Diplomatic setbacks have not affected economic growth and international trade, a spokesman of the Ministry of Economic Affairs said.
He said the economic growth rate from January to May was 7.8 per cent higher than in the corresponding period last year.
Barring typhoon or flood in the second half of 1972, the year will be a good one economically.
The spokesman said foreign trade totaled US$2,220 million for the five months, or US$640 million more than in the corresponding period of last year. Exports amounted to US$1,100 million and imports to US$1,120 million. The import bulge resulted from large purchase of heavy machinery.
The wholesale price index rose by 3.83 per cent, due mainly to rising food prices.
The industrial growth rate was 26.9 per cent, paced by construction at 50.1 per cent.
Overseas Chinese and foreign investment totaled US$30,390,000, or 38.4 per cent more than in the five-month period last year. Fifty-nine per cent of the total came from Americans.
Stock transactions for the five months totaled US$459,935,000, an increase of US$306,490,000 or 199.7 per cent. The stock index in May was 162.69.
Revenues of government owned enterprises for the period were US$357,175,000,an increase of 27.4 per cent. Net profit was US$74,150,000, an increase of 42.9 per cent.
Free China has continued to maintain "good trade relations" with countries with which it has no diplomatic ties, the spokesman said.
Taiwan's trade with Canada, West Germany, the Netherlands, Britain, Singapore, Malaysia and Hongkong has been growing.
Canada imported US$113.4 worth of commodities from Taiwan last year, an increase of 110 per cent over 1970's US$53.8 million.
Exports to West Germany rose by nearly 30 per cent to US$93.8 million. Shipments to Britain more than doubled from US$16.8 million in 1970 to US$4.1 million in 1971.
Increases ranging from 10 to 25 per cent were registered in exports to Malaysia, Singapore, the Netherlands and Hongkong. Per capita income grew 6.3% annually.
Per capita income in Taiwan should rise by 6.3 per cent a year from 1972 to 1980, economic planners say.
If the target is reached, per capita income will exceed US$1,000 at current prices. Per capita income was US$329 last year. A figure of US$500 is expected when the Sixth Four-Year Economic Development Plan is completed in 1976.
Economic resources have to be fully utilized to attain the goal. The government expects the gross national product to grow by an average of 8.5 per cent annually in the next eight years.
The establishment and expansion of heavy and sophisticated industries and modernization of the industrial structure figure prominently in long-range economic development plans now under study by the Cabinet. The projected growth rate of industry is 11.5 per cent annually for the eight years.
Modernization of the infrastructure will be stepped up. This will include expansion of the power industry and additions to the transportation system and harbors. Between 1972 and 1980, power output will be increased by 11.9 per cent a year. Transportation and telecommunications growth is projected at 10.2 per cent a year.
Agriculture is expected to grow at a modest 3.6 per cent annually. Main efforts will be concentrated on cash crops, fishery and animal husbandry. The earning power of the farmers will be enhanced to improve their living standard.
Economic planners are depending on continuous enlargement of trade. Goals are 12.1 per cent for exports and 11.9 per cent for imports.
The government hopes to add 180,000 jobs by 1980. Vocational training will be extended and modernized. Taiwan will have 63 trained technicians per 10,000 people in 1980, compared with 32 in 1970.
Science development spending will be increased from 0.6 per cent of the GNP in 1970 to 1 per cent in 1980.
Trade of US$10 billion expected by 1976
Foreign trade will hit the US$10 billion mark by 1976, according to Walter H. Fei, secretary-general of the Executive Yuan.
The target, which is roughly twice the amount of trade expected in 1972 has been set in the Sixth Four-Year Economic Development Plan starting next year, Fei told participants in the. Seminar on Modern Engineering and Technology.
By the end of the new four-year plan, he added, the Republic of China will have joined ranks of the developed nations.
Fei, former vice chairman of the Council for International Economic Cooperation Development, said recommendations made by seminar participants would contribute much to the economic development of Taiwan in the years ahead.
He said the government will emphasize the following in pushing economic development:
— A shift from labor-intensive industries to capital-intensive and technology-intensive industries.
— Strengthening of the economic infrastructure.
— Stepped-up vocational and technological training.
— Equitable distribution of wealth while striving for a rapid rise in the gross national product.
The three-week seminar, jointly sponsored by the Institute of Chinese Engineers and its New York branch, adjourned following a general discussion chaired by Philip C.C. Chang, CIECD vice chairman.
Dr. Li Tien-ho, head of the overseas engineers group which came for the seminar, summed up the recommendations of the seminarians as follows:
— Modern technology should be introduced from abroad to hasten the development of sophisticated industries.
— Research and development policies should be formulated with emphasis on industrial research by private enterprises.
— Managerial skill should be up graded and training of managerial personnel stepped up.
Final suggestions made for new four-year plan
Economic growth in the next four years can be maintained at 9 to 9.5 per cent annually, according to a group of economists and fiscal experts.
The scholars expressed their view in a panel discussion of objectives for the Sixth Four-Year Economic Development Plan starting next year.
The meeting, held under the sponsorship of the Council for International Economic Cooperation and Development, was intended to solicit expert opinions regarding the economic plan pending a final revision.
Highlights of the suggestions made by the scholars include the following:
— More emphasis should be attached to equitable distribution of wealth while continuing the efforts to spur economic growth.
— The annual export growth target of 14.5 per cent seems too high in consideration of international economic changes. However, contrary views were also aired.
— The 3 per cent ceiling on the annual rise of commodity prices may not be maintained in view of the drastic changes in free world currency values.
— Greater emphasis should be attached to pollution control while the problem is still manageable.
— In seeking trade development, the potential of the domestic market should not be overlooked.
— Investment priorities should be spelled out in the new economic plan for the reference of prospective investors.
Another record year forecast by CIECD
Another record economic year can be expected in 1972 judging by the performance in the first two quarters, according to the Council for International Economic Cooperation and Development.
Foreign trade continued to surge ahead from January through June with a volume of US$2,674,100,000. This represents an increase of nearly 40 per cent compared with the like period last year.
Exports rose to US$1,354,900,000 and imports to US$1,319,200,000 for a surplus of US$35,700,000.
The currency remained stable. Money supply increased by only 23.7 per cent compared with the 30 per cent average of the past.
Savings deposits amounted to US$1,770.75 million, a gain of more than 29 per cent.
Synthetic fibers registered the sharpest rise among industrial products with output hitting 62,325 tons, an increase of 42.57 per cent.
Next came PVC powder and pellets with production of 85,737 tons, an increase of approximately 40 per cent.
Petroleum refining was up by 30.41 per cent.
The only decline was in coal, which showed a production drop of 4.99 per cent.
Emphasis to be placed on European trade
Free China has been doing well in its trade with countries with which it has no formal diplomatic ties, especially with Western European countries, official sources said.
From January through May, the Republic of China exported goods worth US$123,982,933 to Europe and had imports of US$100,279,110 for a surplus of US$23,704,823.
For all 1971, Taiwan exported US$224,595,959 worth of goods to Western Europe and had imports of US$199,825,469. The favorable balance was to US$34,770,490.
The government and semi-official trade promotion organizations will step up efforts to promote European trade.
Wu Kuan-hsiung, secretary-general, said the China External Trade Development Council would adopt a two-pronged approach. First, it will seek the establishment of working relationships between the Chinese chamber of commerce and chambers of commerce in European countries. They can exchange trade information.
Second, trade organizations here will set up working relations with commercial banks in Western Europe. These banks will collect information and promote trade.
Free China will continue to send trade missions to Western Europe. Missions also will go to Africa and Latin America.
CETDC will dispatch specially trained trade promotion personnel to Jakarta, Singapore, Bangkok, London, the Middle East, North Africa and other areas to collect market information and engage in trade promotion work.
Cabinet wants planners to be more realistic
The Cabinet has told the Council for International Economic Cooperation and Development to make public the main content of the Sixth Four-Year Economic Development Plan, before it is finalized. CIECD is specifically instructed to invite comments and suggestions from business and industrial leaders.
The Cabinet directive said the economic plan should be "pragmatic" and "avoid dislocation of the private sector of the economy."
The Sixth Four-Year Economic Development Plan covers the period from 1973 and 1976. Previously, only scholars and economic experts were asked to comment on the plans.
Premier Chiang Ching-kuo serves concurrently as chairman of the Council for International Economic Cooperation and Development. When he assumed this concurrent post several years ago while vice premier, he defined the function of the highest economic planning agency as that of the "economic general staff." Aside from its planning functions, CIECD has taken over certain supervisory functions.
The Ministry of Economic Affairs will carry out government orders to modernize the operation of the state enterprises in coordination with the rapid development of the private sector of the economy.
The modernization program will include improvement of financing, implementation of scientific management, modernization of production techniques and infusion of young blood into management.
MOEA will solicit the advice of leading foreign corporation and enter into technical cooperation with them to raise the technological standards of state enterprises in Taiwan.
Chase Manhattan Bank plans branch in Taipei
Chase Manhattan Bank has been given the go-ahead by United States and Chinese authorities to establish a branch in Taipei, the Ministry of Financial Affairs announced. The opening is set for September.
Chase Manhattan is the third largest commercial bank in the world, with assets totaling US$24.8 billion. It was established in 1920 and opened its first Chinese branch in Shanghai the following year.
The bank opened a Taipei liaison office in 1970. Commercial transactions handled by the office last year totaled US$154 million.
Due to the rapid growth of the economy of the Republic of China, the bank's board of directors decided to elevate the Taipei office to branch status.
The U.S. Federal Reserve Bank approved the proposal in early May and Chase Manhattan presented a formal application to the Ministry of Finance June 22.
There are six foreign banks in Taipei: Dai-Ichi Kangyo Bank Ltd. of Japan, First National City Bank, Bank of America, American Express International Banking Corporation, Bangkok Bank Ltd. and Capital Bank of the Philippines.
Processing zone exports to reach US$200 million
Exports from the three export processing zones in Taiwan will reach the US$200 million mark in 1972, officials of the Export Processing Zones Administration predicted.
The prediction was made on the basis of volume from the three zones in the first five months of this year. The total was US$64,710,000.
In the month of May alone, exports from the Kaohsiung, Nantzu and Taichung zones amounted to US$15,886,000.
The Kaohsiung Export Processing Zone reported exports of US$13,826,000 in May.
It said exports from the Nantzu zone amounted to US$1,080,000 and from the Taichung zone US$979,000 in the same month.
Electronic products topped the list of exports in May. KEPZ alone exported US$7,700,000 worth of electronics products.
Of the 161 plants at KEPZ, 37 are electronics manufacturers with 15,000 job opportunities. Then comes textiles with 23 plants and 4,700 workers.
KEPZ has 21 handicraft and 14 garment manufacturers.
The Nantzu Export Processing Zone was established in July of 1971. As of today, 24 plants have been approved and 16 are in operation. Among these, eight are plastics manufacturers.
There are 13 plants in operation at the Taichung Export Processing Zone with six plants manufacturing electronics products. Employment is 3,000 workers with 2,100 of these at the electronics factories.
KEPZ reported exports of US$34 million worth of products in the first five months of this year, representing 60 per cent of all zone exports.
The United States remained the biggest market for KEPZ, followed by Hongkong at US$5 million, Japan at US$4 million and West Germany at US$2,600,000.
KEPZ imported US$22 million worth of raw materials and components from Japan in the five-month period.
Imports from Hongkong totaled US$5,310,000 and those from the United States US$2,400,000.
The import situation at the Nantzu zone was about the same as at KEPZ with Japan as the major supplier.
Research institutes will be combined
Three research institutes under the Ministry of Economic Affairs will be merged to form a corporate body for the promotion of industrial research.
Known as the Institute of Industrial Technology, the new organization will be composed of the Union Industrial Research Institute at Hsinchu, the Mineral Research and Service Organization in Taipei and the Metallic Industrial Research Institute at Kaohsiung.
Patterned after the Korean Institute of Science and Technology, IIT will be free from restrictions imposed on government agencies.
Functioning as an independent research body, IIT is expected to serve industries by helping them solve technical bottlenecks and develop new products and production techniques.
The Cabinet has drafted a bill establishing IIT for legislative consideration.
Functions of IIT will include surveys, experiments, research and development in matters concerning technology and applied science.
Assets will include those of the three component institutes plus US$25.000 from the government.