Gov’t ups 2008 GDP goal to 5% on China

The China Post news staff and Bloomberg

TAIPEI, Taiwan — Taiwan’s government yesterday raised its target for 2008 economic growth, saying the prospect of improving relations with China would help investment and tourist spending.

Chairman of the Council for Economic Planning and Development (CEPD) Chen Tain-jy, who took office Tuesday, said the government increased its target to 5 percent from 4.8 percent in December.

As for prospects of achieving a growth of six percent, part of President Ma Ying-jeou’s “633” vision, Chen said flat out during an interview with the United Evening News: “It’s impossible this year.” The “633” visions refers to Ma’s plan to raise Taiwan’s economic growth to six percent, raise Taiwan people’s average annual income to US$30,000, and lower the island’s unemployment rate to three percent. “With the government set to increase gasoline, electricity and water prices, and with inflation in full swing, reaching a six percent growth this year is not possible,” he said. “However, efforts can still be made in this regard. I think it would be okay if we reach this objective in four years.” Ma, who was sworn in Tuesday, said he’ll ease restrictions on transportation links and visits by mainland tourists. Mainland tourists will help boost spending, and increase investment,” Chen said. “Better cross-strait relations will also help private investment.”

The island plans to allow 3,000 tourists to come directly from the mainland a day, or 1 million a year, rising to 3 million annually over the longer term, Chen said in a statement yesterday. Currently, visitors from China must first travel to a third destination and then to Taiwan. China’s residents made about 320,000 trips to the island last year, according to Mainland Affairs Council Web site.

Former President Chen Shui-bian’s administration restricted economic relations with China, including banning regular direct transportation links, because of a dispute over the island’s sovereignty. The government in Beijing considers Taiwan as part of China, a claim that Chen rejected. Ma said the two sides should shelve the dispute and talk about matters such as tourism.

Chen said he hoped that Taiwan’s inflation won’t exceed 3 percent for 2008. He said the government is about to lift a ceiling on fuel prices, which would reduce demand for oil and help temper price increases.

The government of Ma’s predecessor, Chen, in November imposed a ceiling on gasoline and diesel prices charged by state-run refiner CPC Corp. after inflation rose to a 13-year high in October. Taiwan Power Co., the island’s only electricity retailer, hasn’t increased prices since July 2006.

The central bank in Taipei raised interest rates on March 27 for the 15th straight quarter and said inflation may exceed the government’s target of 2 percent this year. Consumer prices rose 3.86 percent from a year earlier in April, the statistics bureau said on May 5.

The government is scheduled to report first-quarter gross domestic product and revised forecasts for the year on May 29.

Taiwan’s government typically has an economic growth target that is higher than the forecast given by the statistics bureau, which still stands at 4.32 percent for the year. The economy grew 5.7 percent in 2007, the statistics bureau said in February.