Wayzata World Factbook 1994/World Factbook - 1994 Edition - Wayzata Technology (1994).iso/pc/text/txtfiles/taiwan.bkg

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#CARD:Taiwan:Background Notes
US DEPARTMENT OF STATE BACKGROUND NOTES:  TAIWAN

September 1991
Official Name:  Taiwan

PROFILE
Geography
Area: 35,981 sq. km. (14,000 sq.  mi.); about the size of West Virginia.
 Cities: Capital--Taipei (pop. 2.6 million).  Other cities--Kaohsiung
(1.6 million), Taichung (701,720), Tainan (648,377), Keelung (348,893),
Hsinchu (306,547).  Terrain: Largely mountainous.  Climate: Maritime
subtropical.

People
Population (1989 est.): 20 million.  Annual growth rate: 1%.  Languages:
Mandarin Chinese (official).  Principal dialects--Taiwanese, Hakka.
Education: Years compulsory--9; Attendance--99%.  Literacy (1986)--92%.
Health: Infant mortality rate (1986)--7/1,000.  Life expectancy--72 yrs.
 (men 71, women 76).  Work force (7.7 million): Agriculture--17%.
Industry--41%.  Services--42%.

Political Establishment
Type: One party dominates system, Nationalist Party--Kuomintang (KMT).
Originally, one-party system (Nationalist Party) established 1911 in
mainland China, moved to Taiwan 1949.  In 1986, a group of
oppositionists formed the Democratic Progressive Party (DPP), now the
main opposition party.  The ban on new political parties was lifted in
January 1989, and by September 1989 there were 38 registered parties.
Constitution: December 25, 1947.
Branches: President, Vice President, Premier (president of Executive
Yuan or cabinet), Legislative Yuan (parliament), Judicial Yuan, Control
Yuan, Examination Yuan.
Administrative subdivisions: Taiwan Province, Taipei and Kaohsiung
special municipalities, certain offshore islands (the most prominent of
which are Quemoy and Matsu) of Fukien (Fujian) Province.
Political parties: Kuomintang (KMT--Nationalist Party); Democratic
Progressive Party (DPP); Labor Party, Workers Party, other minor parties
also exist.  Suffrage: Universal over 20.
Central budget proposed (FY 1991): $30 billion.
Defense (1991): 5% of GNP.
Emblem: Red field with white sun in blue rectangle in upper left corner.

Economy
GNP (1989): $150 billion.  Annual growth rate (1989): 6%.  Per capita
GNP (1989): $7,500  Avg. inflation rate (CPI, 1989): 4%.
Natural resources: Small deposits of coal, natural gas, limestone,
marble, and asbestos.
Agriculture (5% of GNP): Products--pork, rice, poultry, shrimp,
watermelon, cabbage, corn, citrus fruit, lumber,
tobacco, wax apples, mangos, pineapple, grapes.  Cultivated land--25%.
Industry (43.58% of GNP): Types--electronics, textiles, footwear,
plastics, machinery, cement, furniture, other consumer goods, iron,
steel, petrochemicals.
Trade (1989): Exports--$66 billion: electronic products, machinery and
electrical products, textile products, plastic and rubber products,
footwear.  Major markets--US $24 billion, Japan $9 billion, Hong Kong $7
billion.  Imports--$52 billion: machinery and electrical products,
electronic products, chemicals, iron and steel, transportation
equipment, crude oil.  Major suppliers--Japan $16 billion, US $12
billion, FRG $2.6 billion.
Official exchange rate (December 1990): 27 Taiwan dollars=US$1.
Fiscal year: July 1 to June 30.

PEOPLE
 Taiwan has a population of 20 million, including about 100,000 on the
Penghu Islands.  The native Taiwanese, who number more than 16 million,
are descendants of Chinese who migrated from the crowded, coastal
mainland areas of Fujian (Fukien) and Guangdong (Kwangtung) Provinces
primarily in the 18th and 19th centuries.  The more than 2 million
"mainlanders," who arrived on Taiwan in 1949 and thereafter, came from
all parts of China.  About 330,000 aborigines, inhabiting the
mountainous central and eastern parts of the island are believed to be
of Malayo-Polynesian origin.

Education
 In 1985, about 25% of the population attended school, reflecting the
relative youthfulness of the island's population--about 39% under age 20
as of 1986.  Since 1968, a 9-year, free educational system has been in
effect.  Six years of elementary school and three of junior high are
compulsory for all children.
 Taiwan has an extensive system of higher education.  In 1988, the
number of institutions of higher learning rose to 109, with 496,530
students at 16 universities, 23 colleges, and 70 junior colleges.
Admission to both undergraduate and graduate study is through
competitive examinations.  Each year more than 100,000 students take the
joint entrance college exam, and about 45% are admitted to a college.
Opportunities for graduate education also are expanding.  In 1985,
10,981 students were enrolled in the 293 graduate programs affiliated
with universities and colleges in Taiwan.
 In 1988, 7,841 students, or more than 90% of students from Taiwan going
abroad for study, traveled to the United States for advanced education,
predominantly in the fields of engineering, natural science, business
and management, and computer science.  Although the number of graduating
students returning to Taiwan is increasing, a majority remain abroad.
In 1988, just fewer than 3,000 students returned from study abroad.

Languages
 A large majority of people on Taiwan speak Mandarin, the official
Chinese language, which has been the medium of instruction in the
schools for more than three decades.  Most native Taiwanese, as opposed
to the mainlanders, speak a variant of the Amoy (Hokkien) dialect of
southern Fujian.  The Hakka dialect is spoken in the two northwestern
counties of Hsinchu and Miaoli and in parts of southern and eastern
Taiwan.  As a result of the half century of Japanese rule, many
Taiwanese over age 50 also speak Japanese.

Religions
 The predominant religion is a combination of Buddhism and Taoism
brought to Taiwan centuries ago by the original Chinese settlers of the
island.  The Confucian ethical code, with its ancient rites and
ceremonies, has long been considered the "religion" of Chinese literati
and today is considered by some to be the "official religion" of Taiwan.
 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.  A few Chinese Muslims came to Taiwan with other refugees
from the mainland after the communist victory in 1949.

Cultural Background
 Taiwan's culture is a blend of its Chinese heritage and Western
influences.  Fine arts, folk traditions, and popular culture embody
traditional and modern, Asian, and Western motifs.  Interest in
classical Chinese calligraphy and woodblocks remains great, and Western
sculpture and painting are increasingly popular.

HISTORY
 Chinese migration to Taiwan may have begun as early as AD 500.  Taiwan
seems to have been known, albeit vaguely, to Sung dynasty historians as
early as the 10th century.  Dutch traders first claimed the island in
1624 as a base for Dutch commerce with Japan and coastal China.  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 twilight of the Ming
dynasty and at the time of the Manchu invasion.
 Manchu China ruled Taiwan as a frontier district until it was declared
a separate Chinese province in 1886.  During the 18th and 19th
centuries, migration from China's coastal provinces of Fukien and
Kwangtung steadily increased, and Chinese became the dominant population
group.  In 1895, a weakened imperial China ceded Taiwan to Japan
following the first Sino-Japanese war.
 At the end of World War II, Taiwan reverted to mainland Chinese rule.
During the immediate postwar period, the Nationalist Chinese fought a
civil war with communists on the mainland; the Nationalist
administration ruling Taiwan was repressive and corrupt.  These
conditions led to extreme Taiwanese discontent with the newly arrived
authorities from mainland China, and anti-mainlander violence flared on
February 28, 1947.  The uprising was swiftly and brutally suppressed by
Nationalist Chinese troops.  Although Taiwanese and mainlanders have
learned to live together over the ensuing three and one-half decades, a
lingering distrust reportedly remains.
 Toward the end of the civil war in mainland China between communists
and Nationalists, about 2 million refugees, predominantly from the
military, government, and business, fled to Taiwan.  Following the
communist victory, Chiang Kai-shek in December 1949 established his
"provisional" capital in Taipei.

ADMINISTRATION
 The authorities in Taipei claim to be the government of all China,
including Taiwan.  In keeping with that claim, they maintain in Taipei
the full array of central political bodies originally established on the
mainland before withdrawal to Taiwan.  The governments of Taiwan
Province and the special municipalities of Taipei and Kaohsiung are
local bodies constituted separately from the central administrative
bodies.
 Under the constitution adopted by the Taiwan-based Nationalist Chinese
in 1947, the sovereignty of the people is exercised by the National
Assembly, whose seats are filled on the basis of territorial and
professional representation.  In addition to electing the President and
Vice President, the National Assembly has the power to amend the
constitution and the powers (as yet unexercised) of initiative and
referendum.
 The first National Assembly was elected in November 1947 with 2,961
delegates from throughout China.  Since 1969, the number of seats has
gradually increased to provide new seats for Taiwan.  There are
currently 3,045 seats.  All representatives elected in the 1947-48
period hold their seats "indefinitely," due to the impossibility of
holding new general elections for assembly members from constituencies
on the mainland.  In June 1990, however, a decision by the Council of
Grand Justices mandated that all "indefinitely" elected members of the
National Assembly and other elected bodies retire by December 1991.  By
November 1990, the National Assembly had declined--for a number of
reasons, among them natural attrition--to 651 members, including those
added when new seats were created for Taiwan.
 The President stands above the five administrative branches (Yuan):
Executive, Legislative, Control, Judicial, and Examination.  The
President is assisted by the Office of the President, headed by a
secretary-general.  With the consent of the Legislative Yuan, the
President appoints the Premier or "president" of the Executive Yuan.
The Executive Yuan constitutes the cabinet and is responsible for policy
and administration.
 The Legislative Yuan (parliament), originally had 773 seats.  With
Taiwan's growing population, the authorities ordered supplementary
elections in 1969 to add 11 new members.  In 1972, triennial elections
were inaugurated to fill the supplementary seats, and, in 1989, 101
members were elected to fill these seats.  At the same time, 29 members
were appointed to represent overseas Chinese constituencies.  In 1990,
members elected or appointed in Taiwan after 1949 came to be a majority.
 As of August 1990, the total membership of the Legislative Yuan was
257.
 The other elected branch is the Control Yuan, which monitors the
efficiency of the public service and investigates instances of
corruption.  Before 1980, the Control Yuan consisted of 42 members of
the original 180 elected in 1948 and 10 supplemental members elected for
6-year terms beginning in 1972.  As of June, 1990, Control Yuan
membership was 50 seats, consisting of 19 "indefinite" term members, 22
supplemental members elected in 1987 by the Taiwan Provincial Assembly
and Taipei and Kaohsiung city councils, and 9 supplemental members
appointed in 1987 from overseas Chinese constituencies by the President.
 The Judicial Yuan includes a 17-member Council of Grand Justices that,
like the US Supreme Court, interprets the constitution.  Its
jurisdiction includes civil, criminal, and administrative cases, and
cases concerning disciplinary measures against public functionaries.
The Judicial Yuan also handles election suits.  As the highest judicial
organ, it is concerned only with final judicial decisions.  The
Executive Yuan administers the lower courts.
 The Examination Yuan functions as a civil service commission and
comprises two ministries: the Ministry of Examination, responsible for
recruiting public functionaries through competitive examination; and the
Ministry of Personnel, in charge of the registration of public
functionaries, transfers,
promotions, and commendations.
 The top local administrative organs are the Taiwan Provincial
Government (located in central Taiwan at Chunghsing New Village, near
Taichung), Taipei Municipality, and Kaohsiung Municipality.  The
governor of Taiwan Province and the mayors of Taipei and Kaohsiung are
appointed by the central authorities.  The elected Provincial Assembly
and city councils have limited authority over local affairs.  Many
positions at subordinate levels are filled by local elections.

Principal Officials
President--Lee Teng-hui
Premier--Hau Pei-tsun
Minister of Foreign Affairs--Frederick Chien

POLITICAL CONDITIONS
 The National Assembly elected President Lee Teng-hui to a 6-year term
as president in his own right on March 21, 1990.  Li Yuan-tzu was
elected as Vice President.
 President Lee Teng-hui also is chairman of the ruling Kuomintang
(KMT--Nationalist Party).  Formerly Mayor of Taipei and Governor of
Taiwan Province, Lee succeeded Chiang Ching-kuo as President when Chiang
died on January 13, 1988.  Lee is sensitive to the pluralistic nature of
Taiwan's society and is continuing former President Chiang Ching-kuo's
policy of opening the political process to more Taiwanese participation
while still maintaining effective KMT control.
 The KMT organization closely parallels the administrative structure at
all levels.  Most of the top officials, including cabinet members and
the governor of Taiwan Province, are members of its Central Standing
Committee.  The Central Standing Committee is elected annually by the
Central Committee of the KMT from nominees proposed by the party's
chairman.  At lower levels, KMT committees are organized on a
provincial, county, and district basis and in various vocational
groupings.
 Party funds are derived from dues and contributions paid by members and
from the proceeds of party-operated businesses.  The KMT has more than 2
million paying members, about two-thirds of whom are of Taiwanese
origin.  Most senior military officers and civilian officials are KMT
members.
 A revision of the constitution in 1948 granted virtually unlimited
emergency powers to the President.  These powers remained in effect
until July 15, 1987, when former President Chiang's reform initiative
resulted in the lifting of martial law.  For the nearly four decades
under martial rule, emergency powers were the basis for strict security
measures.  Opposition to basic policy (such as expressing views contrary
to the authorities' claim to represent all China or supporting
independent legal status for Taiwan) were considered seditious and thus

punishable under martial law.  Restrictions on personal freedoms in
recent years have been relaxed.
 Concurrent with the lifting of martial law in 1987 was passage of a new
national security law (NSL).  In a significant departure from martial
law, the NSL ensures that civilians will not be subject to court
martial.  Further, the NSL transfers control of Taiwan entry and exit
permits from the Taiwan Garrison Command, a military security
organization, to civilian authorities.  However, the NSL still forbids
groups to violate the constitution or advocate communism or the
"division of national territory."
 The Taiwan authorities have, since the end of martial law, considered
further political reforms, with the goal of moving toward a more
democratic system.  Restrictions on the press have greatly diminished.
The prohibition against organizing new political parties was ended.
President Lee convened a National Affairs Conference (NAC) in June 1990
to discuss broader changes to Taiwan's political institutions, including
reform of the parliamentary system, direct elections of key appointive
offices, and policy toward the mainland.
 Until 1986, Taiwan's political system was effectively one-party.  Two
additional political parties had been organized before the KMT retreated
to Taiwan in 1949, but they had no significant influence or following.
Other candidates opposing the KMT ran in elections as independents or
"nonpartisans."  These "nonpartisans" met with increasing success, and,
by the elections of 1977 and 1980, they had captured about one-quarter
of Legislative Yuan seats up for election.  In the 1983 elections,
strong KMT organization temporarily reversed the "nonpartisans' " gains,
but before the 1986 elections many "nonpartisans" formally grouped
together to form--illegally--Taiwan's first new political party in more
than four decades, the Democratic Progressive Party (DPP).  Despite the
official ban on forming new parties, Taiwan authorities did not prohibit
the DPP from operating, and in 1986 elections DPP and independent
candidates captured more than 20% of the vote.
 Since the DPP came about as a coalition of independent "nonpartisans,"
its membership includes factions with widely varying positions on
political issues.  Most DPP leaders hold moderate opinions and see their
primary purposes as implementing gradual change and providing a system
of checks and balances in the political structure.  However, due to its
orientation toward the Taiwanese population, the DPP platform includes
outspoken positions on some of the most sensitive issues in Taiwan
politics.  For example, the DPP advocates "self-determination," a term
party leaders say is not necessarily a call for Taiwan's secession from
China but a demand that the people of Taiwan be allowed to determine
their own future.  However, a number of ranking DPP officials do, in a
direct challenge to steadfast tenets of both Kuomintang and People's
Republic of China (PRC) policy, openly advocate Taiwan independence.
The DPP also advocates immediately abolishing the indefinite-term
mainlander seats in the National Assembly and Legislative Yuan, as well
as other changes in the political system.
 The DPP is the largest of the opposition parties and claims a
membership of 25,000.  The role of the opposition, however, is greater
than its small numbers might indicate.  The opposition is very vocal in
elected bodies, frequently using such public forums to raise
controversial or sensitive issues.  Consultation between the ruling KMT
and opposition DPP on legislative issues is growing over time.
 In 1972, Premier Chiang Ching-kuo began an effort to bring Taiwanese
into more senior positions in the central administration and the KMT.
Since his accession to the presidency in January 1988, President Lee
Teng-hui has continued this process.  Taiwanese now hold 9 of 19
ministerial positions in the cabinet and 13 of 31 positions on the KMT
Party Central Standing Committee.  Of 2 million KMT members about 70%
are Taiwanese.  Taiwanese hold most of the elective and appointive
positions at the provincial and local levels; nonetheless, mainlanders
continue to exercise control in the central governing bodies.

ECONOMY
 Over the past three decades, Taiwan has changed from an agricultural to
an industrialized economy.  In early 1949, the Nationalist authorities
started implementing a far-reaching and highly successful land reform
program.  The redistribution of land among small farmers was followed by
a significant increase in farm production.  In the land reform program,
the Nationalist authorities compensated large landowners with
commodities certificates and stock in state-owned light industries.
Although some landowners were left impoverished by the compensation,
others were able to turn theirs into capital with which to start new,
non-agricultural commercial and industrial enterprises.  These new
entrepreneurs became Taiwan's first industrial capitalists who, with
business refugees from the mainland, managed Taiwan's transition from an
agricultural to a commercial, industrial economy.  Since 1949, Taiwan
has developed steadily into a major international trading power.
Tremendous prosperity on the island has brought economic and social
stability.
 Foreign investment, mostly from overseas Chinese, the United States,
Japan, and Western Europe, helped introduce modern, labor-intensive
technology to the island in the 1960s and move industrial production to
increasingly sophisticated products for export in the 1970s and 1980s
Now the emphasis is to expand domestic demand, upgrade industrial
structure, and pursue development of the service sector.
 During the 1980s, GDP rose at an annual average of 8.1% in real terms
despite a series of economic downturns.  During the first 2 years of the
decade, Taiwan suffered through the second global oil crisis.  In 1985
just as the island was recovering from the economic slowdown, the
collapse of the island's largest credit cooperative and the largest
trust company cut the growth rate in half.  Following the G-5 Plaza
Summit in September 1985 Taiwan's currency began its 55% appreciation
against the US dollar that was to last through 1989.  Capital rushed
into Taiwan.  However, currency appreciation has not seriously damaged
Taiwan's export industries; instead, it prompted relocation of the less
efficient, more labor-intensive operations to other less developed
countries.  During this period, Taiwan has been transformed from a
debtor to a creditor economy, holding one of the largest foreign
exchange reserves in the world.

Major Infrastructure Projects
 One of the development strategies adopted by Taiwan authorities has
been to assign priority to infrastructural projects.  Ten major
construction projects, launched in 1973 and most completed by the end of
1978, provided a firm foundation for further development.  They included
a north-south freeway linking the major cities of western Taiwan, a new
international airport at Taoyuan, near Taipei, railway electrification,
modernization of the island's ports and construction of a new port near
Taichung, a rail link from Suao to Hualien, the island's first
integrated steel mill, a major shipyard at Kaohsiung, petrochemical
plants, and additional electric power plants.
 Twelve new development projects were subsequently initiated in 1978,
placing emphasis on more balanced development between the various
sectors of the economy.  They included construction of additional
highways, completion of a rail network around the island, finishing the
second phase of the integrated steel mill, constructing the island's
second and third nuclear power plants, expanding Taichung Harbor,
constructing new towns and housing, improving irrigation and flood
control, financing farm mechanization, and construction of local
cultural centers.
 In September 1984, Taiwan authorities announced another infrastructure
program consisting of 14 major construction projects.  These projects
are already under way, although progress on some of them has been
stalled by labor shortages.
 The authorities encourage foreign investment to help finance the
island's efforts to move away from light, labor-intensive,
export-oriented industry to more capital-intensive production for export
and for secondary import substitution.  According to Taiwan statistics,
foreign investment from 1952 to 1989 totaled $10.9 billion, of which
28%--or $3.1 billion--came from the United States.
 Electronics is the most important industrial export sector and is the
largest recipient of US investment.  Textile production, though of
declining importance, remains Taiwan's second most important industrial
sector.  Other major export industries include plastics, toys, sporting
goods, footwear, and machinery.  Although it is changing, Taiwan's
economy has been characterized by highly labor-intensive production.
However, the recent rapid development of the service sector, supported
by government policy, has taken away some of the labor force, causing
serious labor shortages.
 Tight supply of labor and a steady rise in wages, together with the 55%
currency appreciation and other factors, have promoted a massive
offshore relocation of production in the past 3 years.  Outward
investment approvals doubled in 1987 to $103 million, doubled again in
1988 to $219 million, and more than quadrupled in 1989 to $931 million.
Many local investors have never reported their overseas projects to the
investment authorities, and actual outward investments are many times
more than the official approval figures.  Outward investments--already
making Taiwan one of the most important investors in southeast Asian
countries and the PRC--were more than three times greater than the total
foreign investment in Taiwan in each of the past 2 years.  Thus, while
still a recipient of foreign investment, Taiwan has in fact become a
major supplier of investment funds to other developing countries.
 With the prospect of continued industrial emigration, Taiwan's future
development will have to rely more on domestic demand and on further
transformation to a higher-technology and service-oriented economy.
Capital outflow has shifted enough Taiwan business offshore that it led
to a slowdown in 1988 and 1989 and a decline in early 1990 in exports
from Taiwan.  The shift in export sourcing abroad has successfully
diversified Taiwan's trade markets, cutting its share of exports to the
US from 49% in 1984 to 36% in 1988 and 33% in the first 5 months of
1990.  Taiwan's dependence on the US should decrease as its exports to
southeast Asian countries and the PRC grow and its efforts to develop
European markets produce results.
 The movement of enterprises offshore also has reduced the importance of
Taiwan's three export processing zones which used to be one of the prime
engines behind Taiwan's earlier development.
 The focus of Taiwan's efforts to develop a high-technology industrial
base is the Hsinchu science-based industrial park, which opened in 1980
and now employs 19,000 people.  Of 120 companies with permits to operate
there, 36 are US firms.  Products include computers and peripheral
equipment, semiconductors, precision electronics, machinery and
instrumentation, and telecommunications equipment.  Three biotechnology
companies also have set up operations.  Most production is exported to
US and European markets.
 Two of Taiwan's leading science and engineering schools, Tsinghua and
National Chiaotung Universities, are located near the park and provide a
readily available pool of skilled labor.  Laboratories of the nonprofit
Industrial Technology Research Institute (ITRI) are adjacent to the
park.  ITRI conducts basic and applied research in the fields of energy,
environment, materials, and electronic and mechanical engineering.

Foreign Trade
 Foreign trade has been the engine of Taiwan's rapid growth over the
past 40 years.  The total value of trade roughly increased nearly
five-fold in the 1960s, more than ten-fold in the 1970s, and tripled in
the 1980s.  Variety of exports increased nearly four-fold between 1975
and 1980 and doubled from 1980 to 1985.  Export composition has changed
from predominantly agricultural commodities to industrial goods (95%).
Imports are dominated by raw materials and capital goods, which account
for more than 70% of the total.  Taiwan imports more than 92% of its
energy needs.
 The United States is Taiwan's largest trading partner, taking
36% of exports and supplying 23% of imports.  US private investment in
Taiwan since 1952 is $3 billion.  In 1989, Taiwan's trade with the US
was to $36 billion.  Imports from the US consisted mostly of farm
products, chemicals, machinery, electronic products and home appliances.
 Exports to the US were mainly consumer goods such as footwear,
furniture, and bicycles.  The US Department of Commerce calculates
Taiwan's 1989 trade surplus with the United States at $13 billion based
on US customs value of imports.  The United States and Japan account for
more than half of Taiwan's foreign trade.  Other important trading
partners are Hong Kong, Germany, Australia, Canada, Singapore, the
Netherlands, South Korea, and Saudi Arabia.  The lack of formal
diplomatic relations with all but a few of its trading partners has not
seriously hindered Taiwan's rapidly expanding commerce.

Agriculture
 Taiwan's agricultural sector is very productive.  Although only about
one-quarter of the territory is arable, virtually all farmland is
intensively 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.
 Although self-sufficient in rice production, Taiwan imports large
amounts of feedgrains such as wheat, mostly from the United States.
Meat production and consumption are rising sharply, reflecting a rising
standard of living.  Taiwan exports large amounts of frozen pork.  Other
agricultural exports include tuna, processed eel, fresh and frozen
vegetables, feathers, shrimp, canned vegetables, sugar, tea, and rice.
Taiwan has a large fishing fleet and is an important exporter of fish.
Deep sea fisheries have increased steadily each year while in-shore
fisheries have fluctuated slightly.  However, Taiwan's use of driftnets
for deep sea fishing has aroused international concerns.

Economic Outlook
 Taiwan has mixed economic prospects, but current trends may put the
island on a broader development base.  Exports in its traditionally
trade-oriented economy declined in the first months of 1990, foreign
purchase orders dropped, and industrial production suffered the first
decline in 15 years.  A weaker New Taiwan Dollar since late l989,
together with political unrest surrounding the March 1990 presidential
and vice presidential elections, caused substantial capital outflows.
The Taiwan Stock Exchange plunged, the real estate market was hit hard,
and sales at restaurants and department stores fell.  All of these
factors forced the economic planning authorities to lower the projected
growth target of 7% to 5-6% in 1990.  However, in the longer run, the

continued movement of less efficient, labor-intensive production
overseas and the corresponding upgrading of remaining production may
help stabilize the island economy on a broader development base.

DEFENSE
 The maintenance of a large military establishment, which absorbs about
5% of the GNP and accounts for about 28% of the central budget, places a
substantial but manageable burden on Taiwan's expanding economy.  The
armed forces number about 550,000; two-thirds are ground forces.  The
rest are divided among air and naval branches.  The reserves total more
than 2 million troops.  Conscription is universal for men over age 19.
 Taiwan's armed forces are equipped with weapons obtained primarily from
the United States, but in recent years stress on military
"self-reliance" has resulted in the growth of indigenous military
production in certain fields.  Taiwan adheres to the Nuclear
Non-Proliferation Treaty and has stated repeatedly 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.  Since then, Taiwan's diplomatic position has eroded, as countries
changed their official recognition from Taipei to Beijing.  In July
1991, Taiwan had formal diplomatic ties with 28 countries.
 Taiwan has cultivated informal ties with many countries as a means to
offset its diplomatic isolation and to expand its economic relations.  A
growing number of nations have found it useful to set up unofficial
organizations to carry out commercial and other unofficial relations
with Taiwan.  These organizations typically have representatives in
Taipei, who provide services required by business travelers and others
to or from their countries.  A counterpart organization is usually set
up by Taiwan in those countries.

US-TAIWAN RELATIONS
 On January 1, 1979, the United States changed its diplomatic
recognition from Taipei to Beijing.  Five consecutive administrations
have found normalizing relations with the PRC to be in the long-term
interest of the United States.  The United States is committed to this
effort because it is important for America's global position and for
peace and stability in Asia.  In the December 1978 US-PRC joint
communique announcing 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 that 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 of Taiwan."
 On April 10, 1979, President Carter signed into law the Taiwan
Relations Act (TRA), PL 96-8, which created domestic legal authority for
the conduct of unofficial relations with Taiwan.  US commercial and
cultural interaction with the people of Taiwan is facilitated through
the American Institute in Taiwan, a nongovernmental entity.  The
Institute has its headquarters in Washington, DC, and field offices in
Taipei and Kaohsiung.  It is authorized to accept visa and passport
applications and to provide assistance to US citizens in Taiwan.  A
counterpart organization, the Coordination Council for North American
Affairs, has been created by Taiwan.  It had headquarters in Taipei and
field offices in Washington, DC, and (in July 1991) 11 other US cities.
 In January 1979, the United States notified the Taiwan authorities of
intent to terminate the 1954 Mutual Defense Treaty, and termination took
effect January 1, 1980.  However, in its unilateral statement released
on December 15, 1978, concurrently with the US-PRC joint communique, the
United States declared that it continues to have an interest in the
peaceful resolution of the Taiwan issue and expects that the Taiwan
issue will be settled peacefully by the Chinese themselves.
 Since then, the United States, in accord with Taiwan authorities, has
continued the sale of carefully selected defensive military equipment to
Taiwan.  The August 17, 1982, US-PRC joint communique addressed this
point.  In that communique, the PRC cited a "fundamental policy" of
striving for a peaceful solution to the Taiwan question.  With that
Chinese policy in mind, the United States said in the communique that it
does not seek to carry out a long-term policy of arms sales to Taiwan,
that its arms sales to Taiwan will not exceed, either in qualitative or
in quantitative terms, the level of those supplied in recent years since
the establishment of diplomatic relations between the United States and
China, and that it intends to reduce gradually its sales of arms to
Taiwan . . . .
 Future arms sales to Taiwan will accord with the policies contained in
the August 1982 joint communique.  In conjunction with that communique,
President Reagan issued a statement that regarding future US arms sales
to Taiwan, our policy, set forth clearly in the communique, is fully
consistent with the Taiwan Relations Act.  Arms sales will continue in
accordance with the act and with the full expectation that the approach
of the Chinese Government to the resolution of the Taiwan issue will
continue to be peaceful . . . . The position of the US Government has
always been clear and consistent in this regard.  The Taiwan question is
a matter for the Chinese people, on both sides of the Taiwan Strait, to
resolve.  We will not interfere in this matter or prejudice the free
choice of, or put pressure on, the people of Taiwan in this matter.  At
the same time, we have an abiding interest and concern that any
resolution be peaceful.
 US commercial ties with Taiwan have been maintained and expanded since
early 1979.  Taiwan continues to enjoy Export-Import Bank financing,
Overseas Private Investment Corporation guarantees, most-favored-nation
status, and ready access to US markets.  The US Agency for International
Development mission in Taiwan was closed in 1965.  More than $1.7
billion in economic aid went to Taiwan between 1949 and 1965.
 In recent years, US economic dealings with Taiwan have focused on the
US trade deficit.  The American Institute in Taiwan has been engaged in
a series of trade negotiations to reduce the deficit with Taiwan, which
was $13 billion in 1989  Such negotiations have focused on copyright
issues, tariff reduction, and market liberalization.

TAIWAN AND THE MAINLAND
 Over the past few years, Taiwan has relaxed restrictions on unofficial
contacts with the PRC.  As a result, cross-strait interaction has
mushroomed.  At least half a million Taiwan residents have visited the
PRC since November 1987, when the Taiwan authorities lifted the ban on
private travel there.  Since May 1990, members of the Legislative Yuan
and the ruling Nationalist Party also can travel to the mainland.
Indirect trade, mostly through Hong Kong, reached about $3.5 billion in
1989.  Indirect investment, although technically still prohibited,
totaled $1 billion by 1990.
 A number of factors have contributed to this upsurge in contacts.
Taiwan residents born in mainland China have understandably been anxious
to visit their homes and relatives.  The indirect trade runs heavily in
Taiwan's favor, providing another outlet for the island's booming
economy.  A lure for indirect investment by Taiwan businessmen in the
PRC is the cheaper labor costs there, an advantage Taiwan itself is
losing as economic success drives up wages.  Ideologically, the Taiwan
authorities hope that private contacts will rekindle the sense of "one
China" after almost 40 years of separation.  They also hope that the
message of Taiwan's political and economic success will influence the
pace and character of change occurring in the PRC and hasten the day
when the unification of China will take place on Taiwan's terms.  Some
critics in Taiwan have complained that the opening to the PRC has moved
too quickly and that its purpose is ill-defined, but their voices appear
to have quieted recently.
 Beijing has a mixed view of these developments.  PRC leaders are
pleased if such contacts seem to lead toward eventual reunification,
which they assume will be on their terms.  But the upswing in contacts,
combined with domestic political liberalization in Taiwan, has brought
more open discussion in Taiwan of its future--including the option of
independence, which Beijing strongly opposes.
 While condemning the PRC for the use of force to crush the
pro-democracy movement in June l989, Taiwan leaders have continued their
policy of gradually liberalizing guidelines on contacts.  Visits, trade,
and investment suffered a temporary slowdown during the summer of l989,
but they have now resumed their upward trend.
 The United States believes that differences between Taipei and Beijing
should be resolved by the Chinese themselves, free of outside pressure,
and is concerned only that the process be peaceful.  The United States
has welcomed increased contacts as steps which contribute to a reduction
of tension and to an environment conducive to the eventual peaceful
resolution of the outstanding differences.

TRAVEL NOTES
 Immigration: For a stay of less than 2 weeks, a transit visa and
confirmed onward passage are required; for a stay of up to 2 months, a
visitor visa, valid for a stay of 2 months and extendable twice for a
total of 6 months, is required.  Persons coming from or passing through
disease-infected areas should have inoculations as appropriate.  Since
health requirements often change, travelers should check the latest
information.
 Climate and clothing: Taiwan is hot and humid in summer and chilly and
damp in winter.  The climate in the northern half of the island
resembles that of the south-central United States; the southern part is
similar to Florida.  In winter, raincoats, light jackets, and sweaters
are recommended; in summer, lightweight garments are essential.  An
umbrella is useful year-round.
 Health: Epidemics and serious diseases are infrequent in Taiwan.  High
pollen counts and air pollution can cause discomfort to people who
suffer from allergies or asthma.  Drinking water served at Taipei's
major hotels is safe, but care must be taken elsewhere.  Hepatitis is a
major problem.
 Telecommunications: Telephone and telegraph services are modern and
efficient.  Bilingual assistance is available through most hotel
switchboards.  Domestic telephone rates are moderate; however,
international calls dialed from Taiwan can be costly.  Taipei is 13
hours ahead of eastern standard time.
 Transportation:  Rental cars are available in Taiwan.  Although Taipei
has an extensive bus system, foreign visitors tend to rely on the
inexpensive taxis for transportation.  The north-south freeway provides
excellent links by car to the island's major cities, but travel around
the island by Taiwan's comfortable passenger express trains is
preferable.  Flights are available from Taipei to Kaohsiung (30
minutes), Hualien, Makung, Tainan, and Taitung.(###)


#ENDCARD