Taiwan Hopes Links To China Will Boost Economy

Island's expected growth rate could reach 4.8 percent this year with direct charter flights to rival China and a significant increase in mainland tourist arrivals.

TAIPEI, Taiwan (AP) -- Taiwan's new government said Thursday the island's expected growth rate could be boosted this year by direct charter flights with rival China and a significant increase in mainland tourist arrivals.

Economic growth this year could reach 4.8 percent, 0.5 percentage point higher than forecast, said Chen Tain-jy, minister of the Cabinet-level Council for Economic Planning and Development.

The forecast was made at a Cabinet meeting, the first since President Ma Ying-jeou was sworn in Tuesday.

Ma has pledged to relax controls on trade and investment with China and expand direct charter flights to the mainland -- currently limited to major holidays -- to weekend or daily services.

The flights are part of Ma's comprehensive plan to help jump-start the island's powerful but laggard high-tech economy.

Taiwan and China have banned direct air links and other formal contacts since they split amid civil war in 1949.

Earlier Thursday, Taiwan's Cabinet announced it will lift a six-month freeze and allow local oil refiners to raise prices in June to catch up with surging global oil prices, while striving to keep inflation at 3 percent.

It also said weekend charter flights to China will probably be launched in July to coincide with an expansion of tourist visits from the mainland.

The China initiatives and other measures to boost domestic demand could more than offset the impact of energy prices hikes, Chen said.

In February, Taiwan projected a 4.3 percent GDP increase for 2008. The island's GDP increased 5.7 percent in 2007.

Chen predicted earlier this week Taiwan could reach annual economic growth rates of 6 percent for the next three years, up from the average of around 4.5 percent during the eight-year rule of former President Chen Shui-bian.

Chen Tain-jy blamed recent sluggish growth on outgoing President Chen Shui-bian's refusal to lift the stringent restrictions on investment in China. High-tech firms have complained the controls hampered their competitiveness in world markets.

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