Wayzata World Factbook 1995/World Factbook - 1995 Edition - Wayzata Technology (1995).iso/mac/text/Build/orig BACKGR/BNOT0101.TXT

Text File | 1994-11-21 | 42KB | 811 lines

National Trade Data Bank
ITEM ID     : ST BNOTES TAIWAN
DATE        : Oct 28, 1994

AGENCY      : U.S. DEPARTMENT OF STATE
PROGRAM     : BACKGROUND NOTES
TITLE       : Background Notes - TAIWAN

Source key      : ST
Program key     : ST BNOTES
Update sched.   : Occasionally
Data type       : TEXT
End year        : 1992
Date of record  : 19941018
Keywords 3      :
Keywords 3      : | TAIWAN

US DEPARTMENT OF STATE PUBLICATION
BUREAU OF PUBLIC AFFAIRS

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.