ABSTRACT
Inflationary pressures were declining. In value-added terms, economic growth exceeded that of the average of post-war years. Benefits also accrued to the state, since the regulated foreign-trade market generated increased amounts of tax revenue for the government, which enabled officials to balance the national budget. In 1955 tariff revenue constituted 30 percent of total import value, and for imported products, such as cotton cloth, the figure was 40 percent. In early 1956 the import-substitution strategy pioneered by K. Y. Yin had made possible the emergence of a small industrial core of large-scale manufacturing firms using capital-intensive technology and producing electrical energy, chemical fertilizers, and cotton textiles, as well as – albeit in a more nascent fashion – cement, plastics, and chemical products. In late 1956, American advisors for the first time informed the Taiwanese government that economic and military aid would be ended in the early 1960s and that, in consequence, reform must be accelerated.
