Taiwan hits recession with GDP drop
TAIPEI, Taiwan -- Taiwan joined Singapore in recession on Friday, putting out its second straight quarter of economic decline.
Taiwan's gross domestic product shrank 4.2 percent in the third quarter to September, the government reported. That worsens the 2.35 percent decline for the second quarter.
It is the steepest dropoff in 26 years for Taiwan, which was already suffering badly from the United States slowdown before September 11. The terror attacks have made matters worse.
The United States is Taiwan's biggest export market. A rapid dropoff in demand for electronics products, Taiwan's key industry, has hit home.
Only Singapore is worse off
Salomon Smith Barney predicts that the island's economy will shrink 2.6 percent this year, the second-worst performance in Asia.
It is outdone only by Singapore, which Salomon expects to decline 3.0 percent. Singapore actually reported an even sharper third-quarter decline on Friday, of 5.6 percent.
Both island economies rely heavily on exports and technology shipments, and both held up better than most of Asia in the 1997 financial crisis.
They are now paying the price of their tech concentration. The rapid decline in the economy has forced Taiwan's lawmakers to seek closer ties with mainland China.
President Chen looks to visit China
"Why can't the two sides have a bit more economics and a bit less politics?" President Chen Shui-bian asks in an interview taped this week with state-run Central Broadcasting System.
With elections due on December 1, Taiwan is in high political season. Chen has a new book out, "First Voyage of a Century," chronicling his first 500 days in office.
At the start of November, Taiwan scrapped 50-year-old restrictions on investment in China. Taiwanese companies have been leaving the island, to take advantage of cheaper labor across the Taiwan Strait in Fujian province.
China considers Taiwan a rogue province and insists it come back into the fold, under a similar "One China, Two Systems" policy to the one in Hong Kong.
In his book, Chen warned that system would destroy Taiwan. But he said in the television interview that he wants to visit the mainland to look for his family's roots.
"We have a blood relationship, a common culture, religious belief and history with the mainland," he said. "Why must we politicize and ideologize things at every turn?"
Taiwan stocks end up
China has been deeply suspicious of the president, whom they suspect has leanings toward Taiwanese independence.
Taiwan and China have been at odds since the nationalist Kuomintang fought a civil war with China's communists in 1949.
Chinese officials criticized Taiwan for fueling the rift between the two at the recent Asia Pacific Economic Cooperation meeting in Shanghai.
Taiwan pulled out when its choice of delegate was denied an invitation. China said political motives were at play, hinting that Chen wanted to play the divide as an election card.
Taiwan's third-quarter figures were in line with estimates. In fact, Taiwan's stock market rose on Friday, the benchmark Taiex index putting on 0.98 percent to close at 4,446.62.
Singapore stocks also weathered the weak growth data, but sold off rapidly late in the day. The Straits Times closed down 0.7 percent at 1,422.
Taiwan's economy is expected to get a long-term boost out of joining the World Trade Organization.
Taiwan's parliament voted to approve WTO entry on Friday in a special session. The WTO OK'd the entry of Taiwan on Sunday, one day after approving China's entry.
Taiwan had been trying to join the WTO for 12 years and China, for 15 years. Their entry is due to take effect one month after the WTO meeting, assuming the necessary paperwork and approvals go through.
Reuters contributed to this report.
Taiwan approves WTO entry
November 16, 2001
Taiwan drops China trade ban
November 7, 2001
China officially joins WTO
November 11, 2001
Taiwan joins China in WTO
November 11, 2001
Singapore GDP slumps 5.6% in 3Q
November 16, 2001
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