The 1968 Ramon Magsaysay Award for Government Service

LI KWOH-TING was born in Nanking, China on January 28, 1910, son of businessman Li Pei-lou and his wife Li Liu Cheng. Tall and both athletic and studious from boyhood, he was regularly a member of school soccer and basketball teams and maintained high marks in the classroom. Of his favorite pastime of reading classical Chinese novels, frowned upon as risqué for the young, he reminisces with a broad smile: "I improved my Chinese that way."

While an undergraduate at National Central University in Nanking LI was an active participant in the Natural Science Society of China formed by "young Turks" of the University who were eager proponents of new ideas and methods in science. He also served as editor-in-chief of the Society's publication Scientific World.

After graduating with a Bachelor of Science degree in 1930, LI taught mathematics and physics for three years at Ginling College in Nanking, one of China's leading colleges for girls. In July 1934 he won in competitive examination a government fellowship to pursue postgraduate study abroad. Proceeding to England he did graduate work from 1934 to 1937 on the beta and gamma ray spectrum at the Cavendish Laboratory of Cambridge University, and on the superconductivity of thin film at very low temperatures at the Royal Society Mond Laboratory. After the outbreak of the Sino-Japanese War in July 1937 LI sought the advice of his professor, Lord Rutherford, who agreed he would be needed at home to join the war effort against Japan.

Upon his return to China in November 1937 he was appointed Professor of Physics at National Wuhan University. In December of that year, in Wuchang, he was married to Sung Ging-hsiung (Pearl), a graduate in biology whom he had first met when she was his student at Ginling College. While teaching at Wuhan LI volunteered for service in the Antiaircraft Defense Corps where he was assigned to the searchlight and sound locator division. At the request of the Director of the Institute of Astronomy of the Academia Sinica, he joined the Total Eclipse Expedition in August 1941 and thereafter was detailed to serve as a Senior Specialist at the Institute in Kunming.

LI's scholarly career was interrupted in 1942 when his government called him to help mobilize defense production. From 1942 to 1945 he was Superintendent of the Tze-Yu Iron and Steel Works in Chungking. Following the Japanese surrender he took part in his country's rehabilitation and reorganization as Deputy Director of the Construction Office of the Central Shipbuilding Corporation located in Wusung, Shanghai. In July 1948, before Communist forces overtook the mainland and forced the Nationalist government to retreat to Taiwan, LI was transferred to Taiwan as Vice-President—and later President—of the Taiwan Shipbuilding Corporation.

In 1953 LI was appointed to the Industrial Development Commission and brought his planning and organizational skills to the broader field of guiding and promoting the industrialization of the Republic of China. As a full-time member of this government commission, LIT helped draft the industrial sector portion of the First Four-Year Plan (1953-1956) which was designed to serve as a basis for the long-range economic development of Taiwan. His work on the Commission also brought him into close association with the United States Aid Mission; the Commission was responsible for drawing up annual industrial program proposals for aid-financing, and for screening, promoting and following up on projects.

When Taiwan was returned to China at the end of World War II its economy was in chaos. During the 50 years of Japanese occupation agricultural improvements—better farming methods, construction of irrigation facilities, mass importation and application of chemical fertilizers and establishment of farmers' associations—had been keyed to promoting production for export to Japan, and by 1938 a fairly high level of development had been achieved. However, during the last years of World War II, as a consequence of heavy bombing by the Allied Forces and Japan's increasing preoccupation with military priorities, irrigation facilities were untended, forests were over-exploited, labor became scarce and the supply of chemical fertilizers from Japan was cut off. In 1945 when Taiwan was restored to China, agricultural output amounted to only 45 per cent of the record output of 1938.

Similarly, in the early years of industrial development under the Japanese occupation, emphasis was on processing agricultural products to meet the domestic needs of Japan. To meet wartime requirements plants were later built for the production of caustic soda, aluminum, iron, steel, machinery and liquid fuel substitutes, and ship-repair facilities were constructed. The Japanese also built textile mills, fertilizer plants and paper factories to minimize the local need for imports. All were severely damaged by Allied bombings and many were totally destroyed. Industrial output in 1945 amounted to less than one-third of the prewar peak.

The rail and road systems also were suffering from heavy bomb damage and from the absence of maintenance during the war. In 1945 over one-half of existing rail beds, bridges, station facilities and rolling stock were unuseable, and only one-fourth of the highways remained serviceable for motor vehicles. Harbor facilities, including wharves which had been repeatedly expanded for military purposes in the final years of the war, were in ruins; sunken ships blocked traffic.

Lack of local managerial talent compounded the economic disarray faced by the Chinese government. Prior to 1945 Taiwan's economy had been controlled entirely by the Japanese. All industrial, business and financial organizations of any significance were in their hands, with all the required capital, expertise and managerial personnel provided from Japan. The repatriation of the Japanese at the end of the war left Taiwan with an acute shortage of experienced personnel, especially in the industrial sector.

Looking back on those first years of rebuilding Taiwan's economy, LI recalls it was "a period when we concentrated our efforts on rural reconstruction and development of basic goods and services to meet the needs of the economy. The late Dr. Sun Yat-sen, the founder of the Republic of China, advocated the Three People's Principles, one of which is the Principle of People's Livelihood. Our constitution is based on these Three People's Principles, and the economic officials followed closely what is stated in the Principle of Livelihood. That meant we had to meet the basic requirements of daily living—food, clothing, housing and transportation, and our President Chiang Kai-shek added education and recreation. These things we tried very hard to do during the period of the decade of the 50's."

The Second Four-Year Plan (1957-1960) was a continuation of the first. Its purposes were to continue to develop resources, boost agricultural and industrial output and expand exports in order to create new employment opportunities, increase national income and improve international payments.

In the initial stage of Taiwan's economic development large amounts of capital were allocated for the improvement of electric power, transportation and communications. This infrastructural investment reflects LI's realistic and practical approach. As he states: "Electric power is the prime mover for industrial growth, while adequate transportation and communications reduce freight costs, help enlarge the markets for agricultural and industrial products, and facilitate the dissemination of new knowledge and skills. From the outset priority was also given to chemical fertilizers, textiles, food processing, and other consumer goods industries, directed toward the improvement of people's livelihood and designed to lay the foundation for further balanced growth of the economy."

In the implementation of these programs, LI points out, "the government has at various times served as custodian of private firms, founder of new enterprises, prospector, supplier of raw materials, buyer of finished products, and moneylender willing to accept high risks. In the advanced countries, all such tasks are usually undertaken by the farsighted entrepreneur or the imaginative banker. Early in Taiwan's economic development, however, there was an acute shortage of such people. If the government had not performed a large part of these functions, it would have been extremely difficult for the private sector to develop and prosper. The initiative and leadership taken by the government in this respect is generally believed to be one of the main reasons for the rapid- economic development on Taiwan."

The Industrial Development Commission was phased out in 1958 and its functions were turned over to the Ministry of Economic Affairs. LI was then appointed Secretary General of the Council for United States Aid, responsible for coordinating all U.S. aid-financed economic and social development activities. At the same time he was made Chairman of the Industrial Planning and Coordination Group in the Ministry of Economic Affairs which extended his responsibilities to include the entire industrial and mining sector. During the years 1958 to 1963, he oversaw the reorientation of industry from import substitution to export expansion.

By the end of 1958, halfway through the Second Four-Year Plan, it was apparent that agricultural and industrial production, as well as foreign trade, would attain their targets. Economic development in Taiwan had entered a new stage and the pressure of inflation was much mitigated. A number of control measures were subsequently relaxed or rescinded and a foreign exchange reform program was introduced in order to attain a realistic unitary rate favorable to exports. However, since industrial development was retarded by the small size of the domestic market, there was need for the development of new markets and new investment opportunities. Attention, therefore, had to be turned to the expansion of exports and the establishment of new export industries.

LI was commissioned in December 1959 to activate and head the Industrial Development and Investment Center whose function was to make recommendations to the government for improvement of the investment climate and to render investment services to private businessmen. Among the Center's achievements were formulation of the 19-Point Program for Financial and Economic Reform, revision of existing statutes governing foreign and overseas Chinese investments, and drafting the Statute for Encouragement of Investment.

As LI recalls: "By 1959, realizing that we could not depend on United States economic aid forever, the government saw that we had to accelerate soliciting and formation of private capital, both domestic and foreign. So the late Prime Minister and Vice President Chen Cheng, at the time concurrently the Chairman of the Council for U.S. Aid, just gave me the order: 'You are my secretary general; you ought to do something else besides administering American aid.' And he gave me this assignment of improving the investment climate. I didn't even know what constituted an investment climate, so I tried to identify the factors scientifically, using the science I learned in college. I drew flow charts identifying various instances of administrative red tape and showing improvements we had to make. Then I worked out the statute for encouraging investment, trying to remove the factors contained in then existing laws relating to different taxes and land acquisition which amounted to hindrances to capital formation, saving, and investment."

The 19-Point Reform launched early in 1960 aimed at ensuring economic stability on one hand, and accelerating the pace of economic development on the other. The latter was to be accomplished by facilitating capital formation through the encouragement of domestic savings and the inflow of private capital, and through the reduction of government and private consumption. Measures taken included increasing tax incentives, establishing a unitary rate of foreign exchange and developing industrial estates.

Throughout the decade of the 50's LI notes, "We tried at each stage of the game to introduce various institutional measures to encourage private enterprise to participate in industrialization efforts." One of the first of these, initiated by LI in 1955, was the China Productivity and Trade Center, to provide training and assistance to the private sector in business management, increase productivity and strengthen trade. The Taiwan Handicraft Promotion Center was set up in 1956 to help improve and popularize traditional Chinese handicrafts. China Technical Consultants, Inc., was established in 1959 to undertake engineering contracts and to strengthen engineering as a profession. The China Development Corporation (CDC) to develop financing for private industry was also set up in 1959.

LI had proposed the CDC in 1958 following a trip to Washington, D.C., where he became aware of the difficulties facing small entrepreneurs trying to borrow money from foreign sources such as the World Bank and the Development Loan Fund. His suggestion for organizing a private financing institution was considered infeasible by some bureaucrats until Chen Cheng became premier and gave LI the green light. Within six months the CDC was organized with 70 per cent private capital and 30 per cent government. The Council for U.S. Aid provided credit in local currency, and the Development Loan Fund credit in U.S. dollars for relending purposes.

The Third Four-Year Plan (1961-1964), with a target growth rate of eight per cent, was formulated to facilitate improvement of the investment climate, stimulate investment and raise productivity in order to achieve a more rapid and sustained growth and thereby upgrade living standards and achieve economic independence. In addition to agriculture, industry, transportation and communications, and international payments, the Plan stressed the development of social overhead capital and incorporated the 19-Point Program for Financial and Economic Reform as a supporting measure. In the first three years of implementation the economic growth rate reached the targeted eight per cent; 1964 saw unprecedented prosperity and registered a growth rate that "far exceeded the target." Exports during the period increased sharply, exceeding the target by a wide margin and resulting in a remarkable increase in foreign exchange reserves.

An important factor in economic development during this period was the establishment in September 1963 of the Council for International Economic Cooperation and Development (CIECD) to replace the Council for U.S. Aid. The nation's development planning, programing and financing operations, until then performed by separate departments of government, were brought together under a single authority of which LI was Vice Chairman. This made possible greater planning efficiency as well as rationalization of resources allocation. The CIECD initiated a number of programs and studies which were forwarded to relevant government agencies for action. Among them was the proposal for the development of Export Processing Zones.

The Fourth Four-Year Plan (1965-1968) emphasized the long-range objectives of modernization and maintenance of rapid economic growth under stable conditions. The Plan called for continued improvement of the investment climate and the continuous expansion and diversification of export industries by setting up Export Processing Zones and simplifying tax rebate procedures. Development of more sophisticated industries and the broadening of the industrial base were especially stressed. Principal emphasis was laid on manpower resources, e.g., population policy, vocational education and training.

In January 1965 LI assumed the nation's chief economic policymaking responsibility as Minister of Economic Affairs. Major developments in that eventful year included launching the new Four-Year Plan, the phaseout of U.S. economic aid and a drastic slump in the price of sugar, the island's main foreign exchange earner. Under his guidance the Ministry took strong steps to steer the economy. Efforts continued in diversification of production with the result that new export products were continually developed by both agriculture and industry. Li also had to find additional long-term foreign capital for both government and private projects.

U.S. economic aid to China, which was terminated in June 1965 because it was no longer needed, is considered one of the most successful examples of utilization by a recipient country of external assistance. As the nation's chief industrial planner, and later the overall administrator and coordinator of U.S. aid-financed activities, LI KWOH-TING is one of the men primarily responsible for this achievement. "During the period of the first three four-year economic development plans (19531964)," LI has written, "U.S. aid had been instrumental in the postwar stabilization of the economy and subsequently in the implementation of development projects. On the average, one-third of the capital formation had come from this source each year. The role of U.S. aid had been especially crucial in the early stage of Taiwan's economic development when inflation was not yet arrested, domestic savings were still low, and private capital hesitated to come forward. Because of its confessional terms (low interest and long maturities), the judicious use of U.S. aid had effectively helped mobilize domestic savings and channel them into industrial development through the requirement of matching funds and selection of projects for U.S. aid-financing."

An important factor in the increase in local capital formation was the Statute for Encouragement of Investment, introduced by the Industrial Development and Investment Center under the direction of LI. In 1961, just one year after the statute was introduced, bank savings deposits increased from New Taiwan (NT) $6 billion to NT$10 billion (the exchange rate was NT$40 to US$1). By 1965 domestic savings had increased to the extent that over 80 per cent of capital formation was derived from local sources.

A principal element of LI's planning for development has been a strategy of balanced growth with emphasis on diversification of production. This strategy has safeguarded Taiwan's economy against serious repercussions following isolated cases of market fluctuation. The importance of sugar as a principal export has been decreasing materially over the years. Despite the sharp cutback on earnings from sugar exports in 1965 (from US$128 million to US$59 million) and a vast increase in the import of capital goods and raw materials (from US$402 million to US$528 million) the trade deficit (US$106 million) was not restrictive and the economy still registered a growth of 10 per cent in real gross national product (GNP).

"Land reform," LI states, "is the basis around which our whole development program has centered. Without land reform in the early 50's we wouldn't have such progress as we have today. . . .Because the farmers own their own land, they try to get as much out of it as possible. They are willing to learn and accept extension workers' new ideas for increasing their wealth."

At the beginning of its economic development effort the government realized that the agricultural sector is not only a source of food but also a source of raw materials required by the industrial sector. Moreover, industry depends on the export of agricultural products in exchange for needed equipment and supplies. Consequently, the government made clear from the outset its policy of "developing industry through agriculture and expanding agriculture through industry."

The land reform program has benefited some 467,000 farm families, or about 60 per cent of the total. To ensure the success of land reform, the government instituted a number of measures to increase production—improvement and multiplication of species, pest and disease control, improvement of farming methods, more effective techniques of fertilization, construction of irrigation facilities, farm land reconsolidation and the strengthening of farmers' organizations. As a result Taiwan's agricultural production averaged an annual increase of 6.1 per cent during the 14-year period 1952 to 1966.

The success of the land reform program gave Taiwan a way to transform agricultural capital into industrial capital, since the substantially increased earnings of the farmers created a bigger market for local industry. The government also took specific steps to assure transfer of agricultural capital to the industrial sector. During the land-to-the-tiller program landlords were partially compensated for holdings exceeding the government maximum of three hectares of paddy (irrigated rice land) or their equivalent, with shares in four leading public enterprises. This enabled the government to transfer public corporations to private ownership, forced land capital into industry and stimulated the interest of otherwise conservative landlords in future industrial activities.

Under LI's planning for balanced growth, industrialization has moved in an orderly fashion from light to heavy industries. Before 1952 government efforts centered on the rehabilitation of war-damaged industries. Next came promotion of light industries which were not highly demanding of capital investment and technical know-how, such as agricultural product processing, textiles, plywood, plastics, glass, cement, simple machinery, electrical appliances and other consumer goods. While most of these industries were initially intended for import substitution, they gradually became export industries as they grew and expanded. Then the government began to plan for development of more sophisticated heavy industries such as petrochemicals and heavy machinery.

In petrochemicals, arrangements for market sharing were made with South Korea. As LI puts it, "We felt that the developing countries in Asia each had too small a market to support an economic-size unit without resort to high tariff protection. The best solution was to pool the markets for certain products. In 1967 we had a conference with our Korean counterparts, and the next year we firmed up a proposal for having Korea make caprolactum, a raw material for nylon, while we would make DMT for polyester. We supply the needs of the Koreans and they supply the needs of the Chinese. In this way we put these two small markets together and doubled their size. We got the strong support of the Asian Development Bank which provided the dollar financing. This venture was the first of its kind, and we hope that more countries will be interested in such cooperation."

Fostering international cooperation to promote economic development and trade was not a new endeavor for Minister LI. Through his efforts the Sino-Vietnamese Economic Cooperation Conference was inaugurated in 1960. The resulting agreement extended to all fields of development, with Chinese technicians and specialists working on projects for Vietnam which ranged from establishment of textile and paper mills to irrigation and crop improvement. The third meeting of the Cooperation Conference was held in October 1965 with the Chinese delegation again headed by Minister LI. Emphasis was placed on two projects. The first involved setting up three Improved Villages—areas selected for development into prototypes for overall rural reconstruction efforts—with Chinese technicians assisting in the improvement and extension of production and marketing techniques, the development of irrigation and drainage facilities and the training of extension personnel. Farm implements, cement, seeds, fertilizers and other supplies were contributed by the Chinese Government. The second project provided for increased support of the Chinese Power Mission to Vietnam to ensure power supply in various regions despite the existing state of war and to establish a complete power system when peace and order were restored.

Following consultations between Minister LI and Philippine Vice-President Fernando Lopez during the latter's visit to Taiwan in May 1966, an agricultural technical cooperation agreement was concluded between the Philippines and the Republic of China which provided for sending a 19-member Chinese agricultural mission to work on a 3,000 hectare demonstration and extension farm in Bulacan Province to test various methods of increasing rice yield. The mission also assisted in irrigation improvement and farm credit operations in the Philippines.

Minister LI is a proponent of regional as well as bilateral cooperation projects, some of which have been carried out under the auspices of the United Nations Economic Commission for Asia and the Far East. One of these is the prospecting for oil in offshore areas undertaken jointly by Taiwan, Japan, Korea and the Philippines.

Sharing his nation's own development experience to help friendly developing countries was an idea early espoused by Minister LI. It was in consequence of his recommendation, made after he led an Economic Mission to Vietnam in August 1958, that three Chinese farm technical teams were sent to Vietnam in 1959-60, marking the beginning of the Chinese overseas technical service now being extended to a number of African, Southeast Asian and Latin American countries.

The Chinese technical service program lays special emphasis on agriculture. The most urgent need of developing countries, LI has repeatedly stressed, is the know-how to increase food production. As the Chinese rice cultivation method aptly fills this need for countries in tropical and subtropical zones, demonstration of rice planting and cultivation techniques has been the central feature of the (Chinese overseas program. Chinese farm demonstration teams are now operating in some 20 countries. Bumper crops amounting to five to eight times normal local yields have been reported by some of these teams. Help is given as well in crop diversification.

The Chinese overseas program has also provided medical workers and technicians in engineering, harbor construction and other fields to Vietnam, Ethiopia and Libya under agreements signed during the years 1962 to 1966. The program currently involves a total of about 800 overseas technicians and specialists. At home it provides training opportunities, particularly in agriculture. By mid-year 1966 some 3,000 foreign technicians had undergone field work training in Taiwan, and seminars had been held for an additional 650. A special six-month program, including both classroom and field training, was designed for agricultural workers from Africa.

An important factor in Taiwan's economic growth, LI believes, is the emphasis given to social development: better education, vocational training public health, social insurance and housing.

Education is free and compulsory for the first six years and the attendance rate of school-age children rose from 84 per cent in 1952-53 to 97 per cent in 1965-66. In the same period the number of secondary schools increased from 2I4 to 546 and enrollment grew from 139,000 to 662,000; institutions of higher learning increased from 8 to 56 and enrollment from 1 10,000 to 85,000 In cooperation with the United Nations a large scale industrial vocational training project has been established to intensify training of skills and improve the quality of labor.

Health centers are located throughout the island, even in remote mountain villages. Determined efforts to provide vaccination and maculation have stamped out contagious diseases, and no incidence of smallpox, plague, typhus, scarlet fever, relapsing fever or rabies has been recorded in recent years. Other communicable diseases such as diphtheria, whooping cough, trachoma, venereal disease and tuberculosis have been effectively controlled. In 1967 the World Health Organization declared Taiwan an area free of malaria. As a result of the rapid improvement of health facilities and medical care, the death rate dropped from 9.9 to 5.5 per thousand between 1952 and 1966, and the average life span was lengthened to 65 years for men and 69 for women.

By 1967 the insurance program established under the Labor Insurance Act of 1958 was providing maternity, injury, sickness, disability, old age and death insurance for some 678,000 persons. These included factory workers, members of trade associations, fishermen, sugarcane farmers and workers in government offices and schools. The Government Employees Insurance Program, also launched in 1958, provides similar protection to staff personnel in government agencies; at the end of 1966 over 250,000 people were participating.

Progress in housing was minimal until 1959 when the Taiwan Provincial Government set up a Housing Commission and announced procedures for the extension of housing loans and incentive measures for investment in low-cost housing projects. Loans were directed to people of low income such as laborers, farmers, fishermen and government employees. Investment incentives were directed to civic bodies, firms manufacturers and organizations or individuals interested in building low-cost housing for rent or resale. By the end of 1966 a total of 75,000 housing units had been built with NT$1.8 billion in government loans; substantial reduction of the housing shortage had been achieved.

It is also necessary, LI points out, to involve the citizenry in planning for change, for "only when the government has made the public share with it such concepts as make for economic progress can it get the necessary public support for its policies." An example he cites is the first manpower resources seminar in July 1966. "Government officials of all levels of government, educators, the legislators involved in manpower problems, the industrial leaders and the leaders of the working community, all came together—120 of them—to discuss different issues based on a background paper. Then the plenary session reviewed and approved the draft submitted by the joint committee, which was then referred to the cabinet for consideration. This was the first manpower development plan." One of the problems identified was the ever-increasing burden that rapid population expansion placed On the economy in terms of larger spending on education, health and other items. Consequently, the first step taken to implement the manpower development plan was to set up a voluntary family planning program to slow down the high rate of population growth—in LI's words "to upgrade the quality of manpower instead of its quantity." He adds, "This was the first time that the public accepted a policy for population."

The successive four-year plans have transformed the economy of Taiwan from the ruins of World War II into what has been called "a model of economic development among the developing nations." Determinative ingredients have been LI's initiative and leadership in generating carefully planned programs of public policy and in promoting private initiative. During the 14 years from 1952 to 1966 Taiwan's economy registered an average rate of growth of 7.7 per cent per annum. Especially noteworthy were the three years from 1963 to 1966 when the annual growth rate averaged 9.9 per cent. Per capita income reached US$193 in 1966.

The Taiwan economy has also experienced a significant structural change—from a predominantly agricultural economy to one where agriculture and industry (including manufacturing; mining; water, coal, gas and electric power; and construction) play equally important roles in terms of their contributions to the net domestic product. Private and government consumption has been on the increase each year. However, since the rate of increase has been lower than the rate of growth of the GNP, consumption, as a percentage of total available resources, has been on the decline. This has made possible a rise in investment and export. As a result of the steady increase in national income and the relative decrease in consumption, savings have been greatly augmented. In 1965 gross savings reached 19.4 per cent of the GNP. More than 80 per cent of gross domestic capital formation now comes from domestic savings.

Moreover Taiwan's industry has expanded and diversified with an increasing degree of sophistication. As a result it meets the domestic demand for all daily necessities and a number of consumer durable goods, and competes on the world market in an increasing variety of products. Between 1952 and 1966 industrial output increased 4.4 times, averaging 12.8 per cent a year. Reflecting government policy of promotion of private enterprise, the output of private industries registered an even faster increase, averaging 16.8 per cent a year. In 1966 private enterprise accounted for 61.8 per cent of total industrial output, compared with 43.4 per cent in 1952.

Substantial improvement in transportation and communication has been achieved through renewal and expansion of facilities as well as by advances in operating efficiency. Railway development has stressed replacement of rails, improvement of bridges, modernization of facilities and an increase in rolling stock to cope with increasing traffic and to raise operating efficiency. Between 1952 and 1966 passenger and freight traffic on railways averaged an annual increase of 6.5 and 4.8 per cent, respectively. Equal emphasis was placed on the improvement of existing highways, new road construction and expansion of bus service. As a result highway passenger and freight traffic increased annually by an average of 12.5 and 18.8 per cent, respectively. Shipping routes have seen continuous expansion and both the number of vessels and the tonnage have increased. Rapid growth of foreign trade, however, requires that the government give priority to plans for expansion of harbor facilities and rejuvenation and replacement of aged vessels to improve the operating efficiency of the commercial fleet.

Exports and imports have both shown marked increases, especially in the six years between 1960 and 1966 when foreign trade rose by 177 per cent. Since exports expanded more rapidly than imports, the annual trade deficit narrowed from US$133 million to US$86 million during that period. The rapid expansion of exports has enhanced the economy's ability to import. Whereas U.S. aid-financing accounted for over 40 per cent of imports in earlier years, residual assistance now accounts for less than 10 per cent. Agricultural and industrial raw materials make up 60 to 70 per cent of total imports. The remainder consists of capital goods and consumer goods, with the former showing an upward trend. Sugar and rice that formerly accounted for about 70 per cent of total exports now make up less than 10 per cent. The share of industrial products in total exports moved up from 8 per cent in 1952 to 55 per cent in 1966, while that of agricultural products and processed agricultural products declined from 92 per cent to 45 per cent during the same period. The relative importance of the United States and Japan as the two largest export markets has shown a gradual decline in recent years in line with the planned diversification of trading partners.

Currently more than 100 countries and areas are buyers of Taiwan products.

Recently the Bank of America released a special economic study on Taiwan and its immediate future, stressing the excellent opportunities for foreign investment during the next several years. The general pattern cited by the bank as favoring foreign investment is Taiwan's continuing shift from an agricultural to an industrialized nation, accompanied by increasing participation in world trade.

Entitled Focus on Taiwan-An Economic of Study of the Republic of China, the report reviews many favorable investment factors, including a rapidly climbing gross national product and personal income level, the low cost of labor, an increase in electric power and in plant construction, proximity to Southeast Asian markets, absence of major labor disputes and benefits such as liberal investment laws and industrial zones. The report notes that the country's GNP, which has trebled since 1952, is expected to double by 1975 to US$6.5 billion, maintaining a "remarkable annual growth rate of 9 per cent." And per capita income, the bank predicts, will nearly double by 1975 to US$340, a "high level for developing countries."

Looking to the future Minister LI states: "Renewed emphasis will be placed on continual improvement of the investment climate, development of heavy industries, and expansion of exports. . . .Toward the attainment of these objectives, efforts will have to be redoubled by government and industry alike, in the improvement of productivity and management and marketing practices. . . .The opportunities for a continual rapid, healthy growth of the Taiwan economy are as great as the challenges that are presented. However, there is no reason why these challenges could not be successfully met with wise planning, hard work, and perseverance."

LI, in addition to serving as Minister of Economic Affairs and Vice Chairman of the CIECD, is a member of the National Security Council and Vice Chairman of the National Reconstruction Planning Committee under the Council. Besides entrusting him with major administrative and planning responsibilities, his country has awarded him with the Order of Brilliant Star in recognition of his contributions to rehabilitation work following the August 1959 flood disaster and subsequently for the program of accelerated economic development including improvement of the investment climate and other measures.

He has also been decorated by the Korean Government with the Order of Distinguished Diplomatic Service, Second Class; by the Spanish Government with the Gran Cruz del Orden del Merito Civil; by the Vietnamese Government with the Grand Officiel de l'Ordre National, by the Malagasy Government with the Grand Officiel de l'Ordre National and by the Thai Government with the Knight Grand Cross, First Class, of the Most Exalted Order of the White Elephant.

Today, when he feels the very existence of Chinese civilization is threatened, LI bears heavier responsibilities than ever. Despite the gravity of the times, however, his instinctive warmth, enthusiasm, and almost boyish good humor readily surface when circumstances permit. The LIs live with their son and only child, Yung-chung, aged 16, in one of the modest bungalows converted from Japanese style and assigned to him when he served in the Taiwan Shipbuilding Corporation. The small garden of flowers and vegetables is kept by Mrs. Li. Frequent travel—LI has visited some 35 countries and looks forward to visiting more—is just one of his many hobbies, which also include photography, stamp and match book collecting, and tending the begonias and orchids in his wife's garden. LI's principal physical recreation now is golf which he took up in 1965. The LIs find pleasure and peace of mind in the fellowship and searching discussions of the local nondenominational Christian group where he was baptized in 1966. In his private life as in his professional life his commitment to decency and justice is unstinting.

August 1968 Manila

REFERENCES:

"Bank Praises Taiwan Policy."Evening News. Manila. February 28, 1968.

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Li, K.T. "Industrial and Trade Development in the Republic of China." Address Delivered at the 7th Conference of District 345, Rotary International, Taipei, March 25, 1967.

______. "Statement on the Economic Situation in Asia." Address Delivered at the ECAFE Annual Session, Tokyo, April 1967.

______. "The World-Wide Problem of Brain Drain." Address Delivered at the American University Club, Taipei, December 21, 1966.

______. and Yeh, W.A. "Public Policy and Economic Development on Taiwan." Paper Prepared for the Conference on Economic Development on Taiwan Held in Taipei, June 19-28, 1967.

Statute for Encouragement of Investment Promulgated on September 10, 1960, Amended January 4, 1965, Taipei: Industrial Development and Investment Center. January 1968. Booklet.

Visits by members of the Board of Trustees of the Ramon Magsaysay Award Foundation to Taiwan from 1958 to 1968 and interviews with persons acquainted with the island's agricultural and industrial development and with Li Kwoh-ting and his work.