973 is the "north bend" railway between Suao and Hualien on the east coast. This will be an extension of the west coast mainline which connects Kaohsiung with Suao via the major cities of the west, Taipei and Keelung. At Hualien the line will meet a narrow gauge railroad which runs south to Taitung. The Hualien-Taitung line subsequently will be widened. When a "south bend" railway is built from Kaohsiung to Taitung, Taiwan will have its long awaited "around the island" system.
Construction of the "north bend" link has been delayed by the forbidding nature of Taiwan's geography. Mountains descend precipitously to the sea. The existing highway is often blocked by landslides. Rail construction cost will be high because of the many tunnels and bridges required.
Another imminent railroad undertaking is electrification of the west coast mainline. U.S. loans are under negotiation to help buy the machinery and equipment needed for the US$130 million project. Electrification will reduce running time between population centers and virtually eliminate pollution. Tracks in Taipei will be relocated underground, thus contributing to solution of the city's traffic problem.
Work is to be expedited on the North-South Freeway. The northern section which will link Keelung and Taichung via Taipei is already well under construction. The expressway will help contribute to the Taipei mass transit plan for the 1970-1990 period. Relocation of rail tracks will permit the construction of high-speed feeder highways leading to fast-growing suburbs at all points of the compass. The Taipei population is expected to be close to 5 million by 1990.
Tunnels speed traffic to the suburbs of Taipei.(File photo)
Communications emphasis has been placed on telephones, which now number nearly 600,000. Direct dialing has already begun and will be available island-wide before the end of the decade. Microwave transmissions will improve telephone service to the east coast and also carry television programs. Construction of a ground station linked to the Indian Ocean satellite is nearing completion. This will greatly improve communications with the Middle East, Europe and Africa. Service to the Americas is already provided by a ground station for the satellite stationed over the Pacific.
US$26 million will be spent in the next four years on modernization of the postal service. Annual growth rates for the period are expected to reach 10 per cent for letters, 7 per cent for parcels, 12.3 per cent for postal savings, 12.5 per cent for money orders and 10 per cent for philatelic sales. More than 4,000 additional personnel will have to be employed. Specific plans call for construction or remodeling of post offices, expanded service in rural areas, purchase of electronic sorting machines, establishment of an integrated postal transportation system, opening of an airmail processing center, automating of parcel processing and expansion of postal savings and insurance.
Taipei international airport is outgrowing its narrow corridor between city and mountains. There is no room to add a second main runway. Approaches are over heavily populated areas. Construction is expected to begin next year on a new Taipei airport close to the west coast in the vicinity of Taoyuan. The project will be under-taken in stages. Much of the designing has already been completed. Only the financing remains to be arranged.
These many additions to infrastructure reflect the growth of transportation and communications at rates in excess of 13 per cent annually. Not to keep up is to jeopardize the expansion potential of the whole economy.
Government at all levels is watching carefully to see that the human element is not neglected. Family planning has already begun to bring the population explosion under control. The birth rate soared over 4.5 per cent in the 1950s. For last year, it was down to 1.9 per cent, the lowest on record. The goal for this year is 1.8 per cent. The National Health Administration reported that Taiwan births numbered 365,749 in 1972.
Housing needs will be attacked under a four-year program to build 338,150 units, of which 103,800 will be erected with government funds for the less privileged. Housing formerly was available only on a cash basis or with high-interest loans for brief periods. Movement of money into construction is lowering down payments to around 50 per cent and providing 10-year loans at interest of around 7 per cent.
Social security benefits have been steadily enlarged. Coverage is to be further increased. As of March 1, 1973, nearly I. 5 million people were covered by labor insurance. This means that about a third of the population has protection. Medical costs have been rising. However, the Taiwan level is nothing like that to be found in the West. Only the very poor need seek charity. Competent medical care and hospitalization are still available at reasonable cost.
Girls dominate electronics industry work force.(File photo)
Although some diplomatic retrenchment was required in 1972, the Republic of China did not retreat from international obligations already undertaken or hesitate to begin new projects. Fourteen agricultural technical missions are still serving in Africa and nine are working in Latin America. Two missions are serving in the Middle East and two in Southeast Asia. Three non-agricultural technical assistance groups are serving in Africa, one in South Vietnam and one in the Philippines. About 250 specialists from abroad will be trained in Taiwan this year. Forty-two Africans came from 12 countries for the 14th four-month seminar on agricultural techniques. This raises the total of those trained to 699.
South Vietnam was given a US$5 million line of credit to help in postwar economic reconstruction. The Saigon government was planning to buy construction materials, plastics and electrical machinery in Taiwan. The ROC agricultural assistance team in South Vietnam was enlarged.
Premier Chiang Ching-kuo took up the Republic of China's plans for "upward development" in his oral administrative report to the first meeting of the 51st session of the Legislative Yuan late in February. He spoke of scientific development, and said this "is the main motivating force of modernized construction. This means that scientific development must be closely coordinated with national construction. In the last four years, we have laid the foundations in accordance with our long-term plan for scientific development. From now on, we shall adjust the directions of scientific progress. In addition to research in the basic sciences, we shall emphasize research and development in applied sciences related to national defense and economic construction."
These scientific goals were set:
- To launch scientific studies at the same time and in many fields. Peaceful use of nuclear energy, meteorology, geology, oceanography and ecology will be the major items.
- To take scientific study out of the laboratory and onto the production line. All specialized techniques related to industrial development, rural construction, transportation and communications will be studied and experimented with.
"In the study of science," Premier Chiang said, "the burden is heavy and the road is long. It is not easy to forge ahead of others in a brief time. However, as long as we move in the right direction, take advantage of the experience of developed countries and quicken our pace, we can be confident of catching up with others and of enabling our modernized construction to benefit from today's scientific knowledge and technology.
"We are of the opinion that national construction is most clearly and concretely reflected in economic development. The rapid economic growth of the last two decades has added massive strength to our country. We shall continue to make a great effort and a substantial investment in order to raise economic construction to a higher level.
"We completed our Fifth Four-Year Economic Development Plan satisfactorily last year. The sixth plan got under way this year. We shall strive to implement two important objectives: to raise the living standard of our people and to narrow the gap between rich and poor. We want our plant to grow skyward and root into the earth at the same time, so that we can increase the harvest and assure that all people enjoy the benefits."
The Premier said that all scheduled infrastructure projects would be started and some completed during the four-year period. He mentioned the augmentation of power, iron and steel production, shipbuilding, railways, highways and airport. At the same time, he faced up squarely to the problems facing the Republic of China and said they would be overcome. Obstacles were listed as:
- Apparent slowdown in agricultural growth.
- Steadily rising price indices resulting from international monetary fluctuations and the soaring prices of leading raw materials on international markets.
- Increasing pressure of the money supply resulting from the favorable balance of trade and inflow of foreign capital, though foreign exchange reserves have increased and the standing of the New Taiwan dollar has been enhanced.
- Deliberate attempts of the Chinese Communists to undermine the ROC's economic relations with foreign countries.
Of the government's efforts to meet these challenges, the Premier said:
"We have given careful attention to the slowdown in agricultural growth. We have studied the causes, analyzed the effects and used these findings to work out plans for accelerated rural construction. Our objective is to improve the livelihood of farmers by raising their income. Our plan emphasizes increased public investment in the rural area, reduction of agricultural production costs and improvement of the conditions of agricultural production so we can enhance farmers' interest in production and increase their income. We have drafted a special budget bill to this end.
"Recent price fluctuations have given us the deepest concern. We are watching this closely. We are aware that the price level is an extremely complicated and highly sensitive result of economic phenomena. This implies that we must most definitely and swiftly but with extreme care coordinate our financial, economic and monetary measures in order to meet market changes and adjust supply with demand. Meanwhile, we shall tolerate no man-made disruption or manipulation. We are fully cognizant that the price level has much to do with the people's livelihood, with social security and with the consummation of our economic plans. We shall leave no stone unturned in solving this basic problem so as to assure stability.
"We also have given due attention to possible effects of the increasing money supply. Consistent with our unchanging principles of fulfilling the requirements of industrial and trade development while maintaining financial stability, we are taking all necessary measures to ease the effects of the rapidly increasing money supply. Included are the floating of construction bonds, provision of foreign exchange for renewal of equipment by government and private enterprises, augmenting of productivity, development of the capital market, promotion of the campaign to promote savings by all the people and the lifting of import restrictions on many raw materials and much industrial equipment. We shall never allow the constructive accomplishments of economic expansion to be transformed into destruction forces blocking development.
"We shall never permit the Communists to have their way in the economic war they are waging in overseas areas. We shall strive to improve the quality of our industrial products, increase our ability to provide raw materials and industrial equipment, and become more competitive in the international market. Additionally, we shall strengthen economic and trade relations and technical cooperation with countries which have no diplomatic ties with us. We want to thwart the Chinese Communists' economic challenge with substantial strength and actual accomplishment."
With reference to the 10 per cent devaluation of the U.S. dollar and 5 per cent upward revaluation of the New Taiwan dollar, Premier Chiang said the government was "well aware of the importance of the change's effect on the welfare of the nation, the livelihood of the people, the stability of society and the implementation of our economic construction program. In consequence, we carefully analyzed the advantages and disadvantages from various angles and did our best to safeguard economic development and stability. We would prefer to move a little slowly rather than suffer from the slightest mistake. The change demonstrated that our economy is strong enough to support upward revaluation. At the same time, we must be increasingly aware that the continued expansion of our trade will be more difficult than before. Pressures on money and prices generated by economic growth will continue to increase. We must redouble our efforts and make wise decisions in order to cope with the situation."
Hotel mural and bright lights of Taipei boulevard.(File photo)
Objectively, everything was in the Republic of China's favor as the world moved well into 1973. Those countries which looked to the Maoists as the mainstream of China's future were deceived by an illusion. There was nothing there in Chinese terms - only a temporary un-Chinese tyranny which will pass from the scene as have other tyrannies which tried to destroy the basic qualities of Chineseness.
Speaking in Taipei just before the Chinese New Year in January, the American ambassador, Walter P. McConaughy, summed up the Republic of China's outlook in this way:
"While I do not believe that there ever was reason to be overly anxious about the Republic of China's future, we all know that unfavorable international developments tend to produce people whose pessimism exceeds what the facts warrant. The pessimists were wrong. The achievements are now a matter of record, and the facts are more than sufficient to put such unwarranted pessimism to rest.
"Those who were tempted to think that the Republic of China was in despair have discovered over the past year certain basic truth. They have discovered both in the Republic of China and overseas that those who predicted almost complete isolation, capital flight, national jitters, if you will, were off the mark. They have discovered that the government and people here have reacted to international setbacks and disappointment in a calm and reasonable manner, with unshaken determination to preserve the prospering society created in Taiwan by their common efforts. They have discovered that there is more than just a business-as-usual atmosphere on Taiwan. There has been a surge of energy and a healthy process of self-reflection marked by a spirit of pragmatic flexibility to cope with changing circumstances. They have also discovered the creative intelligence and perspicacity of the people.
"Those who had the impression that the Republic of China was in serious straits after its setback in the U.N. in 1972 are now shown to have underestimated the resiliency of the Republic of China. President Chiang summed up Chinese courage in his New Year's Day message to the nation when he said 'It is characteristic of the Chinese that the greater the difficulties faced by the nation, the more vigorous will be the patriotism and loyalty of the people.' In this patriotism and loyalty, in the vigor of your government and people during times of crisis, we find the source of the remarkable achievements of this government and its people. Not only do these traits account for past performance, but they justify a forecast that this record of achievement in many fields will be maintained or even surpassed in the future."
With such friends, and such avowals of support from its closest international friend, the people of the Republic of China knew that they were not alone. Their spirits were high, their confidence unshaken and, as Ambassador McConaughy said, their accomplishments spoke more eloquently than any number of words.