Q: The CEPD estimates that the growth rate for the ROC for this year will be 7%. How was this figure determined? Can it be achieved?

A: There are more than ten separate plans for estimating the rate of economic growth drawn up by CEPD. Ultimately, three were reported out, one with an estimated growth of 5.9%, one at 6.8%, and one at 7.8%. In the end the 6.8% plan stood out. This is mainly because the 5.9% rate is too close to the economic growth rate of the industrialized countries; if we want to catch up with the advanced countries quickly, we must move a little faster. As for reaching the 7.8% target, this could only be done by expanding the trade surplus. In order to avoid international friction and balance trade, we had to abandon that. Thus the 6.8% plan was chosen; however, it was raised to 7% with the hope of getting the government to strive a little more to push ahead economic growth through financial measures and policy coordination.

Two years ago, the U.S. stock market collapsed, creating pessimism. Unexpectedly, in April or May of last year the international economic situation took a turn for the better, and growth rates for industrial nations in 1988 exceeded expectations. Similarly, we forecast only 7.5% growth at the end of 1987; our growth rate should have increased with the global recovery, but the NT dollar appreciated faster than expected, leading to negative growth in exports to the U.S., so the real growth rate of 7.33% was worse than anticipated.

Q:And the situation for this year?

A: This year the bad effects of the NT rise will continue. Therefore, if the export situation does not improve, the forecast rate of growth can only be reached by expanding domestic demand and domestic public investment. But if these expand too much, there will be tension between supply and demand, producing inflation. So we must seek appropriate, stable growth at the current stage. Q: You frequently stress appropriate, stable growth. Does this mean an abandonment of high growth rates? How much is "appropriate"?

A: This does not mean abandonment, but is a practical consideration. As for how much, it is hard to set a figure. No country can maintain high growth indefinitely; growth has its ups and downs. We hope that we can maintain 6.5 or 7% growth up to the year 2000. Many people are not satisfied with 7%, but this is quite high compared to the 2 or 3% of the industrialized nations.

Q: What factors will determine the rate of growth in the future?

A: Domestically, if labor-management or environmental problems can be resolved, then growth can reach 8 or 9%. If they get more serious, it is possible it will fall to 5%. Abroad, taking the exchange rate as an example, if the U.S. stops pressing us and only presses Korea, this will create more export opportunities, and the growth rate will naturally rise.

Q: Will the NT dollar continue to appreciate?

A: Last year our trade surplus with the U.S. fell almost 20%, revealing our efforts to reduce the surplus; this should win some American understanding. If international exchange rates stabilize, then, the chance of the NT dollar alone appreciating is small. However, if the yen, mark, and Korean won fluctuate, I'm afraid the NT dollar will also have to be adjusted.

Q: Korea is also under international pressure; how is it able to maintain high growth rates?

A: Because Korea has a large foreign debt, and their per capita income only reaches one half of ours, it receives relatively less international pressure. For example, over the last two years, the NT dollar has appreciated more than 40%, the won only 15%. According to estimates, Korea's growth rate will continue to exceed ours for the next few years; only they, too, cannot rely on expanding the trade surplus. Otherwise, once the won appreciates steadily, the situation will change.

Q: What were the reasons the ROC could maintain high growth in the past?

A: The main thing, especially in 1986 and 1987, when growth exceeded 11%, was reliance on increasing the trade surplus. But now, as a major trading nation, we cannot only think of enriching ourselves or avoid our responsibilities. Otherwise, international pressures will come one after another.

Also, in the past the standard of living was low. To raise the standard of living, everything was invested in manufacturing, with no time to look after the environment or basic construction. Now, at the same time as developing the economy, we must strengthen environmental protection and basic construction.

Q: The ROC is now in the transitional stage of altering the productive structure. If the transition is successful, could this revive high economic growth rates?

A: Even if it is successful, in the future there will not again appear long-term high-growth rates. Past labor-intensive production was low investment, fast return. Today's capitaland technology-intensive production is high investment, slow returns. That is, the same investment will have different contributions to economic growth. Further, we will invest more money in environmental protection and basic construction, like a rapid transit system. But from the viewpoint of economic growth, these are "non-productive" investments. But from another angle, they raise the quality of life, and no amount of economic growth can be compared to that. That is why in the future the government has decided to forego high growth rates and have moderate growth rates as the goal.

"Chinese culture is so vast and profound--why don't you place more importance on it?" Professor van der Loon often sighs with regret.