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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: 081 - (26/10/10)

A Lesson in History
October 10 – or “Double 10” as it is commonly referred to is Taiwan’s national day, or to be more precise, the National Day of the Republic of China. The event this year was a rather more subdued affair than normal as the KMT government appears to be unsure as to whether it should be called a “national day” at all for risk of offending Beijing. The Chinese revolution may be coming full circle and what the Chinese Communist Party (CCP) could not win on the battlefield, it may win using its economic muscle.

Taiwan faces another series of elections at the end of November for the special municipalities and President Ma Ying-jeou has announced that he regards the election as a mid-term referendum on his performance; but despite Taiwan enjoying a strong economic rebound and signs of a recovery in job prospects, the KMT party appears to be trailing to the DPP in most pre-election polls. With the Economic Cooperation Framework Agreement with China (ECFA) not due to kick in until 2011, Ma appears vexed as to how best he can regain voter appeal.


This year’s national celebration commemorated the 99th anniversary of the founding of the Republic of China which actually came into existence on 1 January 1912 in the aftermath of China’s upheaval that saw the “Son of Heaven” dislodged from his imperial throne in Beijing. In view of recent events, it is worth delving back into Taiwan’s recent history to provide some context.

Founded originally on principles of bringing democratic nationalism to China, Sun Yat Sen was the first provisional president of the ROC. The Kuomintang Party (KMT) was formed that same year (on August 25) in an attempt to unite disparate revolutionary groups; since that time the fortunes of the ROC and the KMT have been inextricably intertwined. The principles of democratic nationalism did not last very long as China quickly descended into a period of Warlordism. The arrival of Russian advisors in the early 1920s saw the KMT morph into a Leninist system of government. This of course, was before the rise of the Chinese Communist Party (CCP) as an alternative force in its own right. Initially, ardent communists joined the KMT seeking to transform it from within. Neither the KMT nor the CCP saw any role for a “loyal” opposition.

At that stage of course, Taiwan — or Formosa as it was then known— was under Japanese occupation. These early events were played out on the Chinese mainland and mostly in southern China. Although nominally brought into the Chinese empire in the 19th century, much of Taiwan remained ungoverned and lawless; China’s writ did not extend beyond the major cities and ports along the western plain. It was Japan and not China that unified Taiwan, bringing a system of government to the entire island and developing its economy to the point that by the time of the Second World War, the people of Taiwan were among the most prosperous in Asia.

At the Cairo Conference in 1943, Generalissimo Chiang Kai-Shek met with Winston Churchill and Franklin D. Roosevelt to determine the look of post-war Asia once Japan had been defeated. Early ideas of giving independence to Taiwan gave way to pragmatism when Chiang insisted that Taiwan be ceded to China – or to be more precise – to the Republic of China.

In 1949, Chiang and his Nationalist army lost the Chinese civil war to Mao Zedong and the Chinese Communist Party. Rather than surrender, he fled with approximately one million of his troops and loyal supporters across the Taiwan Strait and established a rump government in exile in Taipei. A stalemate ensued between Taipei and Beijing that lasted for more than 40 years and the people of Taiwan were placed under martial law – which was not lifted until the end of the 1980s.

All this time, government was firmly in the hands of the Kuomintang and Taiwan was a one-party state, Both Taiwan and the Chinese mainland had similar systems in which the governing party and the state were to all intents and purposes one and the same. The KMT held onto the myth that it was the legitimate government of the whole of China; representatives of China’s mainland provinces sat in the ROC legislature and while the ROC Government sat in Taipei, Taiwan’s provincial government sat in Taichung.

When Chiang Kai-shek died in 1975, the presidency passed to his eldest son, Chiang Ching-kuo. By this time Taiwan had already lost its seat in the United Nations (and its seat on the Security Council) in favour of Beijing. China was opening up under the new-found pragmatism of Deng Xiaoping and, following the Nixon lead, countries around the world were switching recognition from Taipei to Beijing. Neither was particularly democratic but Beijing had the far greater claim to represent the people of China as a whole.
Had the KMT abandoned the pretext of representing China in its entirety (including Manchuria) events may have played out differently. But the KMT believed for a long while that the PRC would self-destruct and that the nationalists would eventually make a triumphant return.

As hopes of this happening finally dwindled, Chiang 2 realised that the ROC had to change. While remaining authoritarian, he took some early steps at change. These were tentative in nature and barely visible to outsiders, but they resulted in a lighter hand in governance and saw Taiwanese party members brought into the decision-making apparatus of the mainlander-dominated KMT to which they had heretofore been excluded.

Up until the 1980s, the administration had been firmly under the control of the “mainlanders” and the native Taiwanese were regarded as second-class citizens. Chiang went some way to breaking down the mistrust that had long lingered between the two groups — both of which were ethnic Chinese. Bans on visits to the Chinese mainland lifted (in large part to allow elderly KMT members to visit their ancestral homes before they passed on) and the Straits Exchange Foundation (SEF), a non-official official body, was set up to help the thawing of relations between the two sides of the Taiwan Straits.

When Chiang died in 1988, the political landscape had changed sufficiently that a native Taiwanese, a medical doctor educated in Japan and the United States, was able to become party leader and national president. Lee Teng-hui, the vice-president at the time, served out the remainder of Chiang’s term and then won two elections in his own right.

Lee wasted no time in hastening further reform. He introduced direct presidential elections, recognised the legality of opposition parties, redrew the map of China and reformed the legislature by abolishing the seats held in the name of mainland electorates, thereby abandoning the myth that the ROC was the legitimate government of the Chinese mainland. Lee was a pragmatist and a democrat but hardliners in the KMT never forgave him for his democratic ways.

Lee was able to begin the process of regular political dialogue with Beijing through the SEF and its Chinese counterpart body, the Association for Relations Across the Taiwan Straits (ARATS). Perhaps on the Chinese side, in the aftermath of the 1989 Tien an Mien incident, China needed to be seen to be conciliatory.

In any event this early dialogue led to the 1992 Cross Straits Consensus in which each side agreed to the “one China” principle – but left Beijing and Taipei to interpret the meaning for themselves. China it should be remembered, was not the global powerhouse it is now and this level of ambiguity served both sides well. For China, it provided reassurance that Taiwan was not seeking de jure independence while for Taiwan, the lessening of tensions gave it greater freedom to manoeuvre internationally – or so it hoped. Following a meeting in Singapore between SEF Chair Koo Chen-fu and ARATS Chair Wang Daohan in 1993, the first cross-straits accords were signed dealing with posts and telecommunications as well as document authentication.

Any hope that Taiwan might have greater elbow room on the world stage was short-lived. When in 1995, Lee accepted an invitation from Cornell University to deliver a speech on the democratisation of Taiwan, China’s reaction was swift and ugly. A series of Chinese missile tests were held in late 1995 and early 1996 in the waters surrounding Taiwan and intended to send a clear signal that China would not tolerate Taiwanese leaders assuming the world stage. In China’s mind, Lee was seen as wavering from the one-China principle, something he denied at the time but later events would show that he had more in common with the emerging Democratic Progressive Party (which was unashamedly pro-independence) than with the mainland-dominated leadership within the KMT.

Tensions eventually eased and the SEF and ARATS continued their work. A further meeting was held in Shanghai in October 1988 but thereafter relations soured once again when Lee floated his “two states” theory of cross-straits relations. Beijing saw this statement as an abrogation of the 1992 consensus; Lee on the other hand saw it as a means of seeking to give tangible meaning to that consensus by floating the idea of a “commonwealth” whereby the ROC and the PRC (as well as Hong Kong and Tibet) belonged to a supra-national China on the lines of the European model. Taiwan was left in no doubt as to China’s attitude on that one.

Of course with the election of the DPP’s Chen Shui-bian as Taiwan’s first non-KMT president in 2000, relations with China went into deep freeze. Only with the re-election of Ma Ying-jeou and the return of a KMT administration in 2008 have relations thawed – some would say to the point of boiling over. Party-to-party relations (between the CPP and the KMT) have continued although much of the contact has been behind closed doors and beyond public scrutiny.

Over the past two years, relations with China have progressed at a giddy pace and posing the question as to the purpose of such haste. China of course has come a long way economically since that first communiqué in 1992 while treading water politically – as its reaction to the award of a Nobel Prize to dissident Liu Ziaobo, currently serving an 11-year prison term for advocating democratic reform has most recently shown.

For Taiwan, many would claim the opposite to be true. Taiwan has made considerable progress in democratic reform – first under Lee Teng-hui and then under Chen Shui-bian (who became political allies after Lee was forced out of the KMT for his pro-Taiwan views) – although the pendulum may now be swinging the other way. Economically Taiwan has stagnated or gone into reverse as much of its manufacturing has moved to China over the past twenty years, hollowing out Taiwan’s industrial base.
Indeed the case can be made that despite the absence of political dialogue, Taiwan is now far more dependent on China than it ever was. Many believe it to be unhealthily so.

Yet rather than seeking to ensure Taiwan maximises its options, Ma and his KMT allies appear intent on working with Beijing to cement the relationship even further to the point that even the national anthem and the national flag have to be put away whenever a PRC official is within sight. Pro-Taiwan sentiment within the KMT seems to have been nipped in the bud.

The official line is that reunification will come when China sees the error of its ways and embraces a democratic system of government – for which the ROC has shown the way. This is really a reorganisation of the earlier theory that China would self-destruct. The trouble with that reasoning is twofold: there is no sign of it happening any time soon and furthermore the KMT seems to be keen to reinforce the Beijing line by denying visas to Chinese dissidents that seek to visit. The leaders of the KMT do not want to see an independent Taiwan anymore than the Chinese leaders do.

With the economic accords out of the way, China is now pushing for political and military talks with suggestions that one item China may be willing to put on the agenda would be removal of the more than 1000 missiles it has deployed on its southern coast and posing a direct threat to Taiwan. It sounds appealing at first sight until one considers the quid pro quo which undoubtedly would be that Taiwan forgo any further defensive military purchases.

China will not let up the pressure it is exerting on Taiwan to ensure it returns to the fold and in the KMT government, it appears to have many willing hands to ensure that no future government on Taiwan could ever contemplate other than reunification. It has even been floated that Presidents Ma Ying-jeou and Hu Jintao might themselves be nominated for a Nobel Peace Prize. Now that would be one for the books!

The question is whether the electorate will buy into it. We only have another month to find out.  

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