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Key Economic Data 
  2003 2002 2001 Ranking(2002)
Millions of US $  406,000    
GNI per capita
 US $ 18,000
Ranking is given out of 208 nations - (data from the World Bank)

Books on Taiwan

Update No: 037 - (01/03/07)

February ushered in the year of the pig. Local geomancers have happily pronounced that 2007 will be a good year for Taiwan! Leave econometrics out of the picture. The pig-according to the Chinese zodiac-is associated with wood and earth; ergo, the property and construction sectors will boom!

In fact the "dog" year ended well enough. The benchmark TAIEX closed prior to the holiday at 7,809.45 points. This represented a year-on-year increase of 19.55 percent. Auspiciously, the property index rose by 102 percent last year and with local property prices still considered to be under-valued by Asian standards, there appears to be still room for further growth.

With presidential and congressional elections looming at the end of the year, a rising economy bodes well for the incumbents, provided they can hold their act together. This is by no means certain but at least the Democratic Progressive Party (DPP) is looking in a slightly better position than it has for some time.

President Chen Shui-bian in his New Year address stayed clear of politics, much to the relief of his party followers; not to mention US officials who are always looking for the sting in the presidential tale. Unlike last year when President Chen announced the disbandonment of the National Reunification Council-a provocative move that signaled to the world that Taiwan was no longer interested in exploring the idea of reunification with the Chinese mainland-this time Mr. Chen focused on Taiwan's achievements in local rice production and on economic recovery. It was short (2 minutes), visual (the president spoke as a "voice over" to a montage of "feel good" images) and was clearly meant to have one eye on the coming election season.

Presidential hopefuls take their starting positions
Indeed, with regard to the contenders for the top job, the candidates have started to line up. Registration for the DPP primary will open from March 7 to 9th. This is one month earlier than previously planned. Party members will then vote on May 6 on presidential and legislative candidates and this will be followed by a series of public opinion polls. On the basis of party preferences and public opinion the final line up will be announced on May 30th.

Four contenders are expected for the DPP presidential race: These are party Chair, Yu Shyi-kyun, former Premier Frank Hsieh, Vice President Annette Lu and Premier Su Tseng-chang. Both Yu and Hsieh have already announced that they will be running.

For the Kuomintang, former Taipei mayor and KMT Chair, Ma Ying-jeou has already announced his candidacy despite being indicted early in the month on charges of corruption. In the overall scheme of things in Taiwan, his offence appears to be rather minor-that he transferred some US$333,000 from his official account to his personal account-but that is not the point. Ma has always projected the image of a "Mr. Clean" and has waxed indignantly over the transgressions of political opponents. No longer can he claim the moral high ground.

As if to make matters worse, Mr. Ma resigned his chairmanship as soon as the indictment was handed down. Yet almost immediately, the KMT not only refused to accept Mr. Ma's resignation but reversed its own recently revised Constitution back to the status quo ante by repealing its "black gold exclusion clause that would have disqualified Ma from running as the party's presidential candidate. 

This particular clause was only written into the Constitution recently and under Ma's chairmanship to suspend and prevent from seeking office, any party member who was indicted.

So all in all, President Chen should be reasonably happy that at last the political heat is off his shoulders and has been transferred to his bęte noir. But it appears unlikely that Mr. Chen will step to the sidelines-at least not just yet.

What's in a name?
Prior to the Lunar New Year holiday (and possibly with the thought that the approaching holiday season would mean that the issue would quickly be forgotten), Mr. Chen took yet another small step to distance Taiwan from China. The government-owned postal service has changed its name. No longer will it be called Chunghwa Post Company ("Chunghwa" means "China"); from now on it is the Taiwan Post Company. Stamps will no longer bear the name "Republic of China" but simply "Taiwan."

One day later, other government-owned corporations underwent a similar metamorphosis. The Chinese Petroleum Corporation became CPC Corporation Taiwan and China Shipbuilding Corporation became CSBC Corporation Taiwan.

According to Mr. Chen the name changes will help identify these corporations internationally with Taiwan rather than China thereby avoiding confusion. Fair point! But commentators generally see the move as a further attempt by Mr. Chen to establish his legacy before the expiration of his term of office.

A new voting system for the legislature
The end of year elections will not only be about voting in a new head of state; they will also be about voting in a new legislature. Finally and in what has been described as a momentous change to the country's political system, the incoming legislature will be the first to be elected under a new system of voting.

The new unicameral legislative body will have only 113 seats as compared to 225 at present. Seventy-three legislators will be elected directly from single-member districts while the remaining 34 will be filled by parties who win more than 5 percent of the total number of votes cast. 
Essentially, voters will cast two votes: one for a local candidate representing the district in which the voter resides and one for a party. The new system replaces one described as a "single vote, multiple member" districts. The change is expected to work in favour of the major political groups and at the expense of smaller parties. The expectation is that in order to survive, these smaller groups will have to merge with the larger parties. The outcome may well be eventually, the final emergence of a two-party system for Taiwan.

Economic growth appears robust
Indeed, the economy appears on a roll. Taiwan's economy grew at a faster-than-expected pace in the fourth quarter after stock market gains and a recovery from credit-card defaults boosted consumption. Gross domestic product rose 4.02 percent from a year earlier according to Taiwan's statistical agency. Stronger than expected growth makes it easier for the Central Bank to continue pushing up interest rates to stem outflows of money and keep the nation's currency stable. 

Policy makers have increased the key rate every quarter from September 2004 to a five-year high of 2.75 percent, or just over half the Federal Reserve's benchmark.

Consumer spending was boosted by a recovery from past credit and cash-card defaults according to the agency.

The government forecasts a 4.3 percent economic expansion this year, up from the previous estimate of 4.1 percent. Last year's growth was 4.6 percent. Household spending, which accounted for a third of the fourth quarter's economic growth, rose 2.4 percent from a year earlier. Private investment jumped 10.6 percent, the most in two years.

Export growth, which slumped in the fourth quarter at 2.7 percent because of an electronics glut is expected to play a smaller role in driving this year's figure. Export growth slowed to 7.61 percent in the fourth quarter from 18.59 percent in the previous quarter, according to the statistics. 
The domestic contribution to the economy will rise to 60 percent from 25 percent last year.

Exports have been hurt by a US slowdown that created stockpiles of key electronic items including liquid-crystal panels and semiconductors. Electronics are the largest component of Taiwan's exports.

Taiwan's financial house may be starting to get in order. Taiwan lenders wrote off more than US$3 billion of bad credit-card loans last year, helping to dispose of a curb on spending. A jobless rate at almost a six-year low in December is also encouraging people to start spending more. Growth in overseas sales, which account for about half of Taiwan's US$355 billion economy, is expected to slow to 6.2 percent this year from 12.9 percent last year, the statistics bureau said.

Import growth is also expected to slow, with the trade surplus to widen to US$22.7 billion from US$21.3 billion last year.

Inflation may reach 1.4 percent, the bureau said. That is down from the previous forecast of 1.5 percent. Consumer prices have been rising since November after previous declines.

The government forecast for first quarter growth was unchanged at 4.03 percent.

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