Experts see single digit 1982 inflation
The fires of inflation that have seared the Republic of China since 1979, mainly because of the soaring price of petroleum, appear to be dying down. Already economists expect domestic inflation to fall below the double digit level this year, in view of the prospects of stable oil prices through 1982 (oil accounts for a fifth of Taiwan's imports, and its cost equals a tenth of the GNP).
These economists predict that wholesale prices will rise by only 5% to 6% this year, well below the government target of 7.5%, and that consumer price increases will be only a couple of percentage points higher. If these predictions hold true, inflation in 1982 will be down substantially from last year.
Wholesale and consumer prices increased 8.64% and 17.72%, respectively, during the first 10 months of last year.
The Directorate General of Budget, Accounting and Statistics predicts that for the whole year, wholesale prices will be up 8.5% (compared with the government target of 9.5%) and consumer prices 16.5%.
Wholesale prices have been on a downward trend since April, for a number of reasons. Externally, oil prices have been steady and the high-interest rate policy in the United States has forced manufacturers to reduce their inventories, so that the prices of major raw materials have declined; domestically, inventories have also been reduced because of tight money and high interest rates.
But consumer price increases are still very high - almost 10 percentage points higher than the growth in whole sale prices. "This gap is due mainly to time lag," explains Dr. Shih Ming-sheng, deputy director of the economic re search department of the Council for Economic Planning and Development. "It usually takes nine months for wholesale price movements to be reflected in consumer prices. Last year's consumer prices were still being influenced by the 34.07% growth in the money supply in 1978, and by oil price hikes since that year."
The effects of these factors were felt in 1979, when consumer prices went up 9.75% and wholesale prices jumped 13.84%; and in 1980, when consumer prices leaped 19.02% and the wholesale index soared 21.54%.
Inflation continued roaring along in the first quarter of last year, when wholesale prices shot up 2.64% and consumer prices 3.32%. Growth of the wholesale index slowed to 0.61 % in the second quartet, but consumer prices went up by a much higher 3.55%. Despite the 4.86% devaluation of the New Taiwan dollar against the U.S. dollar, wholesale prices dropped 0.14% during the third quarter; consumer prices jumped 3.7%, however, largely because of summer flooding.
In October consumer prices fell 1.01%, mostly because of declining food costs, and wholesale prices were up by a barely appreciable 0.02%.
The advent of another vegetable harvest helped to keep consumer prices stable through the rest of the year. In December, retail prices were expected to be up 9.5% and wholesale prices about 2% over the same month of 1980.
Declining U.S. interest rates and steady oil prices are expected to promote a worldwide economic recovery in 1982, and inflation in the industrial countries is projected to hold at about 6% to 7%. This price stability abroad will help hold prices down in Taiwan, since more than half of the island's inflation is imported.
Experts also predict that wage increases this year will be more moderate than in the past; they expect salaries and wages to go up about 10% this year, compared with 25% in 1980 and 18% last year.
"This decline in wage increases will come about because manufacturers fared poorly last year and cannot afford much of a boost, and workers will not demand so much as they have in the past because inflation will be lower," says Dr. Wu Hui-ran, deputy director of the CEPD's overall planning department.
A 10% increase in labor costs will not have too great an impact on prices, says Dr. Wu, especially since productivity usually gains about 3% in a year.
The expected government budget deficit of NT$30 billion (out of total expenditures of NT$318.1 billion) in fiscal 1982 will not boost inflation, experts say. The government can keep inflationary pressure from the deficit to a minimum by issuing bonds and appropriating part of the postal deposit funds-which currently total more than NT$150 billion - to raise the extra money it needs.
YC. Chen, a DGBAS official, predicts optimistically that "the expected economic recovery should bring in more tax revenues, and this might keep the deficit below the current projection. "
Most people regard control of the money supply as an effective way to curb inflation, and the projected 15% money supply growth for the rest of the year sounds reasonable in view of the targeted 8% growth in the GNP. (Last year the money supply was up about 10%, while GNP growth was around 60%).
Estimated
Tax totals
The Republic of China's 1981 tax revenues may total NT$331.04 billion (US$8.71 billion), according to an estimate by the Directorate General of Budgets, Accounting & Statistics.
Income tax revenue is estimated at NT$60,322 million, and tariff revenue may come to NT$57,813 million. It will be the first time in the history of this country for income tax revenue to surpass tariff revenue.
In addition to income tax, which accounts for 18 percent of total tax revenue, another major revenue source is the wine and tobacco tax, which is estimated to be NT$295,880 million this year.
The directorate general also predicts the tax revenue this year will be 19% of the gross national product (GNP), one lower than last year.
Integrated circuit plant
Completed at Science Park
The Republic of China's first integrated circuit (IC) manufacturing plant will become operational at the start of this year. Its production will be mainly for export.
The United Micro Electronics Co., located at the Hsin chu-based Science Industrial Park, is jointly invested by the Bank of Communications, Industrial Research Institute and three local manufacturers of electrical appliances. It was begun in May 1980 and it is now scheduled to go into production.
The IC plant covers an area of 2600 ping (a ping equals 36 square feet). Construction of the factory building has been completed and the manufacturer has installed various facilities.
ROC leads Red China
In external trade volume
Communist China is behind the Republic of China in its external trade, which was below 1 percent of the world's trade total, the Ministry of Economic Affairs reported.
Since Communist China started its "four modernizations program" and began strengthening trade with other countries a few years ago, the results have not been enough to catch up with the foreign trade of this country, the ministry said.
A ministry spokesman cited the Republic of China's trade volume in the first half of last year as an example: During the January-June period, Taiwan's trade volume was US$22.08 billion. Exports were US$10.801 billion and imports, US$11.279 billion. The ROC suffered a deficit of US$478 million in the first half.
Meanwhile, Red China's trade volume was only US$17.4 billion; exports and imports were USS8.5 billion respectively.
In both 1979 and 1980, mainland China also fell behind Taiwan in external trade volume. In 1979, Taiwan' trade volume was USS30.877 billion with a trade surplus of US$1.329 billion, compared with mainland China' US$29.185 billion with a trade deficit of US$1.989 billion.
In 1980, Taiwan's trade volume was US$39.5436 billion with a surplus of US$77.5 million, compared with mainland China's US$36.4 billion with ~ deficit of US$534 million, the official reported.
In 1980, Taiwan's trade total exceeded 1 percent of world trade while Peiping's was still way below 1 percent, he said.
In 1980, Peiping's foreign trade accounted for 7 percent of its GNP (gross national product). In Taiwan trade accounted for about 50 percen1 of GNP, he said.
President, Vice-President
Exhort engineers
Both President Chiang Ching-kuo and Vice President Shieh Tung-min urged the nation's engineers to make greater contributions to reconstruction projects in Taiwan.
In a written message, President Chiang said the nation is marching forward and elevating itself to the status of a developed country in the 1980s. "Therefore, we need more determination, courage, perseverance and wisdom of our engineers in order to open a new vista for our nation," he said.
The nation needs more of your talent and opinions, he said.
Addressing the opening ceremony of the Chinese Institute of Engineers Conference, Vice President Shieh said the nation is facing more problems and challenges in the 1980s.
Despite its limited natural resources, the Republic of China has won high praise from many countries in the world for its remarkable achievements in the past three decades, he said.
By 1989, the nation will need 295,800 engineers, up from 143,260 in 1979, he predicted.
Engineers in such fields as machinery, electronics, civil engineering, construction, and petrochemicals and chemicals will be in great demand, the Vice President observed.
He urged engineers to spur training of young successors to meet the needs of the future.
British businesswoman held by Communists
For refusal of sub-standard products
An angry British businesswoman revealed how she had been refused permission to leave China because of a row over a business agreement, a Reuters dispatch from Canton reported.
German-born Mrs. Danuta Hocker said the Canton Public Security Bureau had cancelled her exit visa on November 13 after she had refused to pay for US$13,000 worth of wooden picture frames, which she charged were of poor quality.
Mrs. Hocker said: "I am furious. If they keep on behaving like this, (Red) China will get a bad name.
"Business people often run into disputes over quality, sometimes over millions of dollars. But I have never heard of anyone being prevented from leaving the country before."
Mrs. Hocker, who has lived most of her life in Australia, said she had been refused permission to obtain a lawyer from Hongkong as court sessions in China were "secret."
She had attended three court hearings and had agreed to a local commodity inspection committee examining the frames. But no dates had been set for the examination, she said.
Mrs. Hocker, a director of the Hongkong firm Art Post International, a subsidiary of Hongkong's SCM Post news paper, said her company had originally used timber from Taiwan, which was processed in Canton.
But the company in 1980 decided to use mainland wood as a firm in Taishan, about 80 miles southwest of Canton, had assured her that they had timber of comparable quality.
The frames are used for reproductions of famous paintings and are sold in the United States, Australia and Japan.
Monitoring system to assure effectiveness
Banks approve steps to boost loans
The Bankers Association of Taipei (BAT) has approved measures to help increase loans to export-oriented industries. The effectiveness of the measures will be evaluated every two weeks by the BAT. The association will submit its reports to the Ministry of Finance for monitoring. Highlights of the measures are as follows:
• The amount of an export loan to an established exporter is to be deter mined on the basis of the exporter's shipment records in the previous year.
• Exporters who have already obtained export insurance from the Ex port-Import Bank of China can apply for loans using document against payment (DIP), document against acceptance (D/A), or other export bills.
• Exporters with good records who apply for export loans on the basis of DIP, D/A, etc., even without export insurance.
• Preferential interest rates should be offered to exporters with good records.
• The tenor of loans to be used for equipment modernization is eligible for extension on the basis of need.
• The Export-Import Bank of China will expand its export insurance.
U.S.$16.5 billion deficit
In Japan trade
The nation's trade deficit with Japan between 1952 and 1980 comes to an aggregate total of US$16.55 billion, according to Customs statistics.
Last year alone, Taiwan's deficit was expected to reach a record high of US$4 billion, breaking the record high of US$3.18 billion in 1980.
Republic of China tariff preferences
Trading List Announced
The Republic of China is offering preferential tariff treatment to 114 countries and areas, according to the Executive Yuan (Cabinet).
The Cabinet has sent a list of these trading partners to the Legislative Yuan. Currently, the ROC adopts a two-tier tariff system divided into two columns.
The first column applies to goods imported from countries and areas in general, while the second, or preferential, column applies to commodities imported from countries and areas which have close trade relation with the ROC.
Countries having special reciprocal tariffs arrangements with the ROC are: the United States, Japan, South Korea, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Paraguay, Ivory Coast, Haiti, Uruguay, South Africa and Spain.
Countries and areas that do not discriminate against Taiwan-made products and can enjoy the ROC's second column tariff treatment are: the Philippines, Thailand, Malaysia, Indonesia, Singapore, Sri Lanka, Oman, the Ryukyu Islands, Saudi Arabia, Egypt, Lebanon, North Yemen, Jordan, the United Arab Emirates, Kuwait, Bahrain, Hongkong, Macao, Brunei, Qatar, Canada, Colombia, Venezuela, Bolivia, Ecuador, Peru, Argentina, Chile, Brazil, Mexico, Barbados, Trinidad, Jamaica, Antigua, St. Vincent, St. Kitts, Nevis, Montserat, Belize, Anguilla, Grenada, St. Lucia, Puerto Rico, Bahamas, Switzerland, Sweden, Finland, Norway, Austria, Portugal, Iceland, the Netherlands, Belgium, Britain, France, Italy, the Vatican, Cyprus, Niger, Senegal, Upper Volta, Mali, Benin, Togo, Namibia, Swaziland, Lesotho, Botswana, Malawi, Cameroon, the Central African Republic, Congo, Gabon, Zaire, Nigeria, Libya, Liberia, Ghana, Morocco, Australia, Tonga, Fiji Islands, Tahiti, New Caledonia, Papua-New Guinea, the Solomon Islands, New Hebrides, American Samoa, New Zealand, Nauru, Tuvalu, West Samoa and Syria.
Sixty two countries and areas limited to the ROC's first column tariff treatment include India, Iran, South Yemen, Iraq, Pakistan, Burma, Nepal, Israel, Cambodia, Hungary, Afghanistan, East Germany, Czechoslovakia, Yugoslavia, Albania, Bulgaria, Madagascar, Tanzania, Vietnam, Laos, Angola, Zimbabwe, Algeria, Kenya, Turkey, Bangladesh, Malta, Monaco, Dahomey, Uganda, Chad, Mozambique, Sudan, Gambia, Somalia and Surinam.-
161 Exhibitors
At Pack '81
Taipei Pack 1981, a packaging trade exhibit, was held at the Taipei World Trade Center, with 161 exhibitors from 12 countries taking part.
At an opening ceremony, K.H. Wu, secretary general of the China External Trade Development Council, sponsor of the show, noted this is "the largest exhibition on packaging machines and materials ever held in Taiwan."
Of the 161 participating exhibitors, 82 came from abroad and 79 others were from the host country.
The Republic of China was the fourth nation to hold such a show, following the United States, West Germany and Japan, Wu said.
In 1980, exports and imports of the machines totaled US$16.54 million, up 2.8 percent over the previous year.
Taiwan exported US$3.18 million worth in 1980, mostly to Southeast Asian countries.
The show was expanded to an inter national scale in part to allow local producers a chance to familiarize themselves with the latest overseas manufacturing techniques, as well as to demonstrate to world industry ROC competence in the field.