Taiwan
GANG INFORMATION
PROFILE
NAME: Taiwan
Geography
Area: 35,967 sq. km. (13,887 sq. mi.).
Cities (June 2004): Capital--Taipei (pop. 2.6 million). Other
cities--(Kaohsiung 1.5 million), Taichung (1.0 million).
Terrain: Two thirds of the island is largely mountainous with
100 peaks over 3,000 meters (9,843 ft.).
Climate: Maritime subtropical.
People
Population (2004 est.): 22.7 million.
Annual growth rate (2004 est.): 0.34%.
Languages: Mandarin Chinese (official), Taiwanese, Hakka.
Education: Years compulsory--9. Attendance (2003)--99.5%. Literacy
(2003)--97.0 %.
Health: Infant mortality rate (2004)--0.54%. Life expectancy (2003)--male
73.4 yrs.; female 79.1 yrs.
Work force (June, 2004): 10.126 million.
Political Establishment
Type: Multi-party democracy. There are four major parties forming
two alliances known as Pan-Blue and Pan-Green. The Pan-Blue includes
the Kuomintang (KMT) and the People First Party (PFP). The Pan-Green
includes the Democratic Progressive Party (DPP) and the Taiwan
Solidarity Union (TSU). The Pan-Blue coalition holds a slight
majority of seats in the Legislative Yuan (LY).
Constitution: December 25, 1946; last amended 2005.
Branches (Yuan): Executive, Legislative, Judicial, Control, Examination.
Major political parties: Democratic Progressive Party (DPP); Kuomintang
(KMT or Nationalist Party); People First Party (PFP); Taiwan Solidarity
Union (TSU).
Suffrage: Universal over 20 years of age.
Central budget proposed (FY 2005): $50.1 billion.
Defense (2005): 15.90 % of entire budget.
Economy
GNP (2005 est.): $355 billion.
Real annual growth rate (2005 est.): 3.8%.
Per capita GNP (2005): $15,659.
Unemployment (Dec. 2005) 3.86%.
Natural resources: Small deposits of coal, natural gas, limestone,
marble and asbestos.
Agriculture (1.7% of GDP): Major products--pork, rice, fruit and
vegetables, sugarcane, poultry, shrimp, eel.
Services: (72.7% of GDP). Industry (25.6 % of GDP): Types--electronics
and computer products, chemicals and petrochemicals, basic metals,
machinery, textiles, transport equipment, plastics, machinery.
Trade (2005): Exports--$189 billion: electronics, optical &
precision instruments, information and communications products,
textile products, basic metals, plastic and rubber products. Major
markets--U.S. $28 billion, P.R.C. and Hong Kong $72 billion, Japan
$14 billion. Imports--$182 billion: electronics, optical &
precision instruments, information & communications products,
machinery & electrical products, chemicals, basic metals,
transport equipment, crude oil. Major suppliers--Japan $43.6 billion,
P.R.C. $22 billion, U.S. $21 billion.
PEOPLE
Taiwan has a population of 22.7 million. More than 18 million,
the "native" Taiwanese, are descendants of Chinese who
migrated from Fujian and Guangdong Provinces on the mainland,
primarily in the 18th and 19th centuries. The "mainlanders,"
who arrived in Taiwan after 1945, came from all parts of mainland
China. About 370,000 aborigines inhabit the mountainous central
and eastern parts of the island and are believed to be of Malayo-Polynesian
origin. Of Taiwan's total population, approximately one million,
or 4.4%, currently reside in Mainland China,
Education
A 9-year public educational system has been in effect since 1979.
Six years of elementary school and 3 years of junior high are
compulsory for all children. About 93.5% of junior high graduates
continue their studies in either a senior high or vocational school.
Taiwan has an extensive higher education system with more than
150 institutions of higher learning. Each year, over 100,000 students
attempt to enter higher education institutes; about 75% of the
candidates are admitted to a college or university. Opportunities
for graduate education are expanding in Taiwan, but many students
travel abroad for advanced education. In 2005, over 15,000 U.S.
student visas were issued to Taiwan passport holders.
Languages
A large majority of people in Taiwan speak Mandarin Chinese, which
has been the medium of instruction in the schools for more than
four decades. Native Taiwanese and many others also speak one
of the Southern Fujianese dialects, Min-nan, also known as Taiwanese.
Recently there has been a growing use of Taiwanese in the broadcast
media. The Hakka, who are concentrated in several counties throughout
Taiwan, have their own distinct dialect. As a result of the half-century
of Japanese rule, many people over age 60 also can speak Japanese.
The method of Chinese romanization most commonly used in Taiwan
is the Wade-Giles system. In 2002, Taiwan authorities announced
adoption of the pinyin system also used on the Mainland to replace
the Wade-Giles system, but its use is not consistent throughout
society, resulting in two or more romanizations for the same place
or person.
Religions
According to Taiwan's Interior Ministry figures, there are about
11.2 million religious believers in Taiwan, with more than 75%
identifying themselves as Buddhists or Taoists. At the same time,
there is a strong belief in Chinese folk religion throughout the
island. These are not mutually exclusive, and many people practice
a combination of the three. Confucianism also is an honored school
of thought and ethical code. Christian churches have been active
on Taiwan for many years, and today, the island has more than
600,000 Christians, a majority of whom are Protestant.
Culture
Taiwan's culture is a blend of its distinctive Chinese heritage
and Western influences. Fine arts, folk traditions, and popular
culture embody traditional and modern, Asian, and Western motifs.
One of Taiwan's greatest attractions is the Palace Museum, which
houses over 650,000 pieces of Chinese bronze, jade, calligraphy,
painting, and porcelain. This collection was moved from the mainland
in 1949 when Chiang Kai-shek's Nationalist Party (KMT) fled to
Taiwan. The collection is so extensive that only 1% is on display
at any one time.
HISTORY
Taiwan's aboriginal peoples, who originated in Austronesia and
southern China, have lived on Taiwan for 12,000 to 15,000 years.
Significant migration to Taiwan from the Chinese mainland began
as early as A.D. 500. Dutch traders first claimed the island in
1624 as a base for Dutch commerce with Japan and the China coast.
Two years later, the Spanish established a settlement on the northwest
coast of Taiwan, which they occupied until 1642 when they were
driven out by the Dutch. Dutch colonists administered the island
and its predominantly aboriginal population until 1661. The first
major influx of migrants from the Chinese mainland came during
the Dutch period, sparked by the political and economic chaos
on the China coast during the Manchu invasion and the end of the
Ming Dynasty.
In 1664, a Chinese fleet led by the Ming loyalist Cheng Ch'eng-kung
(Zheng Chenggong, known in the West as Koxinga) retreated from
the mainland and occupied Taiwan. Cheng expelled the Dutch and
established Taiwan as a base in his attempt to restore the Ming
Dynasty. He died shortly thereafter, and in 1683, his successors
submitted to Manchu (Qing Dynasty) control. From 1680, the Qing
Dynasty ruled Taiwan as a prefecture and, in 1875, divided the
island into two prefectures, north and south. In 1887 the island
was made into a separate Chinese province.
During the 18th and 19th centuries, migration from Fujian and
Guangdong provinces steadily increased, and Chinese supplanted
aborigines as the dominant population group. In 1895, a weakened
Imperial China ceded Taiwan to Japan in the Treaty of Shimonoseki
following the first Sino-Japanese war.
During its 50 years (1895-1945) of colonial rule, Japan expended
considerable effort in developing Taiwan's economy. At the same
time, Japanese rule led to the "Japanization" of the
island, including compulsory Japanese education and forcing residents
of Taiwan to adopt Japanese names.
At the end of World War II in 1945, Taiwan reverted to Chinese
rule. During the immediate postwar period, the Nationalist Chinese
(KMT) administration on Taiwan was repressive and corrupt, leading
to local discontent. Anti-mainlander violence flared on February
28, 1947, prompted by an incident in which a cigarette seller
was injured and a passerby was shot to death by Nationalist authorities.
The island-wide rioting was brutally put down by Nationalist Chinese
troops, who killed thousands of people. As a result of the February
28 Incident, the native Taiwanese felt a deep-seated bitterness
toward the mainlanders. For 50 years the KMT authorities suppressed
accounts of this episode in Taiwan history. In 1995 a monument
was dedicated to the victims of the "2-28 Incident,"
and for the first time, Taiwan's leader, President Lee Teng-hui,
publicly apologized for the Nationalists' brutality.
Starting before World War II and continuing afterwards, a civil
war was fought on the mainland between Chiang Kai-shek's KMT government
and the Chinese Communist Party led by Mao Zedong. When the civil
war ended in 1949, 2 million refugees, predominately from the
Nationalist government, military, and business community, fled
to Taiwan. In October 1949 the People's Republic of China (P.R.C.)
was founded on the mainland by the victorious communists. Chiang
Kai-shek established a "provisional" KMT capital in
Taipei in December 1949. During the 1950s, the KMT authorities
implemented a far-reaching and highly successful land reform program
on Taiwan. They redistributed land among small farmers and compensated
large landowners with commodities certificates and stock in state-owned
industries. Although this left some large landowners impoverished,
others turned their compensation into capital and started commercial
and industrial enterprises. These entrepreneurs were to become
Taiwan's first industrial capitalists. Together with refugee businessmen
from the mainland, they managed Taiwan's transition from an agricultural
to a commercial, industrial economy.
Taiwan has developed steadily into a major international trading
power with nearly $342 billion in two-way trade (2004) and the
world's 17th largest economy. Taiwan's accession to the World
Trade Organization in 2002 has expanded its trade opportunities
and further strengthened its standing in the global economy. Tremendous
prosperity on the island has been accompanied by economic and
social stability. Chiang Kai-shek's successor, his son Chiang
Ching-kuo, began to liberalize Taiwan's political system, a process
that continued when President Lee Teng-hui took office in 1988.
The direct election of Lee Teng-hui as president in 1996 was followed
by opposition Democratic Progressive Party candidate Chen Shui-bian's
election victory in March 2000. Chen was re-elected in March 2004
in a tightly contested election.
ADMINISTRATION
The authorities in Taipei exercise control over Taiwan, Kinmen,
Matsu, the Penghus (Pescadores) and several other smaller islands.
Taiwan is divided into counties, provincial municipalities, and
two special municipalities, Taipei and Kaohsiung. At the end of
1998, the Constitution was amended to make all counties and cities
directly administered by the Executive Yuan. From 1949 until 1991,
the authorities on Taiwan claimed to be the sole legitimate government
of all of China, including the mainland. In keeping with that
claim, when the Nationalists moved to Taiwan in 1949, they re-established
the full array of central political bodies, which had existed
on the mainland. While much of this structure remains in place,
the authorities on Taiwan in 1991 abandoned their claim of governing
mainland China, stating that they do not "dispute the fact
that the P.R.C. controls mainland China."
The first National Assembly, elected on the mainland in 1947
to carry out the duties of choosing the President and amending
the constitution, was re-established on Taiwan when the KMT moved.
Because it was impossible to hold subsequent elections to represent
constituencies on the mainland, representatives elected in 1947-48
held these seats "indefinitely." In June l990, however,
the Council of Grand Justices mandated the retirement, effective
December 1991, of all remaining "indefinitely" elected
members of the National Assembly and other bodies.
The second National Assembly, elected in 1991, was composed of
325 members. The majority were elected directly; 100 were chosen
from party slates in proportion to the popular vote. This National
Assembly amended the Constitution in 1994, paving the way for
the direct election of the President and Vice President that was
held in March 1996. In April 2000, the members of the National
Assembly voted to permit their terms of office to expire without
holding new elections. In June 2005 the National Assembly voted
to dissolve itself, leaving Taiwan with a unicameral legislature.
The President is both leader of Taiwan and Commander-in-Chief
of its armed forces. The President has authority over four of
the five administrative branches (Yuan): Executive, Control, Judicial,
and Examination. The President appoints the President of the Executive
Yuan, who also serves as the Premier. The Premier and the cabinet
members are responsible for government policy and administration.
The main lawmaking body, the Legislative Yuan (LY), was originally
elected in the late 1940s in parallel with the National Assembly.
The first LY had 773 seats and was viewed as a "rubber stamp"
institution. The second LY was not elected until 1992. The third
LY, elected in 1995, had 157 members serving 3-year terms, while
the fourth LY, elected in 1998, was enlarged to 225 members. The
LY has greatly enhanced its standing in relation to the Executive
Yuan and has established itself as a major player on the central
level. With increasing strength, size, and complexity, the LY
now mirrors Taiwan's recently liberalized political system. In
the 1992 and 1995 elections, the main opposition party--the Democratic
Progressive Party (DPP)--challenged the half-century of KMT dominance
of the Legislature. In both elections, the DPP won a significant
share of the LY seats, leaving only half of the LY seats in the
hands of the KMT. In 2001, the DPP won a plurality of LY seats
(88), compared to the KMT's 66. The PFP won 45 seats, the TSU
13, and all other parties 13. In the December 2004 LY election,
the Pan-Blue coalition won a slender majority of 114 of the 225
seats (later increased to 115) compared to the Pan-Green coalition's
101 (later reduced to 100). Election of four KMT legislators to
city mayor and county magistrate positions in the December 2005
local elections further reduced the Pan-Blue majority to 111 seats
of the LY's 220 occupied seats.
In 1994, when the National Assembly voted to allow direct popular
election of the President, the LY passed legislation allowing
for the direct election of the Governor of Taiwan Province and
the mayors of Taipei and Kaohsiung Special Municipalities. These
elections were held in December 1994, with the KMT winning the
Governor and Kaohsiung Mayor posts, and the DPP winning the Taipei
Mayor's position. In 1998, the KMT's Ma Ying-jeou wrestled back
control of the mayorship of Taipei from the opposition DPP leader
Chen Shui-bian. In the same election, however, DPP leader Frank
Hsieh managed to defeat the KMT incumbent to become Mayor of Kaohsiung.
Additionally, in a move to streamline the administration, the
position of elected Governor and many other elements of the Taiwan
Provincial Government were eliminated.
The Control Yuan (CY) monitors the efficiency of public service
and investigates instances of corruption. The 29 Control Yuan
members are appointed by the President and approved by the National
Assembly; they serve 6-year terms. In recent years, the Control
Yuan has become more activist, and it has conducted several major
investigations and impeachments. Since December 2004, however,
the LY has refused to approve the new slate of CY members proposed
by President Chen, leaving the CY moribund.
The Judicial Yuan (JY) administers Taiwan's court system. It
includes a 16-member Council of Grand Justices (COGJ) that interprets
the constitution. Grand Justices are appointed by the President,
with the consent of the National Assembly, to 9-year terms.
The Examination Yuan (EY) functions as a civil service commission
and includes two ministries: the Ministry of Examination, which
recruits officials through competitive examination, and the Ministry
of Personnel, which manages the civil service. The President appoints
the President of the Examination Yuan.
Principal Leaders
President--Chen Shui-bian
Vice President--Annette Lu (Lu Hsiu-lien)
Premier--Su Tseng-chang
Vice Premier--Tsai Ing-wen
Legislative Yuan President--Wang Jin-pyng
Judicial Yuan President--Weng Yueh-sheng
Defense Minister--Lee Jye
Foreign Minister--James Huang (Huang Chih-fang)
Minister of Justice--Shih Mao-lin
Mainland Affairs Council Chairperson--Joseph Wu (Wu Chao-hsieh)
Government Information Office Minister--Cheng Wen-tsan
Cabinet Spokesperson--Cheng Wen-tsan
POLITICAL CONDITIONS
Until 1986, Taiwan's political system was effectively controlled
by one party, the Kuomintang (KMT), the chairman of which was
also Taiwan's President. As the ruling party, the KMT was able
to fill appointed positions with its members and maintain political
control of the island.
After 1986, the KMT's hold on power was challenged by the emergence
of competing political parties. Before 1986, candidates opposing
the KMT ran in elections as independents or "nonpartisans."
Before the 1986 island-wide elections, many "nonpartisans"
grouped together to create Taiwan's first new political party,
the Democratic Progressive Party (DPP). Despite the official ban
on forming new political parties, Taiwan authorities did not prohibit
the DPP from operating, and in the 1986 island-wide elections,
DPP and independent candidates captured more than 20% of the vote.
In 1987, President Chiang Ching-kuo lifted the emergency decree,
which had been in place since 1948 and which had granted virtually
unlimited powers to the President for use in the anti-communist
campaign. This decree provided the basis for nearly four decades
of martial law under which individuals and groups expressing dissenting
views were dealt with harshly. Expressing views contrary to the
authorities' claim to represent all of China or supporting independent
legal status for Taiwan was treated as sedition. Since ending
martial law, Taiwan has taken dramatic steps to improve respect
for human rights and create a democratic political system. Almost
all restrictions on the press have ended, restrictions on personal
freedoms have been relaxed, and the prohibition against organizing
new political parties has been lifted. Lee Teng-hui succeeded
Chiang Ching-kuo as President when Chiang died on January 13,
1988. The Civic Organizations Law passed in 1989 allowed for the
formation of new political parties, thereby legalizing the DPP,
and its support and influence increased. Lee was elected by the
National Assembly to a 6-year term in 1990, marking the final
time a President was elected by the National Assembly. In the
1992 Legislative Yuan elections, the DPP won 51 seats in the 161-seat
body. While this was only half the number of KMT seats, it made
the DPP's voice an important factor in legislative decisions.
Winning the Taipei mayor's position in December 1994 significantly
enhanced the DPP's image. The DPP continued its strong showing
in the 1995 LY race, winning 45 of the 157 seats to the KMT's
81. In 1996, Lee Teng-hui was elected President and Lien Chan
Vice President in the first direct election by Taiwan voters.
In the November 1997 local elections, the Democratic Progressive
Party (DPP) won 12 of the 23 county magistrate and city mayor
contests to the Kuomintang (KMT)'s 8, outpolling the KMT for the
first time in a major election. In the 2001 LY elections, the
DPP won a plurality of seats for the first time. In March 2000,
DPP candidate Chen Shui-bian became the first opposition party
candidate to win the presidency. His victory resulted in the first-ever
transition of the presidential office from one political party
to another, validating Taiwan's democratic political system. In
a hotly contested election on March 20, 2004, President Chen Shui-bian
was re-elected by 50.1% of the popular vote to a second term.
The election was marred by a shooting incident the day before
the election during which President Chen and his running mate
Vice President Annette Lu were slightly wounded. While the opposition
contested the results, it was the first time that the DPP had
won an outright majority in an island-wide election.
The March election also included a "defensive referendum."
Historically, the issue of referenda has been closely tied to
the question of Taiwan independence, and thus has been a sensitive
issue in cross Strait relations. There were two referenda before
the voters on March 20. The first asked in light of the P.R.C.
missile threat whether Taiwan should purchase anti-missile systems.
The second asked whether Taiwan should adopt a "peace framework"
for addressing cross Strait differences with the P.R.C. However
both referenda failed to obtain support from over 50% of registered
voters, as required to be valid.
President Chen Shui-bian has called for major constitutional
reforms by 2006 aimed at further reducing layers of government,
and making other structural changes aimed at improving governance.
The People's Republic of China has accused Chen of using the constitution
issue to move Taiwan towards independence. He expressed opposition,
however, in his May 20, 2004 inaugural address to using constitutional
reform to alter the constitution's definition of Taiwan sovereignty.
The final National Assembly passed a set of constitutional amendments
on June 7, 2005 that will halve the number of LY seats from 225
to 113 and create single-member legislative election districts.
The revisions also abolished the National Assembly and provided
for the public to confirm or reject future constitutional amendments
passed by the LY. President Chen has called for "Round Two"
of constitutional revision focusing on the form of government
(presidential or parliamentary, 5-branch or 3-branch) and on human,
labor, and aborigine rights. He has pledged not to include independence
or name change in his proposed constitutional revisions.
In the December 2004 Legislative election, the ruling DPP won
a plurality with 89 of the 225 seats, gaining 2 seats more than
it did in 2001. The opposition KMT won 79 seats, or 11 more than
it did in 2001. The KMT's coalition partner, the PFP, won only
34, 12 fewer than it won in 2001, while the DPP's partner, TSU
won 12 seats. The New Party won one seat. The ruling coalition's
inability to secure a majority has left the LY in virtual gridlock
since the election. The KMT won a landslide victory in December
2005 local elections, winning 14 of the 23 city mayor and county
magistrate races to the ruling DPP's 6.
Political Parties
In addition to the KMT (described above in 'History' and 'Political
Conditions'), there are three other major parties. One is the
DPP, with its membership made up largely of native Taiwanese.
Its platform includes outspoken positions on some of the most
sensitive issues in Taiwan politics. For example, the DPP maintains
that Taiwan is an entity separate from mainland China, in contrast
to the KMT position that Taiwan and the mainland, though currently
divided, are both part of "one China." In sharp contrast
to the tenets of both KMT and P.R.C. policy, a number of ranking
DPP officials openly advocate independence for Taiwan. The recent
downplaying of Taiwan independence by the DPP as a party, however,
led to the formation by hard-line advocates of a new political
party called the Taiwan Independence Party in December 1996.
The People's First Party (PFP) was formed in the wake of the
March 2000 presidential election, composed of former KMT members
who supported former KMT Taiwan Provincial Governor James Soong's
presidential bid. PFP and KMT subsequently formed the "Pan-Blue"
Alliance to oppose the DPP government. Former KMT President Lee
Teng-hui, in turn, broke with the KMT and formed the pro-independence
Taiwan Solidarity Union (TSU) in 2001. The TSU, which advocates
changing Taiwan's official name and completely replacing the 1947
constitution, allied itself with the DPP as part of the ruling
"Pan-Green" alliance.
Taiwan and the Mainland
Despite differences between Taiwan and the P.R.C., contact between
the two sides of the Taiwan Strait has grown significantly over
the past decade. Taiwan has continued to relax restrictions on
unofficial contacts with the P.R.C., and cross-Strait interaction
has mushroomed. In January 2001, Taiwan formally allowed the "three
mini-links" (direct trade, travel, and postal links) from
Quemoy and Matsu Islands to Fujian Province. Taiwan opened direct
cross-strait trade in February 2002. Cross-Strait trade has grown
rapidly over the past 10 years. China is Taiwan's largest trading
partner, and Taiwan is China's fifth largest. Estimates of Taiwan
investment on the mainland, both officially approved by Taiwan
authorities and investment made by Taiwan firms through third
parties, start from $100 billion, making Taiwan and Hong Kong
the two largest investors. This trade runs heavily in Taiwan's
favor and continues to grow, providing another engine for the
island's economy. The trend in cross-Strait economic interaction
is one of steady growth with, so far, only temporary setbacks
due to political factors such as the P.R.C.'s passage of its Anti-Secession
Law. In August 2001, President Chen accepted the recommendation
of the Economic Development Advisory Council to set aside the
"no haste, be patient" policy of the Lee administration
and replace it with an "economic opening and effective management
policy." However, in January 2006, President Chen changed
the policy to "active management, effective opening."
In February 2003, Taiwan and the P.R.C. agreed to allow Taiwan
carriers to fly via Hong Kong or Macao to bring Taiwan residents
on the mainland home for the Lunar New Year holiday. The two sides
agreed to conduct Lunar New Year charter flights again in 2005,
with flights operated by both Taiwan and P.R.C. carriers flying
over, but not having to land in, Hong Kong or Macau. The two sides
agreed on an expanded series of Lunar New Year charter flights
in January-February 2006.
The development of semiofficial cross-Strait relations has been
halting. Prior to April 1993, when talks were held in Singapore
between the heads of two private intermediary organizations--Taiwan's
Straits Exchange Foundation (SEF) and the P.R.C.'s Association
for Relations Across the Taiwan Strait (ARATS)--there had been
some lower-level exchanges between the two sides of the Strait.
The April 1993 SEF-ARATS talks primarily addressed technical issues
relating to cross-Strait interactions. Lower-level talks continued
on a fairly regular basis until they were suspended by Beijing
in 1995 after President Lee's U.S. visit. Unofficial exchanges
resumed in 1997 through informal meetings between personnel of
the two sides' unofficial representative organizations. Direct
SEF-ARATS contacts resumed in April 1998, and the SEF Chairman
visited the mainland in October 1998. A planned visit by ARATS
Chairman Wang Daohan to Taiwan in the fall, however, was postponed
following statements made by then-President Lee Teng-hui that
relations between the P.R.C. and Taiwan should be conducted as
"state-to-state" or at least as "special state-to-state
relations." Since his May 20, 2000 inauguration, President
Chen has called for resuming the cross-Strait dialogue without
any preconditions. President Chen has stated that such talks should
be conducted in the spirit of the 1992 Hong Kong talks, a reference
to a meeting the two sides held to discuss how to handle political
barriers to cross-Strait interaction. The P.R.C. has responded
that the Chen administration must acknowledge that the two sides
reached a consensus that there is only "one China" before
any dialogue can be restarted. In his May 20, 2004 inaugural address,
President Chen recognized the P.R.C.'s insistence on "one
China" but stopped short of endorsing the concept. He called
for a new "Cross-Strait Framework for Peace and Stability"
and enhanced political, economic, and social exchanges between
the two sides. In the face of the "one China" recognition
obstacle and Taiwan's resentment over the P.R.C.'s March 2005
"Anti-Secession Law," Taipei and Beijing have been cautiously
feeling each other out on a series of smaller, intermediary steps,
including cross-Strait cargo and passenger charter flights, sale
of Taiwan agricultural products in the P.R.C., and P.R.C. tourists
visiting Taiwan. The United States has welcomed and encouraged
the cross-Strait dialogue as a process which contributes to a
reduction of tension and to an environment conducive to the eventual
peaceful resolution of the outstanding differences between the
two sides. The United States believes that differences between
Taipei and Beijing should be resolved by the people on both sides
of the Strait themselves. The United States has consistently stated
that its abiding interest is that the process be peaceful.
ECONOMY
Through nearly five decades of hard work and sound economic management,
Taiwan has transformed itself from an underdeveloped, agricultural
island to an economic power that is a leading producer of high-technology
goods. In the 1960s, foreign investment in Taiwan helped introduce
modern, labor-intensive technology to the island, and Taiwan became
a major exporter of labor-intensive products. In the 1980s, focus
shifted toward increasingly sophisticated, capital-intensive and
technology-intensive products for export and toward developing
the service sector. At the same time, the appreciation of the
New Taiwan dollar (NT$), rising labor costs, and increasing environmental
consciousness in Taiwan caused many labor-intensive industries,
such as shoe manufacturing, to move to the Chinese mainland and
Southeast Asia. Taiwan has transformed itself from a recipient
of U.S. aid in the 1950s and early 1960s to an aid donor and major
foreign investor, especially in Asia. Taiwan is now a creditor
economy, holding the world's third largest stock of foreign exchange
reserves ($253 billion as of December 2005). Although Taiwan enjoyed
sustained economic growth, full employment, and low inflation
for many years, in 2001, the combination of the slowing global
economy, weaknesses in parts of the financial sector, and sagging
consumer and business confidence in the government's economic
policymaking resulted in the first recession since 1952. The economy
began to recover in 2002, but the outbreak of severe acute respiratory
syndrome (SARS) slowed growth to 3.4% in 2003. The world economic
upturn had driven growth in 2004 to 6.1%. However, slower world
growth in 2005, higher energy prices and interest rates, and excess
inventory dragged 2005 growth to 3.8%.
Foreign Trade
Foreign trade has been the engine of Taiwan's rapid growth during
the past 50 years. Taiwan's economy remains export-oriented, so
it depends on an open world trade regime and remains vulnerable
to downturns in the world economy. The total value of trade increased
more than five-fold in the 1960s, nearly ten-fold in the 1970s,
and doubled again in the 1980s. The 1990s saw a more modest, slightly
less than two-fold, growth. Export composition changed from predominantly
agricultural commodities to industrial goods (now 98%). The electronics
sector is Taiwan's most important industrial export sector and
is the largest recipient of U.S. investment. Taiwan became a member
of the World Trade Organization (WTO) as a special customs territory
in January 2002.
Taiwan firms are the world's largest supplier of computer monitors
and leaders in PC manufacturing. Textile production, though of
declining importance as Taiwan loses its competitive advantage
in labor-intensive markets, is another major industrial export
sector. Imports are dominated by raw materials and capital goods,
which account for more than 90% of the total. Taiwan imports coal,
oil and gas to meet most of its energy needs. Reflecting the large
Taiwan investment in the mainland, China supplanted the United
States as Taiwan's largest trade partner in 2003. In 2005, China
(including Hong Kong) accounted for over 25% of Taiwan's total
trade and almost 38% of Taiwan's exports. Japan was Taiwan's second-largest
trading partner with 16% of total trade, including 25% of Taiwan's
imports. The U.S. is now Taiwan's third-largest trade partner,
taking 15% of Taiwan's exports and supplying 11.6% of its imports.
Taiwan is the United States' eighth-largest trading partner; Taiwan's
two-way trade with the United States amounted to $56 billion in
2004 and rose 1% to $57 billion in 2005. Imports from the United
States consist mostly of agricultural and industrial raw materials.
Exports to the United States are mainly electronics and consumer
goods. The United States, Hong Kong, the P.R.C., and Japan account
for nearly 60.5% of Taiwan's exports, and the United States, Japan,
and the P.R.C. provide almost 50% of Taiwan's imports. As Taiwan's
per capita income level has risen, demand for imported, high-quality
consumer goods has increased. The U.S. trade deficit with Taiwan
in 2003 was $14 billion, fell slightly to $13 billion in 2004,
and leveled off to $13 billion in 2005. The lack of formal diplomatic
relations with all but 24 of its trading partners appears not
to have seriously hindered Taiwan's rapidly expanding commerce,
but has made free trade agreements extremely difficult to pursue.
Taiwan maintains trade offices in more than 96 countries with
which it does not have official relations. Taiwan is a member
of the Asian Development Bank, the WTO, and the Asia-Pacific Economic
Cooperation (APEC) forum. Taiwan is also an observer at the OECD.
These developments reflect Taiwan's economic importance and its
desire to become further integrated into the global economy.
Agriculture
Although only about one-quarter of Taiwan's land area is arable,
virtually all farmland is intensely cultivated, with some areas
suitable for two and even three crops a year. However, increases
in agricultural production have been much slower than industrial
growth. Agriculture only comprises about 1.7% of Taiwan's GDP.
Taiwan's main crops are rice, sugarcane, fruit, and vegetables.
While largely self-sufficient in rice production, Taiwan imports
large amounts of wheat, corn, and soybeans, mostly from the United
States. Meat production (poultry and pork) and consumption are
rising sharply, reflecting a rising standard of living. Taiwan
produces insignificant quantities of soybeans, corn, and wheat
and, in order to meet demand for animal feed and wheat-based consumer
products, Taiwan imports large amounts of these commodities, mostly
from the United States.Overall, U.S. agricultural and food products
account for more than 30% of Taiwan’s agricultural import
demand. U.S. food and agricultural exports exceed $2 billion annually,
making Taiwan the United States’ sixth-largest agricultural
export destination. Taiwan’s agricultural exports include
frozen fish, aquaculture and sea products, canned and frozen vegetables,
and grain products. Imports of agricultural products have increased
since Taiwan's WTO accession, which is slowly liberalizing previously
protected agricultural markets. In December 2003, in response
to the first BSE detection in the United States, Taiwan decided
to suspend the import of U.S. beef. While Taiwan briefly reopened
its market in April 2005 to American beef from cattle under 30
months old, imports were suspended in June 2005 due to a second
BSE detection in the United States. On January 25, 2006 Taiwan
authorities reopened the market following decisions by Japan and
Korea to reopen their markets.
Economic Outlook
Taiwan now faces many of the same economic issues as other developed
economies. With the prospect of continued relocation of labor-intensive
industries to countries with cheaper work forces, Taiwan's future
development will have to rely on further transformation to a high
technology and service-oriented economy. In recent years, Taiwan
has successfully diversified its trade markets, cutting its share
of exports to the United States from 49% in 1984 to 15% by the
end of 2005. However, a significant proportion of Taiwan's rapidly
growing exports to the P.R.C. are ultimately dependent on consumer
demand in the U.S. Taiwan firms are increasingly acting as management
centers that take in orders, produce them in Taiwan, the Mainland
or South East Asia and then ship the final products to the U.S.
Taiwan's accession to the WTO and its desire to become an Asia-Pacific
"regional operations center" are spurring further economic
liberalization.
DEFENSE
In proportion to its population, Taiwan still maintains a large
military establishment accounting for 15.9% of the central budget
and 2.3% of GDP in FY 2005. However, the defense budget as a proportion
of GDP has shrunk significantly over the past decade from about
22.5% of the central budget and 4% of GDP in 1994. The military's
mission is the defense of Taiwan against the P.R.C., which is
seen as the predominant threat and which has not renounced the
use of force against Taiwan. Taiwan's armed forces were reduced
as part of a reform initiative from 1997 to 2001, going from about
450,000 to 385,000, with further reductions since then bringing
the total force level down to just under 300,000. Registered reservists
reportedly totaled 3,870,000 in 1997. Conscription remains universal
for qualified males reaching age 18.
Taiwan's armed forces are equipped with weapons obtained primarily
from the United States. In recent years, however, Taiwan also
has procured some weapons from other Western nations and has stressed
military "self-reliance," which has resulted in the
growth of indigenous military production in certain fields. Taiwan's
legislature is currently debating the approval of a special defense
budget proposal to purchase defensive systems the U.S. agreed
to sell Taiwan in 2001 and earlier. The special budget would provide
funds to purchase the Patriot Advanced Capability (PAC-3) missile
defense system, P-3C maritime patrol aircraft, and diesel-electric
submarines. Taiwan's opposition parties have blocked attempts
to pass the special budget on the legislative agenda. These systems
would give Taiwan key capabilities in missile defense and anti-submarine
warfare to remedy vulnerabilities in countering the P.R.C.'s accelerated
military modernization. Taiwan adheres to the principles of the
nuclear Non-Proliferation Treaty and has stated that it does not
intend to produce nuclear weapons.
FOREIGN RELATIONS
The People's Republic of China replaced Taiwan at the United Nations
in 1971, and Taiwan's diplomatic position has eroded, as many
countries changed their official recognition from Taipei to Beijing.
As of the end of 2005, Taiwan had formal diplomatic ties with
25 countries. At the same time, Taiwan has cultivated informal
ties with most countries to offset its diplomatic isolation and
to expand its economic relations. A number of nations have set
up unofficial organizations to carry out commercial and other
relations with Taiwan. Including its official overseas missions
and its unofficial representative and/or trade offices, Taiwan
is represented in 122 countries. Recently, Taiwan has lobbied
strongly for admission into the United Nations and other international
organizations, such as the WHO. The P.R.C. opposes Taiwan's membership
in such organizations, most of which require statehood for membership,
because Beijing considers Taiwan to be a province of China, not
a separate sovereign state.
U.S.-TAIWAN RELATIONS
On January 1, 1979, the United States changed its diplomatic recognition
from Taipei to Beijing. In the U.S.-P.R.C. Joint Communique that
announced the change, the United States recognized the Government
of the People's Republic of China as the sole legal government
of China and acknowledged the Chinese position that there is but
one China and Taiwan is part of China. The Joint Communique also
stated that within this context the people of the United States
will maintain cultural, commercial, and other unofficial relations
with the people on Taiwan.
On April 10, 1979, President Carter signed into law the Taiwan
Relations Act (TRA), which created domestic legal authority for
the conduct of unofficial relations with Taiwan. U.S. commercial,
cultural, and other interaction with the people on Taiwan is facilitated
through the American Institute in Taiwan (AIT), a private nonprofit
corporation. The Institute has its headquarters in the Washington,
DC area and has offices in Taipei and Kaohsiung. It is authorized
to issue visas, accept passport applications, and provide assistance
to U.S. citizens in Taiwan. A counterpart organization, the Taipei
Economic and Cultural Representative Office in the United States
(TECRO), has been established by the Taiwan authorities. It has
its headquarters in Taipei, the representative branch office in
Washington, DC, and 11 other Taipei Economic and Cultural Offices
(TECO) in the continental U.S. and Guam. The Taiwan Relations
Act (TRA) continues to provide the legal basis for the unofficial
relationship between the U.S. and Taiwan, and enshrines the U.S.
commitment to assisting Taiwan's defensive capability.
Following de-recognition, the United States terminated its Mutual
Defense Treaty with Taiwan. However, the United States has continued
the sale of appropriate defensive military equipment to Taiwan
in accordance with the Taiwan Relations Act, which provides for
such sales and which declares that peace and stability in the
area are in U.S. interests. Sales of defensive military equipment
also are consistent with the 1982 U.S.-P.R.C. Joint Communique.
In this communique, the United States stated that "it does
not seek to carry out a long-term policy of arms sales to Taiwan"
and that U.S. arms sales would "not exceed, either in qualitative
or in quantitative terms, the level of those supplied in recent
years," and that the U.S. intends "gradually to reduce
its sale of arms to Taiwan." The P.R.C., in the 1982 communique,
stated that its policy was to strive for a peaceful resolution
of the Taiwan question.
The United States position on Taiwan has been clear and consistent,
as reflected in the Three Communique's and the Taiwan Relations
Act (TRA). The U.S. "one-China" policy acknowledges
that both Taiwan and the Mainland are part of China. The U.S.
insists on the peaceful resolution of cross-Strait differences
and encourages dialogue to help advance such a resolution. The
U.S. does not support Taiwan independence. President Bush clearly
stated U.S. policy on December 9, 2003. The United States is opposed
to any attempt by either side to unilaterally alter the status
quo in the Taiwan Strait. The United States has endorsed dialogue
and exchanges between the two sides and has encouraged the P.R.C.
to engage the democratically elected leadership of Taiwan.
U.S. commercial ties with Taiwan have been maintained and have
expanded since 1979. Taiwan continues to enjoy Export-Import Bank
financing, Overseas Private Investment Corporation guarantees,
normal trade relations (NTR) status, and ready access to U.S.
markets. In recent years, AIT commercial dealings with Taiwan
have focused on expanding market access for American goods and
services. AIT has been engaged in a series of trade negotiations,
which have focused on protection of intellectual property rights,
market access, and issues relating to Taiwan's accession to the
WTO, which occurred in 2002.
Maintaining diplomatic relations with the P.R.C. has been recognized
to be in the long-term interest of the United States by six consecutive
administrations; however, maintaining strong, unofficial relations
with Taiwan also is in the U.S. interest. The United States is
committed to these efforts because they are important for America's
global position and for peace and stability in Asia. In keeping
with its one-China policy, while the U.S. does not support Taiwan
independence, it does support Taiwan's membership in appropriate
international organizations, such as the WTO, APEC forum, and
the Asian Development Bank, where statehood is not a requirement
for membership. In addition, the U.S. supports appropriate opportunities
for Taiwan's voice to be heard in organizations where its membership
is not possible.
U.S. Representative Offices
American Institute in Taiwan
Washington Headquarters
Suite 1700, 1700 North Moore Street
Arlington, VA 22209
Tel: 703-525-8474
Fax: 703-841-1385
American Institute in Taiwan
Taipei Office
No. 7, Lane 134, Hsin Yi Road
Section 3, Taipei, Taiwan
Tel: 011-886-2-2162-2000
Fax: 011-886-2-2162-2239
American Institute in Taiwan
Kaohsiung Office
5F, No. 2, Chung Cheng 3rd Road
Kaohsiung, Taiwan 800
Tel: 011-886-7-238-7744
Fax: 011-886-7-238-5237
Taiwan Representative Office
Taipei Economic and Cultural Representative Office (TECRO)
4201 Wisconsin Avenue, NW
Washington, DC 20016-2137
Tel: 202-895-1800
Fax: 202-895-0825
TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program provides
Consular Information Sheets, Travel Warnings, and Public Announcements.
Consular Information Sheets exist for all countries and include
information on entry requirements, currency regulations, health
conditions, areas of instability, crime and security, political
disturbances, and the addresses of the U.S. posts in the country.
Travel Warnings are issued when the State Department recommends
that Americans avoid travel to a certain country. Public Announcements
are issued as a means to disseminate information quickly about
terrorist threats and other relatively short-term conditions overseas
that pose significant risks to the security of American travelers.
Free copies of this information are available by calling the Bureau
of Consular Affairs at 202-647-5225 or via the fax-on-demand system:
202-647-3000. Consular Information Sheets and Travel Warnings
also are available on the Consular Affairs Internet home page:
http://travel.state.gov. Consular Affairs Tips for Travelers publication
series, which contain information on obtaining passports and planning
a safe trip abroad, are on the Internet and hard copies can be
purchased from the Superintendent of Documents, U.S. Government
Printing Office, telephone: 202-512-1800; fax 202-512-2250.
Emergency information concerning Americans traveling abroad may
be obtained from the Office of Overseas Citizens Services at (202)
647-5225. For after-hours emergencies, Sundays and holidays, call
202-647-4000.
The National Passport Information Center (NPIC) is the U.S. Department
of State's single, centralized public contact center for U.S.
passport information. Telephone: 1-877-4USA-PPT (1-877-487-2778).
Customer service representatives and operators for TDD/TTY are
available Monday-Friday, 8:00 a.m. to 8:00 p.m., Eastern Time,
excluding federal holidays.
Travelers can check the latest health information with the U.S.
Centers for Disease Control and Prevention in Atlanta, Georgia.
A hotline at 877-FYI-TRIP (877-394-8747) and a web site at http://www.cdc.gov/travel/index.htm
give the most recent health advisories, immunization recommendations
or requirements, and advice on food and drinking water safety
for regions and countries. A booklet entitled Health Information
for International Travel (HHS publication number CDC-95-8280)
is available from the U.S. Government Printing Office, Washington,
DC 20402, tel. (202) 512-1800.
Information on travel conditions, visa requirements, currency
and customs regulations, legal holidays, and other items of interest
to travelers also may be obtained before your departure from a
country's embassy and/or consulates in the U.S. (for this country,
see "Principal Government Officials" listing in this
publication).
U.S. citizens who are long-term visitors or traveling in dangerous
areas are encouraged to register their travel via the State Department’s
travel registration web site at https://travelregistration.state.gov
or at the Consular section of the U.S. embassy upon arrival in
a country by filling out a short form and sending in a copy of
their passports. This may help family members contact you in case
of an emergency.
Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov,
the Department of State web site provides timely, global access
to official U.S. foreign policy information, including Background
Notes and daily press briefings along with the directory of key
officers of Foreign Service posts and more.
Export.gov provides a portal to all export-related assistance
and market information offered by the federal government and provides
trade leads, free export counseling, help with the export process,
and more.
STAT-USA/Internet, a service of the U.S. Department of Commerce,
provides authoritative economic, business, and international trade
information from the Federal government. The site includes current
and historical trade-related releases, international market research,
trade opportunities, and country analysis and provides access
to the National Trade Data Bank.
