TAIPEI, Taiwan

Taiwan’s economy is projected to grow a strong 4.5 per cent in 2011 as its improving relations with China will likely continue to bring major economic benefits to the island, Taiwan’s top economic planner said Tuesday.

The prediction comes on the heel of 2010’s remarkable 10 per cent growth, said Christina Liu, chairwoman of the Cabinet-level Council for Economic Planning and Development. Aside from a strong growth in exports, the launch of direct flights between Taiwan and China and an increase in Chinese tourists contributed to the rebound from the global financial crisis, she said.

Citing separate forecasts released by the International Monetary Fund, Liu said Taiwan’s economy will slightly outperform South Korea, Singapore and Hong Kong — the three other fast-growing economies known as Asia’s little dragons — over the next five years, after lagging behind them during much of the last decade.

The IMF predicted in October that Taiwan will achieve growth rates of 4.4, 4.7, 4.9, 4.9 and five percentage points between 2011 and 2015.

Taiwan’s economy grew at an average rate of 3.8 per cent between 2001 and 2008, amid strained relations with Beijing as former President Chen Shui-bian pushed Taiwan’s separate status from the mainland, from which it split amid civil war in 1949.

Chen’s successor, Ma Ying-jeou, has championed a policy to engage China since he took office in May 2008.

“The peaceful development and relaxation of trade restrictions across the Taiwan Strait were the most important first step” in bringing about the economic growth, said Liu, who heads the Cabinet-level Council for Economic Planning and Development.

The two sides inked in June a wide-ranging trade deal, formally known as the Economic Cooperation Framework Agreement. The deal includes tariff cuts on 539 Taiwanese goods and 267 Chinese products that will formally take effect in January.