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Taiwan Semiconductor Manufacturing Company Limited Message Board

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• get_a_clue99 get_a_clue99 Nov 12, 2002 5:03 PM Flag

PROC/ROC =6.8X

PROC just released a news article that her GDP is approaching RMB\$10T. Coupling with the collapse of ROC economy, the GDP ratio is 6.8X vs 2X pre-Moses.
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1. Well, as far as I can recall, the narrowest case in the GDP ratio between PROC and ROC is about 2.2x, around somewhere in early 1990s.

2. According to your numbers, from 2x to 6.8 x is something like a triple.

3. In pure mathematics, a growth rate of 6% for 12 years will give you a double:

(1+6%) to the power of 12 = 2

4. So, in the past 12 years, if mainland China has a growth rate higher than Taiwan by 6% for 12 years, then the GDP ratio will approximately double.

5. I strongly have doubts that PROC's growth rate, even though higher than ROC's, is higher by a margin about 6% for the past 12 years. Note: PRO's growth rate by itself is just around 7% to 8% (if the data is not watered-up).

My conculsion: 6.8X is not correct.

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• There are two parts to the equation. The other part is that the ROC economy imploded during the last 3 years.

• There are two parts to the equation. The other part is that the ROC economy imploded during the last 3 years.
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But, 3 years is not long enough for you to get a double. Actually, I have already taken the slowdown of Taiwan into account. So, let's imagine the following best-case scenario:

1. suppose mainland China has a growth rate of GDP higher than Taiwan by 7% to 1%, or a gap of 6%; (which is not the real case though)
2. and, suppose this kind of gap maintains for not just 3 years, but 12 years (which is not the real case again)

then, what do you get?

Well, in this hypothetical case, PROC's GDP ratio (relative to the GDP of ROC) will double.

Apparently, ROC's GDP growth rate is not falling behind that of PROC by a margin of 6%, and not for 12 years long. So, even if I give mainland China the best case, the GDP ratio between the two would at best see a double from 2.3 to 4.6. Since in reality, Taiwan's slowdown took place roughly only after 2000, and, before 2000, mainland China's lead in growth rate averages about 3% (not even 6%) over Taiwan (that is, 7% to 4%), so, I don't even guess that a double to 4.6x is likely, not to mention your number 6.8x.

My own (preliminary) estimate is about 3.6x to 3.8x though.

A best way to solve this problem is to get official statistics of GDP of 2001 (expressed in the same currency unit, USD\$) from the two sides. Right now, I can't find online access to these data yet. I am sorry for this. lol.....

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