Low trade surplus not as bad as it looks: official

The record low trade surplus for the first seven months of this year is a result of added imports of capital goods, an investment that will help yield higher growth and larger revenues for the country in the coming years, a government spokesman said yesterday.

Taiwan registered a trade surplus of US$750 million in the first seven months of this year, a plunge from the previous year's US$4.77 billion, according to statistics compiled by the Ministry of Finance. Vice Premier Wu Rong-i (吳榮義) called it an issue of major concern and said that relevant authorities will do something to improve the situation.

Executive Yuan spokesman Cho Jung-tai (卓榮泰) attributed the record low trade surplus to several factors, including spiraling oil prices, the Taiwan High-Speed Railway Corp's (台灣高鐵) imports of carriages, purchases of Airbus planes by China Airlines (華航) and EVA Airways Corp (長榮), and factory expansions by several semiconductor manufacturing companies and liquid-crystal-display panel manufacturers.

Cho said this spending represents "healthy" investments conducive to future development for those major corporations and added that their investments will help create higher economic growth for the country in the long run.

Cho's remark came one day after an economist's warning that the nation's slowing exports and called on the government to craft adequate policies and make effective adjustments to improve what he described as eroding competitiveness in the face of China's fierce challenges.

Chen Po-chih (陳博志), chairman of Taiwan Thinktank (台灣智庫), warned Tuesday that slowing exports, rather than shrinking trade surplus, is a clear reflection of the nation's falling competitive edge and deteriorating business climate.

Chen -- the former chairman of the Cabinet-level Council for Economic Planning and Development -- therefore urged the government to tackle the problem of Chinese products increasingly replacing Taiwan-made goods in the world market and the many possible side effects.

Ministry statistics show that the nation's outbound shipments increased by only 6.6 percent in the same seven-month period year to year, lagging behind an annual 11.2 percent expansion rate in inbound shipments.

Noting that an export increase rate of 7 percent or above can be viewed as an indication that a country's competitive edge remains benign, Chen ascribed Taiwan's slowing export growth to the fact that locally made products are increasingly being edged out by Chinese merchandise in the world market.

But a government economist said Tuesday the sharp surge of imports in the first seven months is healthy, despite public concerns over the rapid shrinkage of the the country's trade surplus during this period.

Thomas Yeh (葉明峰), vice chairman of the Council for Economic Planning and Development, said the country' imports rose as a result of the country's purchase of aircraft as well as carriages for the high-speed railway, in addition to the increase in imported oil costs.

In a breakdown of the outlays for imports, Yeh said the rise in international oil prices has inflated the country's payments for fuel by US$2.57 billion over the same period of last year.

However, all of the them are spendings for capital assets and agricultural and industrial raw materials which will in turn help the country's exports in the long term and are healthy for economic development, Yeh said.