| Taiwan Briefs |
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By Jane Rickards
INTERNATIONAL MACROECONOMICS GROWTH FORECASTS REVISED UPWARDS Despite recession fears in the United States and signs that Taiwan has not fully recovered from last year's credit-card crisis, some analysts are taking a more optimistic view of Taiwan's current economic performance and near-term outlook than they were a few months ago. During October, for example, two prominent economic think tanks revised their GDP forecasts upward. The Polaris Institute, citing a pick-up in demand for Taiwanese exports by Southeast Asia, China, and Europe, inched up its forecast for 2007 growth from 4.58% to 4.61%, higher than the government's current projection of 4.58%. Polaris President Liang Kuo-yuan said at a news conference that the economy is expected to grow by 4.59% in the third quarter and 4.62% in the fourth, and that export value should rise by 5.87% this year while imports increase by 3.4%. Polaris sees the consumer price index (CPI) rising by only 1.3% this year, despite mounting international prices for crude oil and other commodities. The Chunghwa Institute for Economic Research (CIER) also raised its growth forecast for this year, from the 4.26% announced in July to 4.55%. "Taiwan's economy unexpectedly expanded steadily for the first half," Wang Lee-rong, the director of the institute's Center for Economic Forecasting told the local media. "The growth momentum is expected to continue through the next half." CIER said Taiwan's 5.07% economic growth rate in the first half of this year even outpaced South Korea and Thailand. The domestic economy should continue to improve, CIER said, with private consumption forecast to increase by 2.8% in 2007 and private investment seeing a three-year high at 5.83% growth. It put inflation at a 1.33% rise in the CPI, about the same as Polaris's estimation, up from the 0.6% of 2006. For 2008, CIER forecasts slower growth at 4.41% due to a less energetic global economy, with consumer spending rising by 2.91% and private investment climbing by 4.94%. CROSS-STRAIT CHINA OFFERS PEACE AGREEMENT, OF SORTS Chinese President Hu Jintao in mid-October offered to discuss a peace agreement with Taiwan provided the island accepts that it is part of China. "Let us discuss the formal end to the state of hostilities between the two sides," Hu declared at the opening of the Communist Party Congress in Beijing. "We are ready to conduct exchanges, dialogue, consultations, and negotiations with any political party in Taiwan as long as it recognizes that both sides of the Strait belong to one China." While a White House spokesman said Hu's offer was a step in the right direction, Taiwan President Chen Shui-bian immediately slammed the proposal, calling acceptance of the one-China framework tantamount to "surrender." Analysts said that with presidential elections due to be held in Taiwan next March, Hu's remarks may really have been directed at Chen's successor. LONG-RANGE MISSILE BUDGET REJECTED Lawmakers from the opposition Kuomintang (KMT) and People First Party (PFP) in mid-October voted to slash a budget that would have funded production of cruise missiles able to strike Chinese targets such as Shanghai. "I am afraid it would send the wrong signals to all concerned, particularly when Chen Shui-bian's administration is recklessly pushing towards the red line," KMT legislator Su Chi told Reuters. The move effectively put a stop to any mass production of the long-range missiles. The Ministry of National Defense had originally planned to produce 245 Hsiung Feng IIEs and had requested NT$34.6 billion (US$1.1 billion) over eight years for the project, with NT$3.8 billion sought for 2008. Legislators instead cut the budget by one-third, froze another third, and passed the remainder, said Su. The budget still awaits a final review from the legislature, where the opposition has a slim majority. The United States has advised against Taiwan's development of offensive weaponry. DOMESTIC DPP TORCH RELAY PROMOTES U.N. BID The government has nixed the idea of accepting a place next year in the international torch relay preceding the Olympics Games in Beijing, but still Taiwan was not totally deprived of such an illuminating event. A civic organization close to the Democratic Progressive Party (DPP) staged an 11-day 1,200-kilometer, around-the-island torch relay to promote the island's bid to enter the United Nations under the name of "Taiwan." President Chen took part in the opening ceremony in front of the Presidential Office on October 24, after which 20 of the nation's athletes took turns carrying the torch through 25 cities and counties. At the end of the event, a DPP official said the party had collected 2.5 million signatures in support of its proposed referendum on the nation's U.N. bid, reflecting public support for the issue. As of press time, however, the Central Election Commission had not finalized plans to hold the referendum alongside the March presidential elections. The KMT also held a cycling activity on the opening day of the relay, with the theme of focusing on Taiwan's economy. CONVICTED CRIMINALS OKAYED AS CANDIDATES Taiwan's warring political parties rarely agree on anything, but they had no differences of opinion on the right of people convicted of serious crimes to run in elections. Legislative Speaker Wang Jin-pyng said in early November that parties across the spectrum were in agreement over the need to delete a proposed amendment to the Election and Recall Law of Civil Servants that would ban from elections anyone who has been sentenced to more than 10 years in prison but whose case is still on appeal. Wang said there was cross-party consensus on dropping the clause without resorting to a vote before the legislature proceeds to a third and final reading of the bill. THOUSANDS FLOCK TO GANGSTER'S FUNERAL Thousands of mourners, including a number of prominent elected politicians, attended the funeral of shadowy crime figure Chen Chi-li, the reputed leader of the Bamboo Union gang, in early November. The head of the ruling DPP's legislative council, Ker Chien-ming; the deputy secretary general of the legislature, Yu Teng-fan, who represented Speaker Wang Jin-pyng; PFP legislator Liu Wen-hsiung; and DPP legislator Lin Wen-lang were among those who came to pay their last respects to the former mob boss. They were joined by Taipei City Council members, representatives from the movie and entertainment industry, bushiban owners, and several hundred plainclothes police officers, not to mention at least 600 of Chen's fellow gangsters. Thirty people were interrogated by police a day earlier for carrying guns, baseball bats, and shock rods to the venue. Chen Chi-li was best known for his involvement in the October 1984 assassination of Chinese-American writer Henry Liu (who had authored a critical biography of President Chiang Ching-kuo) at his home in San Francisco. He and his henchmen served prison sentences for the crime, as did military intelligence officials who were convicted of instigating the plot, INTERNATIONAL TAIWAN PROTESTS MYANMAR CRACKDOWN Following a bloody crackdown by Myanmar's ruling junta on pro-democracy protesters, Taiwan in late October announced plans to set up a task force - to be managed by the nation's representative office in Thailand - to help the people of Myanmar strive for democracy. Among the Taiwanese leaders condemning the crackdown, Vice President Annette Lu said the international organization she has founded, the Democratic Pacific Union, will help push for democracy in Myanmar. "The military junta should stop the use of force and release all political prisoners immediately," Lu said. "As a feminist, democracy activist, and a former prisoner of conscience, I know that democratization must be a joint effort by activists in and out of the country." EU JOINS OPPOSITION TO REFERENDUM PLANS President Chen's plan to hold a referendum on entering the United Nations under the name "Taiwan" has found little support from the international community. American Institute in Taiwan Director Stephen Young said on the day of the DPP's torch relay that Washington does not support the plan. "The U.S. government's stance is clear," he said. "We do not support it because it is unnecessary." The European Union's foreign policy chief Javier Solana also voiced concerns in late October, based on "the EU's conviction that both sides of the Strait should refrain from statements or actions which might raise tension across the Strait and which might be perceived as a unilateral change in the status quo." Presumably of greater solace for Chen was a survey commissioned by Taiwan's Government Information Office (GIO) showing that a majority of Japanese support both U.N. membership for Taiwan and the holding of the referendum. A GIO poll conducted in the United States had earlier produced a similar result. BUSINESS WEF FINDS TAIWAN LESS COMPETITIVE Taiwan came in 14th - one notch lower than its ranking last year - in the annual global competitiveness survey released by the Geneva-based World Economic Forum (WEF) in late October. Taiwan ranked fifth among Asian countries, also a notch lower than a year earlier and marking the first time Taiwan was surpassed by South Korea in the survey. While the island received high scores in areas such as education and innovation, its lower ranking this year was due largely to what the WEF saw as poor performance in the area of financial market sophistication. RULES EASED ON CHINA HOLDINGS BY FUNDS The Executive Yuan in late October eased restrictions on investments by onshore mutual funds in Chinese companies traded in Hong Kong and the mainland. The move will allow Taiwan fund managers to invest as much as 10% of net assets in Chinese companies listed in Hong Kong, including so-called H shares and red chips. Investments in stocks traded on the mainland will be limited to a maximum of 0.4% of assets. Lifting of the ban will allow Taiwan's investors to join their foreign counterparts in tapping a rally in Chinese stocks that has boosted the CSI 300 Index by 173% this year and the Hang Seng China Enterprises Index by 89%. Taiwan's Taiex has gained 21% during the same period. YOUTUBE LAUNCHES TAIWANESE SITE YouTube, the world's most popular video-sharing site, in mid-October launched a Taiwanese site that uses a script interface with traditional Chinese characters. "You should not have to understand English to be able to use YouTube," said its founder, Steve Chen, who was in Taipei for the launch. The site, at www.youtube.com.tw, will be competing against Wretch, a comprehensive online community with services for sharing videos, photos, and blogs, which was recently acquired by Yahoo's local unit, Yahoo-Kimo. YouTube was purchased by Google for US$1.65 billion last year. IBM AND MEDIATEK START CHIP R&D PROJECT IBM and Taiwan's leading chip designer, Mediatek Inc., in late October said they are jointly launching a three-year research and development project to develop ultra-fast chipsets. The project is expected to integrate IBM's new millimeter wave radio chips and package technology with Mediatek's expertise in digital baseband and videoprocessing chips. No financial terms were made public by the two companies. The research will seek ways to make chipsets enabling consumers to wirelessly transfer large data files in seconds. TAIWAN GAINING IN SEMICONDUCTOR VOLUME Taiwan is likely to produce more semiconductors than the United States this year for the first time, an analyst with Taiwan's Industrial Technology Research Institute told local media. Peng Kuo-chu said the production capacity of Taiwan's semiconductor industry in 2007 is likely to account for 18% of total global output, making it second in the world after Japan. He said production capacity has been increasing most rapidly in Taiwan and South Korea, which have the greatest number of 12" wafer fabs. After meeting with semiconductor industry executives in late October, Minister of Economic Affairs Steve Chen said the government will offer assistance to local manufacturers to move ahead to build 18" wafers to further improve Taiwan's standing internationally. He said local companies needed to retain competitiveness in the face of plans by Intel, the world's biggest chipmaker, to develop the next generation of 18" plants. |