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Key Economic Data 
  2003 2002 2001 Ranking(2002)
Millions of US $  406,000    
GNI per capita
 US $ 18,000
Ranking is given out of 208 nations - (data from the World Bank)

Books on Taiwan

Update No: 041 - (25/07/07)

For much of Asia, this past month has commemorated the 10th anniversary of the financial meltdown of 1997. Starting in Thailand with a plummeting of the Thai Baht, the financial meltdown spread quickly in turn to Indonesia, South Korea, Malaysia and the Philippines. Taiwan suffered also but was somewhat inoculated from the worst of the crisis by its strong currency reserves. Indeed for Taiwan the pain was felt more from the global knock-on effects than from any local factor. It would be right to say that Taiwan in this crisis, with its powerful currency, fared substantially better than any other s of the emergent south east Asian states.

Unsurprisingly therefore, the anniversary of the singular event that has shaped Asian economics and politics over the past decade went largely unnoticed in Taiwan. Perhaps this was because Taiwan had another anniversary to remember and this one unique, and much closer to home.

July also marked the 20th anniversary of the end of Martial Law in Taiwan. This is the anniversary that was remembered locally and provided the catalyst for much debate and soul-searching as to how far Taiwan had come in the past twenty years and, of course, the path it was taking for the future.

A lesson in history
Upon the defeat of the Chinese Nationalist armies in the Chinese Civil War, the KMT regime, led by Generalissimo Chiang Kai-shek (affectionately known in Taiwan as Cash My-check) fled to Taiwan where in May 1949 they declared martial law following an incident on the island of Penghu (the Penghu Incident) when seven out of 8,000 high-school students, their faculty and staff exiled to Penghu from Shandong Province on the Chinese mainland, were executed for refusing forced military service. A further 100 students were imprisoned.

Martial law, at first brutal and then somewhat more relaxed, remained in force until 1987. During this period, any mention of Taiwan's independence from China was ruthlessly dealt with. In 1963 Taiwanese independence activist Chen Chi-hsiung became the first person ever to be executed for advocating Taiwanese independence. Chen, who spoke Hoklo, Mandarin, Japanese, English, Malaysian and Dutch fluently, served as a Japanese diplomat in Dutch-ruled Indonesia during the period of Japanese colonial rule prior to the Second World War. Inspired by the Indonesian independence movement, Chen became an advocate for Taiwanese independence, and served as the circuit ambassador to Southeast Asia for the Provisional Government of the Republic of Taiwan founded by another independence activist, Liao Wen-yi, in Japan after World War II. Chen was later kidnapped by the KMT regime's secret service agents and shipped back to Taiwan via diplomatic mail, which is exempt from inspection by customs.

The "mainlanders" of this period, mostly military officials and bureaucrats, but which accounted for around 10 percent of the total population, saw Taiwan as no more than a staging post from which, with US help, they would eventually retake the mainland. Thus, the KMT Administration of the period laid the foundation of the "One-China" policy that has come back to bite the hand of Taiwan today.

It is worth noting that the Chinese only arrived in Formosa (as the Island was then called) in the fifteenth century and only ever gained control over the narrow coastal plains. The interior of the Island-into the early twentieth century-was controlled by the aboriginal tribes who had been pushed into the uplands and who, until this day, have not been totally integrated into the local Chinese society. Ironically it was only when China ceded control of Taiwan to Japan in 1895 that the seeds of national identity were forged. It was the Japanese that established control over the wild interior, build railways and roads and created a civil service. When the Japanese were defeated at the end of World War II, the Taiwanese expected that America would grant them independence in the same manner as the Philippines, but it was not to be. At the Cairo Conference, Taiwan was ceded back to China and specifically to Chiang Kai-shek.

At a time like this it is worth tracing the history of the "China issue" because fact has long been confused with political myth. The political claim of Beijing that Taiwan is an "unalienable part of the Motherland" is tenuous at best. Comparisons of Taiwan with Hong Kong and even Macau do not pass a reality test.

But, as noted, it was the KMT itself that kept the myth of "One China" alive. The native Taiwanese have never really had much say in the matter-until recently that is.

Chiang Kai-shek died in 1975 and was succeeded, after a brief interregnum, by his son, Chiang Ching-kuo who became president in 1978 and remained so until his death in 1988-one year after finally lifting martial law and the ban on new political parties.

The KMT remained in power throughout much of the nineties under the presidency of a native Taiwanese who had been educated in Japan, Lee Teng-hui. Under Lee's presidency Taiwan rapidly democratized. First came the lifting of the claim to the Chinese mainland and the dismantling of the remnants of the bureaucracy that supported that claim-the removal from the parliament of those aged representatives occupying seats on behalf of non-existent mainland constituencies was the first to go. In 1995, President Lee allowed for the first time, direct elections for the presidency and won handsomely only to see his successor lose to the DPP when he stepped down in 2000.

The DPP had been founded in September of 1987 although officially the ban on new parties was not lifted until a few months later.

Martial law remembered
With a fresh round of presidential elections in the air, it is unsurprising that the 20th anniversary remembrances provided opportunity for the present political players to grandstand. Reminding the public of the excesses of the KMT during that period, a government spokesperson said that Ministry of Justice statistics show that approximately 140,000 people were sentenced and jailed between May 19, 1949, and July 15, 1987, often without a trial and without evidence. The present government had paid a total of NT$18.29 billion (US$554 million) in compensation so far to 15,771 victims of the Martial Law era.

DPP presidential candidate Frank Hsieh was blunt: he compared the KMT to a "caretaker who harmed our people, raped our daughters and stole our property," adding that the public must not allow the "caretaker" to administer the country again.

Not surprisingly, Chinese Nationalist Party (KMT) presidential candidate Ma Ying-jeou lashed back accusing the Democratic Progressive Party (DPP) of "exploiting" the memory of the martial law era while failing to offer a vision for the nation. "[The DPP] is a governing party that fails to make progress. It is just exploiting a historical scar and doesn't dare face up to the corruption of its administration over the past seven years." 

Former president Lee Teng-hui used the occasion to praise late president Chiang Ching-kuo's decision to lift martial law as "forward-looking," but said that the public's demands had led to the decision. "The decision Mr Ching-kuo made to lift martial law was historic ... a brave, resolute, and forward-looking decision made by a leader faced by changes ... It was not only an answer to the public's demands, but also the first step toward Taiwan's release from a one-party system," he said.

So how far has Taiwan come over the past twenty years?
Despite its ever-growing political isolation Taiwan has, in many ways, become a model democratic state that gives the lie to claims that Chinese people would never tolerate "Western-style" democracy. It has one of the freest presses in Asia - if not the most free - and a system of civil liberties and human rights that is liberal and tolerant even by Western standards. In a perfect world Taiwan would be hailed as a model for the rest of Asia and the emerging world to emulate. 

But it is not a perfect world. China remains an autocracy in spite of the liberalization made in the economic sector and, much of the so-called Chinese private sector remains beholden to, if not an arm of, government. Despite concern over China's huge trade surpluses and unfair trade practices - not to mention the poor quality and health standards of Chinese goods, from pet foods to toothpaste, the world appears powerless to do anything about it. Then there are claims of child and forced labour, human trafficking which appear to have a factual basis for concern but to which Beijing appears to turn a deaf ear. And let's not even mention the subject of carbon emissions as China's economy replaces that of Germany, as the world's third largest.

Taiwan meanwhile has done everything right and yet is denied a seat in the United Nations and even in the more technical bodies such as the World Health Organisation (WHO) despite the considerable financial and technical contributions it is now capable of making. More odious is the fact that for political reasons, China also opposes the IAEA conducting nuclear safeguards inspections on Taiwan's nuclear facilities. (In fact, China will only take this position when confronted directly with the issue and probably is quite glad that Taiwan's extensive nuclear energy programme remains under safeguards.)

Taiwan is a victim of geo-politics although it does not yet admit to the fact. On the one hand it desperately wants greater room to manoeuvre on the international stage and believes that it has deserved the right to expect better. On the other hand, its principal benefactor, the United States, is increasingly disengaging from East Asia and is looking to Japan - and even China - as the main regional powers. This has been a long-term trend but has accelerated since the events of 9-11. Japan has already adopted a new defence posture and China is increasingly matching its strategic investments into the Asian region with an expansion of its military capability. China's defence budget has seen double-digit annual increases in recent years and they are working to develop anti-satellite missile capability, as well as a nuclear submarine fleet equipped with long-range nuclear missiles. All this has consequences not only for the United States but also for Asia and nobody realizes this better than the Taiwanese. Global and regional powers are already seeking to accommodate China and democratic or not, Taiwan can count on little by way of support from the outside, although it would take a big shift in current US policy to allow China to use military pressure on Taiwan. 

Many argue that Taiwan lost its best chance for independence after the 1989 Tien An Mien riots. That was an opportunity lost never to be regained.

So while Taiwan remains fixed on the path to becoming a modern democratic state, the problem of China has become more acute over the past twenty years. And while China is busy investing in the region, Taiwan remains as it has always been, the largest single investor in China

Fully 50 percent of China's foreign investment is coming from Taiwan. Moreover, it is the country that is the most integrated into China, with more than 40 percent of Taiwan's exports going there and more than 1 million long-term China-based Taiwanese businesspeople already living there. Indeed many Taiwanese companies have contributed already to the hollowing-out of their domestic local industry by setting up vertically integrated production chains on the Chinese mainland.

Just as Taiwan missed the boat in declaring political independence from China, so too may it have missed the boat in declaring economic independence. Like some giant death-star, Taiwan appears to be circling around China being drawn ever closer and unable to muster sufficient thrust to break free.

Thus are the battle lines being drawn in the lead up to next year's elections in Taiwan. The KMT, keenly aware of its tenuous identity with Taiwan is seeking to float a policy of a regional common market consisting of "Greater China" - The mainland, Taiwan and Hong Kong. The DPP continues for its part to express its view that Taiwan should be left alone to go its own way.

Both parties appear to be missing the point. They are after all economically locked in to each other and nothing foreseeable is likely to change that now.

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