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Republic of China

Chung Hwa Min Kuo

CAPITAL: T'aipei

FLAG: The flag is red with a 12-pointed white sun on the blue upper left quadrant. The 12 points of the sun represent the 12 two-hour periods of the day in Chinese tradition, and symbolize progress. The colors red, white, and blue represent the Three Principles of the people (San Min Chu I) of Sun Yat-sen, father of the Republic of China, and symbolize the spirit of liberty, fraternity, and equality.

ANTHEM: Chung Hwa Min Kuo Kuo Ke (Chinese National Anthem).

MONETARY UNIT: The new Taiwan dollar (nt$) is a paper currency of 100 cents. There are coins of 50 cents and 1, 5, and 10 dollars, and notes of 50, 100, 500, and 1,000 new Taiwan dollars. nt$1 = us$0.03154 (or us$1 = nt$31.71) as of 2005.

WEIGHTS AND MEASURES: The metric system is employed in government and industrial statistics. Commonly used standards of weights and measures are the catty (1.1 lb or 0.4989 kilograms), the li (0.5 kilometers or 0.31 miles), the ch'ih (0.33 meters or 1.09 feet), and the chia (0.97 hectare or 2.39 acres).

HOLIDAYS: New Year's Day and the Founding of the Republic of China (1912), 1 January; Youth Day (formerly known as Martyrs' Day), 29 March; Tomb-Sweeping Day and Anniversary of the Death of Chiang Kaishek, 5 April; Birthday of Confucius and Teachers' Day, 28 September; National Day (Double Tenth Day), 10 October; Taiwan Retrocession Day, 25 October; Chiang Kai-shek's Birthday, 31 October; Sun Yat-sen's Birthday, 12 November; Constitution Day, 25 December.

TIME: 8 pm = noon GMT.


Taiwan, the seat of the Republic of China, lies in the western Pacific Ocean astride the Tropic of Cancer, less than 161 km (100 mi) from the southeast coast of mainland China, from which it is separated by the Taiwan (Formosa) Strait. To the ne, less than 129 km (80 mi) away, is the w end of the Japanese Ryukyu Islands; to the e is the Pacific Ocean; the Philippine island of Luzon lies 370 km (230 mi) to the s.

Besides the island proper, Taiwan comprises 21 small islands in the Taiwan group and 64 islands in the Penghu (Pescadores) group; the total area is 35,980 sq km (13,892 sq mi). Comparatively, the area occupied by Taiwan is slightly larger than the states of Maryland and Delaware combined. Leaf-shaped Taiwan island extends 394 km (245 mi) nnessw and 144 km (89 mi) esewnw; it has a coastline of 1,566 km (973 mi). The Penghu group, lying 40 km (25 mi) west of Taiwan island, has a total area of 127 sq km (49 sq mi).

Also under the control of the Taiwan government are Quemoy (Chinmen) and Matsu, two island groups located strategically close to the mainland Chinese province of Fujian (Fukien). Quemoy is the biggest of a group of six islands, two of which are occupied by the People's Republic of China; it is situated in Xiamen (Amoy) Bay at 118°23e and 24°27n and has a total area of 176 sq km (68 sq mi). The Matsu group, consisting of Nankan (the largest), Peikan, Tungyin, and about 10 small islets, is located at 119°56 e and 26°9 n, 30.6 km (19 mi) off the mainland port city of Fuzhou; it has a total area of 28.8 sq km (11.1 sq mi).

The capital city of T'aipei is located on northern Taiwan.


Taiwan perches on the margin of the continental shelf. Along the west coast the sea is rather shallow, averaging 90 m (300 ft) and not exceeding 210 m (690 ft) at the deepest point; however, it deepens abruptly along the east coast, dropping to a depth of 4,000 m (13,000 ft) only 50 km (31 mi) offshore. The terrain is precipitous on the east coast, with practically no natural harbor except Suao Bay in the north. The west coast is marked by wide tidal flats. Kaohsiung, the southern port, is situated in a long lagoon called Haochiung Bay. The north coast with its many inlets provides Taiwan with its best harbor, Chilung (Keelung).

The eastern two-thirds of the island are composed of rugged foothill ranges and massive mountain chains. A low, flat coastal plain, extending from north to south, occupies the western third. Yü Shan, with an elevation of 3,997 m (13,113 ft), is the highest peak on the island.

Located on the Eurasian tectonic Plate near the border of the Philippine Plate, Taiwan is part of the "Ring of Fire," a seismically active band surrounding the Pacific Ocean. Mild to moderate earthquake tremors are common, with over 200 minor shocks recorded each year.

All the rivers originate in the mountains in the central part of the island. They have short courses and rapid streams. The longest river, Choshui, draining westward, is only 190 km (118 mi) long. Only the Tanshui, which flows past T'aipei in the north, is navigable.


Taiwan enjoys an oceanic, subtropical monsoon climate. The warm and humid summer lasts from May until September, the mild winter from December until February. The average lowland temperature in January is 16°c (61°f) in the north and 20°c (68°f) in the south; the average July temperature is 28°c (82°f) in both the north and south. The growing season lasts throughout the year, except at elevations above 1,200 m (4,000 ft), where frost and snow occasionally occur.

The average rainfall is 257 cm (101 in), ranging from 127 cm (50 in) at the middle of the western coast to 635 cm (250 in) and more on exposed mountain slopes. Southwest monsoon winds blow from May through September and northeast monsoon winds from October to March. Only the extreme southwest has a distinct dry season. As a result of the tropical cyclonic storms that sweep out of the western Pacific, typhoons occur between June and October.


The flora is closely related to that of southern China and the Philippines. Taiwan has almost 190 plant families, about 1,180 genera, and more than 3,800 species, of which indigenous members constitute about one-third of the total flora. Mangrove forest is found in tidal flats and coastal bays. From sea level to a height of 2,000 m (6,600 ft) is the zone of broad-leaved evergreen tropical and subtropical forest, where ficua, pandanus, palms, teak, bamboos, and camphors are commonly found. The mixed forest of broad-leaved deciduous trees and conifers occupies the next zone, extending from a height of 2,000 to 3,000 m (6,6009,800 ft). Pines, cypresses, firs, and rhododendrons are grown in this region. Above this level is the zone of coniferous forests, composed mainly of firs, spruce, juniper, and hemlock.

The mammals so far discovered number more than 60 species, 45 of which appear to be indigenous to the island. The largest beast of prey is the Formosan black bear. Foxes, flying foxes, deer, wild boar, bats, squirrels, macaques, and pangolins are some of the mammals seen on the island. There are more than 330 species and subspecies of birds, of which 33 are common to the island, China, and the Philippines, and about 87 are peculiar forms. More than 65 species of reptiles and amphibians inhabit the island. There is an abundance of snakes, of which 13 species are poisonous. The insect life is rich and varied.


The Environmental Protection Agency (EPA) has the main responsibility for environmental policy. Water pollution from raw sewage and industrial effluents is a significant problem in Taiwan. Outside the larger hotels and urban centers, the water is likely to be impure. Health problems like hepatitis result from waterborne contaminants. Water quality is regulated under provisions of the sanitary drinking water legislation of 1972 and the 1974 Water Pollution Control Act.

Air pollution is another significant problem, complicated by a high pollen count. Solid waste disposal regulations and air quality standards were adopted in 1975. All factories are required to comply with established standards, the cost of installing antipollution devices being written off as a depreciable item over two years. Taiwan in 1978 adopted the safety procedures for nuclear facilities issued by the IAEA. In the mid-1980s, the government began tightening emission standards for automobiles and ordered many factories and power plants to install filters and dust collectors. The EPA announced plans in 1987 to install an island-wide pollution-monitoring system.

Wildlife management is the responsibility of the National Wildlife Protection Association of the Republic of China. The nation's marine life is threatened by the use of driftnets. According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 11 types of mammals, 29 species of birds, 8 types of reptiles, 8 species of amphibians, 23 species of fish, and 78 species of plants. Threatened species include the Formosan sika, hawksbill turtle, Oriental white stork, and Lan Yü scops owl. Trade in endangered species has been reported.


The population of Taiwan in 2005 was estimated by the United Nations (UN) at 22,731,000, which placed it at number 48 in population among the 193 nations of the world. In 2005, approximately 9% of the population was over 65 years of age, with another 19% of the population under 15 years of age. According to the UN, the annual population rate of change for 200510 was expected to be 0.4%, a rate the government viewed as too low. The projected population for the year 2025 was 23,625,000. The population density was 628 per sq km (1,627 per sq mi), one of the highest in the world. Approximately 90% of the inhabitants live west of the Central Range.

The UN estimated that 78% of the population lived in urban areas in 2005, and that urban areas were growing at an annual rate of %. The capital city, T'aipei, had a population of approximately 2,700,000 in that year. Other large cities (with their estimated populations) include Kaohsiung (1,600,000), T'aichung (1,114,080), T'ainan (755,800), and Panch'iao (589,700).


In 1963, the Nationalist government stated that since the completion of the Communist conquest of the mainland in 194950, a total of 146,772 Chinese refugees had come to Taiwan for resettlement. The number of refugees has varied from year to year.

In 1986, the Taiwan government reported that there were 28,714,000 overseas Chinese (25,799,000 in Asia, 2,044,000 in the Americas, 584,000 in Europe, 214,000 in Oceania, and 73,000 in Africa), including those with dual nationality.

There may be as many as 100,000 illegal immigrants. Taiwan is pressured by the Chinese perception that Taiwan is a "land of fortune." In 2003, the Taiwanese government cracked down on illegal Chinese immigrants, especially the smuggling of Chinese women which had increased tenfold from 1999. Detained Chinese immigrants number about 2,000 a year. Their numbers outpace the ability to repatriate them. As reported in the Asia Times Online, the phenomenon of "foreign brides" is another unique aspect of Taiwanese immigration. In 2003, 25% of marriages involved Taiwanese men marrying foreign women. The Ministry of the Interior noted that there were about 280,000 foreign women in Taiwan married to Taiwanese nationals. More than half of these women were from China and the remainder from Southeast Asian countries, predominantly Vietnam and Indonesia. A serious social problem that the government attacked in 2005 was the criminal activities of illegal Chinese immigrants in Taiwan.

In 2005, there were 320,000 foreign workers from Thailand, the Philippines, Indonesia, and Vietnam. The net migration rate in 2005 was an estimated zero migrants per 1,000 population.


The term "Taiwanese" is often used when referring to those Chinese who are natives of the island as distinct from the two million "mainlanders" who migrated from China after the end of World War II. Most of the more than 20 million inhabitants of Taiwan are descendants of earlier immigrants from Fujian and Guangdong (Kwangtung) provinces in South China. They form several distinct groups. The Hakka are descendants of refugees and exiles from Guangdong who came to Taiwan before the 19th century; they are farmers and woodsmen who occupy the frontiers of settlement. The more numerous Fujians are descendants of peasants from Fujian who migrated to Taiwan in the 18th and 19th centuries; they form the bulk of the agricultural population.

The aboriginal population is primarily of Indonesian origin. They live mainly in central and eastern Taiwan. They are mainly divided into nine major tribes, with the Ami, Atayal, Paiwan, and Bunun accounting for about 88%; the balance is mainly distributed among the Puyuma, Rukai, Saisiyat, Tsou, and Yami. The language and customs of the aborigines suggest a close resemblance to the Malays. About 84% of the total population is Taiwanese and 14% are mainland Chinese. About 2% of the total population are aborigine.


Most people on Taiwan now speak Mandarin Chinese (Peking dialect). It is the official language and is used in administration, jurisprudence, education, and, to a large extent, in commerce; it has come into increasingly common use during the last three decades. The Wade-Giles system of romanization, which has been replaced on the mainland by the pinyin system, is still used in Taiwan.

Native Taiwanese speak a variety of southern Chinese dialects, but mainly Southern Fukienese. This is the native tongue of about 70% of the population. It has also influenced the vocabulary of Mandarin spoken on Taiwan. There is also a sizable population of Hakka speakers. This dialect is mainly spoken in Kwantung Province on the mainland. As a result of 50 years of Japanese rule, most Taiwanese and aborigines over the age of 60 speak or understand Japanese. Tribal peoples speak dialects of the Malay-Polynesian family which have no written script.


The Chinese are traditionally eclectic in their religious beliefs. The Taiwan folk religion is a fluid mixture of shamanism, ancestor worship, magic, ghosts and spirits, and aspects of animism. commonly overlap with an individual's belief in Buddhism, Confucianism, Taoism, or other traditional Chinese religions. Natural phenomena have been deified, and ancestors, sages, virtuous women, and historical personalities have been given the status of gods. In 2003, registered organizations estimated that about 33% of the population were Taoists, 23.9% were Buddhists, 2.6% were I Kuan Taoist, and 1.2% were Protestant.

The first Westerners to bring Christianity to Taiwan were the Dutch (1624). However, a great persecution of Christians took place when the island was lost to Cheng Ch'eng-kung in 1662. Christianity made another beginning in 1860, when a missionary from Scotland came to the island. The English Presbyterian Mission started its work in the southern part of Taiwan about 100 years ago. Since the end of World War II, more than 80 Protestant denominations have been established on the island, and the activities of Christian missions, many coming over from the mainland, have become widespread. Christians constitute about 4.5% of the total population. Denominations represented include Roman Catholic, Presbyterians, Mormons, Baptists, Lutherans, Seventh-Day Adventists, Episcopalians, and Jehovah's Witnesses.

Other faiths include Tien Ti Chiao (Heaven Emperor Religion), Tien Te Chiao (Heaven Virtue Religion), Li-Ism, Hsuan Yuan Chiao (Yellow Emperor Religion), Maitraya Great Tao, Chinese Holy Religion, Hai Tzu Tao (Innocent Child Religion), Tien Li Chiao (Heaven Reason Religion), the Baha'i Faith, Mahikari, and Judaism. About 14% of the population are atheists.


As of 2004, Taiwan had 2,497 km (1,553 mi) of railroad track, all of it narrow gauge. Of that total, 1,400 km (871 mi) belonged to the Taiwan Sugar Corporation and the Taiwan Forestry Bureau. The main trunk line, now electrified, links the main cities of the populous west coast between Chilung and Kaohsiung. A second trunk line, the North Link between T'aipei and Hualien on the east coast, was completed in 1979. It connects with an eastern line between Hualien and T'aitung, which was modernized in the early 1980s. Construction of the 98-km (61-mi) South Link (between T'aitung and P'ingtung) has been completed. Forming the last link in the round-the-island rail system, the South Link opened on 6 December 1991, taking over 11 years and $770 million to complete. A total of 685 km (426 mi) of main line were electrified.

As of 2002, Taiwan had an estimated 37,299 km (23,200 mi) of highways, of which 35,621 km (22,156 mi) were paved, including 608 km (378 mi) of expressways. By 2003 there were 6,133,794 registered motor vehicles, 5,169,733 of which were passenger cars and 964,061 were commercial vehicles.

Taiwan has five international seaports, all of them extensively modernized in the 1970s. Kaohsiung in the southwest is by far the largest, handling about two-thirds of all imports and exports. Other major ports are Chilung, on the north coast; Hualien and Suao, both on the east coast; and T'aichung, on the west coast. As of 2005, Taiwan's merchant marine consisted of 126 vessels of 1,000 GRT or more, totaling 3,417,768 GRT.

Also in 2004, there were an estimated 40 airports. As of 2005 a total of 38 had paved runways, and there were also three heliports. There are two international airports. The main one, opened in 1979, is Chiang Kai-shek International Airport, at T'aoyüan, southwest of T'aipei; the other serves Kaohsiung. T'aipei Airport handles only domestic flights. Regular domestic flights also reach Hualien, T'aitung, Chiai, T'ainan, and several other cities. Principal air service is provided by China Air Lines, Taiwan's international airline, and other international carriers, and by Taiwan's leading domestic airline, Far Eastern Air Transport.


Although Taiwan can be seen on a clear day from the China mainland, ancient Chinese accounts contain few references to the island. The earliest inhabitants were Malayo-Polynesian aborigines. Historians have surmised from the brief information available in the early dynastic histories that Chinese emigration to Taiwan began as early as the T'ang dynasty (618907). During the reign of Kublai Khan (126394), the first civil administration was established in the neighboring Pescadores. Taiwan itself, however, remained outside the jurisdiction of the Mongol Empire. During the Ming dynasty (13681644), Japanese pirates and Chinese outlaws and refugees wrested the coastal areas from the native aborigines. The Chinese settled in the southwest region, while the Japanese occupied the northern tip of the island. Significant Chinese settlement, by immigrants from Fujian and Guangdong, began in the 17th century.

In 1517, the Portuguese sighted the island and named it Ilha Formosa (Beautiful Island). The Dutch, who were disputing the monopoly of Far Eastern trade held by the Portuguese, captured the Pescadores in 1622 and used them as a base for harassing commerce between China, Japan, and the Philippines. Two years later, the Chinese offered the Dutch a treaty that gave them certain commercial privileges if they withdrew from the Pescadores and occupied instead a trading post on Taiwan. The Dutch complied by building Fort Zeelandia and Fort Providentia in the southwestern part of the island. The Spaniards, wishing to compete, seized the northern part of Chilung in 1626 and later extended their domain to nearby Tanshui. The Japanese, constrained by the policy of national seclusion adopted by the Tokugawa Shogunate, withdrew voluntarily in 1628. The Dutch captured the Spanish settlement in 1642 and, after putting down a Chinese uprising in 1656 with the aid of the aborigines, gained complete control of the island.

While the Dutch were consolidating their hold on Taiwan, the Ming dynasty on the China mainland was overthrown by the Manchus, who established the Qing (Ch'ing) dynasty (16441912). Remnants of the Ming forces, led by Zheng Chenggong (Cheng Ch'eng-kung Koxinga, 162462), son of a Chinese pirate and a Japanese mother, decided to establish an overseas base in Taiwan. They landed on the island in 1661 and ousted the Dutch in the following year. It was not until 1683 that the Manchus succeeded in wresting Taiwan from Zheng Chenggong's successors.

From 1683 to 1885, Taiwan was administered as a part of Fujian Province. During this period, Chinese colonization proceeded steadily, as the aborigines were either assimilated into the Chinese population or pushed back into the mountains. The imperial government, however, paid scant attention to the island administration. As a result, official corruption and inefficiency often provoked armed rebellions. In the latter part of the 19th century, the strategic importance of Taiwan for the defense of the South China coast was recognized by the authorities, particularly after the French bombardment and blockade of the island in 1884 during the Sino-French War over Annam. The local administration was reorganized, and the island was made into a separate province in 1885.

Upon the conclusion of the First Sino-Japanese War in 1895, Taiwan was ceded to Japan. Refusing to submit to Japanese rule, the islanders declared their independence and established a republic, although organized resistance against the Japanese lasted only a few months. Ineffective armed resistance, chiefly by aborigines, continued. Under the Japanese, the island's agricultural resources were developed rapidly to supply the needs of the home islands and the transportation infrastructure experienced modernization. A policy of Japanization of the Taiwan population was adopted and, by 1944, 71% of children attended primary school. During World War II, Japanese administrators began to orchestrate the island's industrialization in support of Japanese expansionism in south Asia.

In accordance with the Cairo Declaration of 1943 and the Potsdam Proclamation of 1945, Taiwan was restored to China in September 1945. The carpetbagging malpractices of the mainland Chinese officials, however, aroused the resentment of the local population. In February 1947, a police incident touched off a popular revolt, which was suppressed with bloodshed. In May, more troops were brought from the mainland and the Taiwanese leadership was systematically killed. Estimates of the dead range from 5,000 to 50,000. On 8 December 1949, as the Chinese Communists were sweeping the Nationalist armies off the mainland, the government of the Republic of China (ROC), led by General Chiang Kai-shek (Jiang Jieshi), was officially transferred to Taiwan.

The Republic of China

With the removal of the ROC government to Taiwan, two million mainland Chinese came to the island where they instituted an authoritarian rule under martial law. Initially Chiang Kai-shek remained myopically focused on retaking the mainland, but as the stalemate continued, the government gradually shifted its attention to industrializing Taiwan. Strong government policies contributed to steady economic progress, first in agriculture and then in industry. In the 1950s, with US aid and advice, the ROC undertook a successful program of land redistribution. Japan built an infrastructure; the Nationalists brought skills and capital; and the United States poured in excess of $2 billion in aid by 1968. Furthermore, Japanese investment and procurement boom during the Vietnam War in the 1960s further stimulated economic growth.

In 1951, Japan signed the San Francisco Peace Treaty, thereby formally renouncing its claim to the island of Taiwan. In 1954, the ROC and the United States concluded a Mutual Defense Treaty and the United States and Western nations supported Taiwan possession of a UN Security Council seat, while the Eastern bloc nations supported the People's Republic of China (PRC). Support for Taiwan's representation gradually eroded over the years, and on 25 November 1971 the General Assembly voted 7536 (with 17 abstentions) to remove recognition from the ROC and recognize the PRC. In a significant policy reversal, the United States voted with the majority to seat the mainland government. Although maintaining full diplomatic ties with Taiwan, the United States took the occasion of President Nixon's visit to China to acknowledge, in what became known as the Shanghai communiqué of February 1972, that "all Chinese on either side of the Taiwan Strait maintain there is but one China and that Taiwan is part of China. The United States government does not challenge that position."

By 1975, most nations shifted recognition from the ROC to the PRC. On 1 January 1979, the United States formally recognized the PRC as the sole legal government of China and severed diplomatic ties with Taiwan. It also announced the unilateral termination of the 1954 US-ROC Mutual Defense Treaty, effective 1 January 1980, and withdrew its remaining military personnel. Nonetheless, the United States continued to sell arms to Taiwan, and commercial and cultural contacts were unofficially maintained through the American Institute in Taiwan and the Coordination Council for North American Affairs. Taiwan successfully warded off worldwide political and economic isolation by maintaining a host of similar contacts with other countries.

When President Chiang Kai-shek died at age 87 on 5 April 1975, he was succeeded in office by former Vice President Yen Chia-kan (Yan Jiagan). Leadership of the Nationalist Party (Kuomintang, Guomindang) and, hence, of the government, passed to Chiang's elder son, Chiang Ching-kuo (Jiang Jingguo). The younger Chiang was elected to a six-year term as president in March 1978 and reelected in 1984. While control of the central government had remained in the hands of mainlanders in the first decades of the Nationalists' rule on Taiwan, Taiwanese Chinese increasingly won elections at local levels, and Chiang Ching-kuo instituted a policy of bringing more Taiwanese into the Nationalist Party. By the 1980s, economic development had produced a new middle class, and the passage of time, together with intermarriage between mainlanders and Taiwanese, had brought a new generation for which the distinction between mainlander and Taiwanese held diminished importance. These factors contributed to popular pressure for a more democratic government. In November 1986, 5,00010,000 demonstrated in support of an exiled dissident, Hsu Hsin-liang (Xu Xinliang), when he was not allowed to return to Taiwan. Thousands protested the 38th anniversary of martial law in May 1987. And, in March 1990, more than 10,000 demonstrators demanded greater democracy and direct presidential elections. This was followed in the same month by a demonstration involving some 6,000 students.

In 1987 martial law was revoked and with that press restrictions were eased, citizens were allowed to visit relatives on the mainland, and opposition political parties formed. Then in January 1988, Chiang Ching-kuo died and was succeeded as president by the vice president, Lee Teng-hui (Li Denghui, b. 1923). Lee, a protégé of Chiang Ching-kuo, was a native Taiwanese. In March 1990, the National Assembly reelected Lee as president for a six-year term. In July, he was also named Chairman of the Nationalist Party by the Party Congress.

In the early 1990s, as Taiwan increasingly opened its political system to greater democracy, the KMT's corrupt practices were revealed. However, after the 1992 legislative elections, the KMT emerged victorious as it still controlled most national media and opposition parties failed to mobilize voters. Vote-buying and other forms of fraud were also widespread. By the 1995 elections, however, the political environment changed because the KMT lost control of the media. Furthermore, the Control Yuan, the branch of government responsible for oversight, began to assert its independence by investigating KMT corruption. In local elections of 1994, for instance, state prosecutors convicted more than one third of 858 city and county representatives for vote-buying. Just prior to the 1995 national elections, it was revealed that the Minister of Justice had evidence of another extensive ring of vote-buying. The KMT took 54% of the vote (83 seats), its lowest majority ever and its major rival, the Democratic People's Party (DPP) obtained 54 seats and the Chinese New Party (CNP) captured 21 with 6 going to various independents. The constitution was also rewritten in 1995, calling for direct election of the president with the first election slated to be held in 1996.

Amid these democratic reforms, Taiwan faced a major international crisis in 1995 when President Lee was given a US visa to visit Cornell University, his alma mater. China objected vociferously and threatened military action against Taiwan. In a show of support for Taiwan and in opposition to PR China's launching of missiles into Taiwan's territorial waters, the United States dispatched a naval force to the region, only to further irritate PR China.

Prior to the presidential elections of March 1996, the formerly united KMT began to splinter. Dissidents within the party and those who had previously left the KMT announced their intentions to run against Lee, who had been chosen by a party plenum in August 1995 as the official KMT candidate. Primary among these were Lin Yang-gang, a former Judicial Yuan president and current vice-chairman of the KMT, and Chien Li-an, president of the Control Yuan and former Minister of National Defense. Campaigning was intense, with scandals being revealed on all sides, but Lee received a resounding 54% compared to 21% for his nearest competitor.

President Lee was criticized by political opponents in 1997 as an increased wave of crime swept the island. In May 1997, more than 50,000 protestors gathered in the capital protesting the government's lack of action on issues of crime. Multiple members of the Executive Yuan resigned and Lee reshuffled his cabinet. However, late in 1997, the KMT suffered severe losses in local and magistrate elections. The main opposition, the DPP, won 12 of the 23 constituency positions contested and led to the reorganization of the KMT following the resignation of the party's Secretary General. In 1998, the KMT recovered in the next set of elections but only to suffer a setback in summer elections that year. As the economy weakened from the Asian financial crisis, the government sought to deregulate the economy and decrease taxes. Relations with PR China again worsened as Taiwan prepared for presidential elections in 2000. On 18 March 2000, Chen Shui-bian, the DPP candidate and a former dissident leader imprisoned for his opposition to the KMT was elected president in a hotly contested race. He obtained 39.3% of the vote and Lien Chan (KMT) captured 23.1% while ex-KMT businessman James Soong ran as an independent and garnered 36.8%. Leading up to and following the election, the PRC warned the Taiwanese that the election of a pro-independence DPP candidate would lead to possible military action. In his inaugural address in May, Chen stated that he would not declare independence as long as China did not attack the island. He said he would not call for a referendum on independence, nor abolish Taiwan's plan for an eventual reunion with the PRC. China responded by saying that Chen had evaded the question as to whether he considered Taiwan to be part of China.

In April 2001, the Dalai Lama met with President Chen during a visit which drew strong opposition from China. That month, the United States announced it would sell submarines, warships, and antisubmarine aircraft to Taiwan, but not the Aegis naval combat radar system, as Taiwan had requested. China protested the sale, and US president George W. Bush pledged to come to Taiwan's aid in the event of a Chinese invasion. That November, Taiwan lifted a 50-year ban on direct trade and investment with China.

In parliamentary elections held 1 December 2001, the DPP won 87 out of 225 seats, compared with the KMT's 68. It was the first time the KMT lost its parliamentary majority since 1949. In January 2002, Prime Minister Chang Chun-hsiung led the cabinet to resign en masse, stating he had "accomplished his mission" during a time of political instability in the transfer of power from the KMT to the DPP, and during an economic downturn that was worse than the Asian financial crisis of 199798. President Chen nominated his chief-of-staff, Yu Shyi-ku, as prime minister.

As of April 2002, academics from Taiwan and China were discussing the possibility of building an underwater tunnel to join Taiwan and the mainland. The shortest possible route would be 78 miles. There is no direct passenger access between the mainland and Taiwan by air or sea, although there were "friendship flights" between Taiwan and Beijing in 2005 during the Lunar New Year celebration. All travel between the ROC and the PRC is required by both sides to go through another regional location, usually Hong Kong or Macao. The ROC and the PRC declared that technical considerations for the tunnel posed no problems; the question to be resolved is the political one.

In August 2002, President Chen referred to Taiwan and China as two countries, and stated he supported legislation for a referendum to be held on independence, contrasting with his inaugural pledge not to hold a referendum. In 2003 Taiwan passed a referendum law which allows Taiwanese to hold referendums for the first time. This so called "defensive referendum" allowed the president, on his own authority and without legislative oversight, to initiate a referendum on national-security issues if faced with an external threat to national sovereignty. China was harshly critical because it believed Chen would hold a referendum on independence from mainland China, which as of 2005 had not happened.

President Chen accomplished lowering the amount of corruption, bribery and organized crime which pervaded Taiwanese politics prior to his term. However, allegations of vote buying and electoral inconsistencies remained. The 2004 presidential elections resulted in a surprising electoral result with Chen emerging victorious over the opposition by 0.2%. Hours before the vote, Chen and his vice president, Annette Lu, were shot, although not fatally. The opposition blamed the loss of the presidential election on sympathy votes gained by the shooting and claimed the shooting was staged. A commission was set up in late 2004 to investigate the shooting.

Taiwan participates in a free-market capitalist economy and due to its economic success is part of the four "Asian Tigers." Although many countries were devastated by the Asian financial crisis in 1998, Taiwan was able to escape serious recession due to conservative fiscal spending and its entrepreneurial base. Due to growing ties with China, the Taiwanese economy continued to strengthen as 2004 growth figures were above 6%. China replaced the United States as Taiwan's largest export partner.


The government of the Republic of China in T'aipei claims to be the central government of all of China. Its constitution was drafted by a constitutional convention at Nanjing (Nanking) on 15 November 1946; it was adopted on 25 December 1946 and promulgated by the national government on 1 January 1947. All governmental powers originally emanated from the National Assembly; however, the powers of the National Assembly have been curtailed. The first National Assembly, which was elected in November 1947, had 2,961 delegates, selected on the basis of regional and occupational representation. The original delegates held their seats "indefinitely," until control of the mainland could be reestablished. Since 1969, the number of seats gradually increased with the addition of new seats for Taiwan. In April 1990, President Lee Tenghui revoked the emergency decree of 1948 which had allowed the 1,947 deputies to remain in office and the "indefinite" deputies had to retire by December 1991. With the promulgation of constitutional amendments on 25 April 2000, the National Assembly's functions are limited to amending the constitution and altering the national territory after a public announcement by the Legislative Yuan. In addition, the Assembly may impeach the president or vice president within three months of a petition initiated by the Legislative Yuan. The National Assembly's 300 delegates are selected by proportional representation of the political parties in the Legislative Yuan.

The president is the head of state and of the Executive Yuan, which functions as a cabinet. Previously, the National Assembly chose the president. After amendments to the constitution in 1992, however, citizens now elect the president by direct popular vote. The president may serve a maximum of two consecutive four-year terms. Under the president, there are five government branches known as yuans (councils or departments): legislative, executive, control, examination, and judicial. The legislative yuan, elected by popular vote, is the highest lawmaking body. As in the National Assembly, many members of the 1948 legislative yuan held their seats until 1991.

The executive yuan, comparable to the cabinet in other countries, is the highest administrative organ in the government. There are eight ministries, two commissions, and a number of subordinate organs under the executive yuan. The premierthe president of the executive yuanis appointed by the president of the republic, with the consent of the legislative yuan. The president is empowered to compel the premier to resign by refusing to sign decrees or orders presented by the latter for promulgation.

The legislative yuan is the highest legislative organ of the state. It has a binding vote of no confidence which would lead to the dissolution of the executive yuan. Of its 225 members, 168 are chosen by universal suffrage and the remaining members are appointed through a system of proportional representation; members serve three-year terms. The number of seats in the legislature were reduced from 225 to 113 beginning with the election in 2008.

The control yuan, the highest supervisory organ, exercises censorial and audit powers over the government and may impeach officials. It also supervises the execution of the government budget. It has 29 members, all of whom serve six-year terms and are appointed by the president with the consent of the legislative yuan.

The examination yuan is the equivalent of a civil service commission. It consists of two ministries. The Ministry of Examination appoints government personnel through competitive examination. The Ministry of Civil Service registers, classifies, promotes, transfers, retires, and pensions. Its president, vice president, and 19 commissioners are appointed by the president of the republic with the consent of the control yuan.


The Chinese Nationalist Party, better known as the KuomintangKMT, was, until 2000, the dominant political party in Taiwan. The teachings of Sun Yat-sen (Sun Zhongshan), which stress nationalism, democracy, and people's livelihood, form the ideology of the party. After the fall of the mainland to the Communists in 1949, a reform committee was organized to chart a new program for the party.

The KMT's organization is similar to that of the Chinese Communist Party. The basic unit is the cell, which represents neighborhoods. The next levels include the district, county, and provincial congresses and committees. The highest levels include the National Congress and the Central Committee. The National Congress delegates serve four-year terms and are charged with the tasks of amending the party charter, determining the party platform and other important policies. It also elects the party chairman and the Central Committee members, and approves candidates nominated by the chairman to serve as vice chairmen and members of the Central Advisory Council. When the National Congress is in recess, the supreme party organ is the Central Committee, which holds a plenary session every year.

The Central Standing Committee, which represents the Central Committee when that body is not in session, is the most influential organ in the KMT. The day-to-day affairs of the party are managed by the secretariat. All organization within the KMT are funded by profits from party-owned and operated business enterprises, ranging from newspapers and TV stations to electrical appliance companies and computer firms.

At the party's 14th National Congress held in August 1993, significant changes to the conduct of party affairs were made. It decided that the party chairman was to be elected by the National Congress through secret ballot. President Lee Teng-hui won 83% of the votes cast and was reelected chairman of the party. In addition, four vice-chairmen were added to the Central Committee after being nominated by the chairman and approved by the National Congress. It also decided that the chairman would appoint only 10 to 15 of the 31 members of the Central Standing Committee, with the remaining members elected by the Central Committee. Finally, it decided to hold the National Congress every two years instead of four years.

Under martial law, from 1949 through 1986, the formation of new political parties was illegal, although there were two nominal, previously formed parties. Non-KMT candidates ran as independents or "Nonpartisans," with increasing success by the end of the 1970s. In September 1986, a group of "nonpartisans" formed a new opposition party, the Democratic Progressive Party (DPP), which had an orientation toward the Taiwanese population and advocated "self-determination." Although technically illegal, the DPP's candidates took 22% of the vote in the December 1986 elections, winning 12 out of 73 contested seats in the Legislative Yuan; the KMT won 59. The lifting of martial law in 1987 made the formation of new parties legal, although a new security law continued to restrict political activity. In the first fully competitive, democratic national elections, in December 1992, the KMT won 53% and the DPP 31% of the votes for the Legislative Yuan. Before the 1995 legislative elections, the KMT began to splinter and in 1994 the Chinese New Party (CNP) was formed by KMT defectors who favored strengthened ties with the mainland. In the 1995 balloting, however, the KMT was able to maintain its majority, winning 83 of the 164 seats in the Legislative Yuan. The DPP took 54, the CNP took 21 and six seats were won by independents. In the National Assembly (334 seats) the KMT took 183, the DPP 99, the CNP 46, and six were won by others.

The Democratic Progressive Party was formed on 28 September 1986. The party's organizational structure closely resembles that of the Kuomintang. The DPP's National Congress elects members to the Central Executive Committee and to the Central Advisory Committee. The Central Executive Committee in turn elects the members of the Central Standing Committee. Its leader is President Chen Shui-bian. At the party's sixth National Congress, held in April and May of 1994, a two-tier primary system was initiated under which ordinary members of the DPP voted for candidates in one primary election and party cadres vote in a second primary. The results of the two would then be combined, with equal weight given to both. At the second plenary meeting of the sixth National Congress held in March 1995, the nomination process for the presidential and gubernatorial candidates was modified to add open primaries for DPP members and nonmembers. It was further decided at the meeting that the party chairman would be elected directly by all members of the party starting in 1998. What most distinguishes the DPP from the two other major parties is its support of Taiwan independence, or the permanent political separation of Taiwan from the Chinese mainland. Although the DPP has incorporated Taiwan independence into its official platform, the urgency accorded to its realization is a source of factional contention within the party.

The Chinese New Party (NP) was formed in August 1993, shortly before the Kuomintang's 14th National Congress by a group of KMT reformers who broke away from the party in protest of the undemocratic practices of the KMT. The NP adopted an anticorruption platform and championed social justice. The goal of the NP was to attract voters who were dissatisfied with the performance of the ruling KMT and opposed to the DPP's advocacy of Taiwan independence.

As of early 2003, there were four significant political parties operating in Taiwan. The DPP, which won the presidential and legislative elections of 2000 and 2001, respectively, was the largest party. It took 87 seats in the Legislative Yuan in December 2001 election. The KMT took 68 seats, and was the second-largest party in the Legislative Yuan. The People First Party (PFP), founded by James Soong following his second-place finish in the 2000 presidential election, was the third-largest party with 46 seats. The fourth major political party, based on its membership in the Legislative Yuan, was the Taiwan Solidarity Union (TSU), winning 13 seats. As of June 2002, a total of 99 political parties had registered with the Ministry of the Interior.

The 2004 elections of the Legislative Yuan resulted in the DPP retaining the largest number of seats with 89; the KMT gained 11 seats to secure 79 overall; the PFP continued to place in third with 34 seats; and the TSU lost one to emerge with 12 seats; other parties and independents retain 11 seats. The next election for the Legislative Yuan was scheduled to be held in 2007.


The Taiwan provincial government holds jurisdiction over the main island of Taiwan, 21 smaller islands in adjacent waters, and the 64 islands of the Penghu (Pescadores) group. The provincial capital is located at T'aichung. The province is divided into 16 county (hsien) administrative areas and 5 municipalities under the direct jurisdiction of the provincial government. In addition, T'aipei (since 1967) and Kaohsiung (since 1979) are self-governing "special" municipalities. Subdivisions of the county are the township (chen ), the rural district or group of villages (hsiang ), and the precinct. Quemoy and Matsu are administered by the military. At the local level and under the Taiwan Provincial Government, there are five citiesChilung, Hsinchu, T'aichung, Chiai, and T'ainanand 16 counties, and under each county there are county municipalities.

The province is headed by a governor who is nominated by the president of the executive yuan and appointed by the president of the republic. Department heads and members of the provincial council are recommended by the governor for appointment by the executive yuan. The governor is the ex officio chairman of the appointed provincial council, the policy making body, and holds veto power over its resolutions. The provincial government can issue ordinances and regulations for the administration of the province as long as they do not conflict with laws of the central government. The mayors and city councils of T'aipei and Kaohsiung are elected.

The provincial assembly, an elected body, meets for two yearly sessions of two months each. Nominally it possesses broad legislative powers; however, its prerogatives are circumscribed by a provision in its organic law that in the event of a disagreement between the provincial executive and the Assembly, the former may request reconsideration. Should the assembly uphold its original resolution, the provincial executive may submit the dispute to the executive yuan for final judgment. The executive yuan may dissolve the provincial assembly and order a new election if it holds that the assembly is acting contrary to national policy.

At the end of 1996, the National Development Conference was convened to streamline local government operations. The county government is headed by an elected magistrate (hsien-chang ) and the municipal government by a mayor (shih-chang ). Each county or municipality has a representative body called the hsien, or municipal assembly. Further down are the councils and assemblies of townships and rural districts, each headed by a chief officer. All of these officials are elected by universal suffrage of citizens over age 20.


The Judicial Yuan is Taiwan's highest judicial organ. It interprets the constitution and other laws and decrees, adjudicates administrative suits, and disciplines public functionaries. The president and vice president of the Judicial Yuan are nominated and appointed by the president of the republic, with the consent of the legislative yuan. They, together with 15 grand justices, form the Council of Grand Justices, which is charged with the power and responsibility of interpreting the constitution, laws, and ordinances. The judicial system is based on the principle of three trials in three grades of courts: district court, high court, and Supreme Court. The Supreme Court, the highest tribunal of the land, consists of a number of civil and criminal divisions, each of which is formed by a presiding judge and four associate judges. The judges are appointed for life.

In 1993 a separate Constitution Court was established. Staffed by the then-16 grand justices of the Judicial Yuan, but with the judicial yuan excluded from the court, the new court was charged with resolving constitutional disputes, regulating the activities of political parties and accelerating the democratization process.

There is no right to trial by jury, but the right to a fair public trial is protected by law and respected in practice. Defendants are afforded a right to counsel and to a right to appeal to the High Court and the Supreme Court in cases in which the sentence exceeds three years. Those sentenced to three years or less may appeal only to the High Court. The Supreme Court automatically reviews all sentences to life imprisonment or death. There is also an administrative court.

In late 2004 the Legislative Yuan approved constitutional changes, effective 2008, which included halving the number of seats in the Legislative Yuan and extending all legislators' terms from three to four years. Taiwan employs a quota system which allows for minorities and aboriginal persons to gain access into government positions. Although banned by law, minorities and aboriginal persons claim to face discrimination in the socio-economic realm.

The judicial system is based on civil law and Taiwan accepts compulsory jurisdiction of the International Court of Justice. Military service is mandatory for Taiwanese males.

Taiwan is a free and fair society. Citizens are able to organize, protest and gain access to any type of material without fear of reprisal. Trade unions are independent and collective bargaining is legal. The law does restrict the right to strike by ordering mediation sessions and banning work stoppages while mediation is in progress.

Taiwan is involved in several land disputes, most notably involved in a complex dispute with China, Malaysia, Philippines, Vietnam, and possibly Brunei over the Spratly Islands. The Paracel Islands are occupied by China, but claimed by Taiwan and Vietnam. In 2003, China and Taiwan became more vocal in rejecting both Japan's claims to the uninhabited islands of the Senkaku-shoto (Diaoyu Tai). Taiwan also disputes Japan's unilaterally declared claim to the exclusive economic zone in the East China Sea.


In 2005, Taiwan's armed forces had 290,000 active personnel, with reserves numbering 1,653,500. The Army had an estimated 200,000 members including military police. Equipment included more than 926 main battle tanks, 905 light tanks, 225 armored infantry fighting vehicles, 950 armored personnel carriers, over 1,815 artillery pieces and 101 attack helicopters. The Navy numbered 45,000, including 15,000 Marines. Major naval units included four tactical submarines, 11 destroyers, 21 frigates, 59 patrol/coastal vessels and 12 mine warfare ships. The Navy's aviation arm also operated 32 maritime reconnaissance and 20 antisubmarine warfare helicopters. The Air Force had 45,000 active personnel, and operated 479 combat capable aircraft that included 293 fighters and 128 fighter ground attack aircraft. Paramilitary forces included security groups with 25,000 members, a 22,000 member civilian Coast Guard and an estimated 1,000 member Maritime Police. Taiwan's defense budget in 2005 totaled $8.32 billion.


The ROC, a charter member of the UN, became the first government to lose its recognition from that body following a General Assembly vote on 25 November 1971 to recognize the PRC as the sole legitimate representative of China. The ROC subsequently lost its membership in most UN bodies, as well as in several other international organizationsusually with its place taken by the PRC. Taiwan is a member of APEC, the Asian Development Bank, the International Chamber of Commerce, the International Confederation of Free Trade Unions, the World Confederation of Labor, and the World Trade Organization.

As of 2005, Taiwan had formal diplomatic ties with only 25 countries. The government claims to have "substantive" trade relations with more than 140 countries and territories, however. In November 2001, Taiwan lifted a 50-year ban on direct trade and investment with China.


Under the Japanese, the island was developed as a major source of foodstuffs for Japan. Production of rice and sugar increased rapidly, but little effort was directed toward industrialization until after 1937. Immediately after World War II, a number of factorsincluding repatriation of Japanese technicians, dismantling of industrial plants, and lack of fertilizer for agriculturecaused a rapid deterioration of the economy, which was aggravated by the influx of refugees from the mainland. The situation improved after 1949 with the removal of the ROC government to Taiwan. The arrival of technical and experienced personnel and capital equipment from the mainland facilitated the island's economic rehabilitation. Currency and tax reforms stabilized the monetary situation. The supply of fertilizer from the United States and a land reform program aided the revival of agricultural production.

Energetic government measures in the form of successive fouryear plans, at first supplemented by US aid, resulted in substantial economic progress. In the first decade (195160), the stress was on agricultural development and the establishment of textile and other labor-intensive industries. From 1961 to 1970, the promotion of industrial products for export was emphasized. In 1963, Taiwan registered its first favorable trade balance. By 1965, the economy appeared stable enough to warrant the cessation of US economic aid programs. Medium and light industry led the expansion, with striking gains registered in electronics, household goods, and chemicals. The decade 197180 saw the development of such capital-intensive industries as steel, machinery, machine tools, and motor vehicle assembly. Such industries, based on imports of raw materials, were encouraged through massive government support for major infrastructural improvements in roads, railroads, ports, and electricity. During the 1980s, emphasis was placed on the development of high-technology industries. As a result, between 1981 and 1991, the share of high-technology industries in total manufactures increased from 20% to 29%, making Taiwan the seventh-largest producer of computer hardware on the global market. The 1990s brought an influx of capital-rich investment, especially after 1996 when the first democratic elections were held. High-technology industries accounted for over 73% of total manufacturing, and 67% of exports in 1999. Growth accelerated in the late 1990s, measuring 4.6% in 1998, 5.4% in 1999 and 6% in 2000, spurred by the boom in the PC and IT industries. Exports played an increasing role, accounting for 47.8% of GDP in 1998, 48.3% in 1999 and 54% in 2000. Growth in high-tech exports peaked at 54% in the third quarter of 2000.

Taiwan's GNP advanced at an average annual rate of 9% in real terms between 1952 and 1980. In contrast to Taiwan's industryled economic growth of previous decades, since the late 1980s the country has undergone a shift towards a services-dominated economy. As of 2000, services made up about 66% of the GDP, compared to less than 50% in the mid-1980s and 44% in the early 1960s. Taiwan has the world's third-largest foreign exchange reserves and over $230 billion in two-way trade. Though still expanding in absolute terms, industry's share of the GDP declined from 52% in 1986 to 32% in 2000. Agriculture has continued to claim only a small share of the economy, making up 2% of the GDP in 2000. A lack of domestic resources hampers the development of agriculture and primary industries. An earthquake in September of 1999 caused major damages to Taiwanese lives and property, but reconstruction was complete by 2000. What affected the economy was the burst of the bubble beginning in late 2000, and the global slowdown in 2001, aggravated by the aftermath of the 11 September 2001 terrorist attacks on the United States. Taiwan experienced its first recorded decline in real GDP, -2.2%. Recovery began in the last quarter of 2001, and in 2002 real growth of 3.2% was recorded. Inflation has been generally falling in the late 1990s, from 3.1% in 1996 to 0% in 2001 and a slightly negative -0.2% in 2002. Unemployment, by contrast, has increased steadily, from 2.6% in 1996 to 5.2% in 2002.

The economy grew by 5.7% in 2004, up from 3.3% in 2003; in 2005, the GDP growth rate was expected to be 3.7%. Inflation remains at negligible levels, and unemployment seems to have been brought under control, decreasing from a rate of 5.2% in 2002 to 4.4% in 2004, and an expected 4.2% in 2005. Increasing trade with China has contributed significantly to the country's economic recovery.


The US Central Intelligence Agency (CIA) reports that in 2005 Taiwan's gross domestic product (GDP) was estimated at $610.8 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $26,700. The annual growth rate of GDP was estimated at 3.6%. The average inflation rate in 2005 was 2.3%. It was estimated that agriculture accounted for 1.6% of GDP, industry 29.3%, and services 69%.

According to the World Bank, in 2003 remittances from citizens working abroad totaled $45 million.

It was estimated that in 0.9 about 2005% of the population had incomes below the poverty line.


The civilian labor force in Taiwan was estimated at 10.31 million in 2005. The share of persons employed in farming, forestry, and fishing has been declining steadily, while the share of the workforce employed in mining, manufacturing, construction, and utilities has increased. As of 2005, about 6% of the labor force was engaged in agriculture, 58.2% in services, and 35.8% in industry. In that same year the unemployment rate was estimated to be 4.2%.

Trade unions are weak and cannot be called unions in the real sense of the term, for the law does not provide for effective collective bargaining and also prohibits strikes, shutdowns, and walk-outs in vital industries. The trade unions, organized under government supervision, tend to be used for carrying out government policies, but they carry on a considerable amount of welfare work. In 2002, there were 3,854 registered unions in Taiwan, with membership totaling 29% of all employed persons.

The minimum age for employment is 15. Current occupational health and safety regulations provide only minimal protection and have a mixed record of enforcement. The law provides for an eight-hour day (which may be extended to 11 hours for men and 10 for women) and a six-day workweek; overtime is paid at 40100% above the regular wage. Most large firms give allowances for transportation, meals, housing, and other benefits, which can increase base pay by 6080%. A minimum of one week's vacation is provided after a year's employment, and there are 14 or 15 other paid holidays. In 2002, the monthly minimum wage was us$452. This amount provides a decent standard of living in rural areas, but is not sufficient for urban life.


About 24% of the land is under cultivation. Although still important as both an export earner and a domestic food source, agriculture has fallen far from the preeminent position it long held in the Taiwan economy. From 1973 to 1987, the crop production growth rate increased on average only 0.1% per year. In 2004, agriculture accounted for 1.6% of GDP. About 6% of the labor force was employed in agriculture. High production costs and low return have driven much of the agricultural work force away to industry. In 2003, there were 200,246 farm households. Part-time farming households have accounted for over 80% of all farming households since 1980. In 2003, Taiwan imported nearly $8 billion in food and agricultural products, with 33% coming from the United States, 7% from Australia, and 7% from Japan.

Rice, the principal food crop, is grown along the western plain and in the south. In 2004, paddy rice production was 1,433,611 tons; brown rice, 1,164,580 tons. Taiwan's annual rice production exceeds demand; the island's per capita rice consumption has declined by over 50% since the mid-1970s due to changing diet preferences. Other food crops include sweet potatoes, bananas, peanuts, soybeans, and wheat. Sugar, pineapples, citrus fruits, crude tea, and asparagus are plantation-grown and are the principal cash and export crops. Small amounts of Taiwan's world-famous oolong tea, cotton, tobacco, jute, and sisal are also produced. A fast-rising industry, mushroom canning, led to the development of mushroom cultivation, a specialty crop well suited to Taiwan since it is labor-intensive and requires little space and small investment. Betel nuts have become Taiwan's second most valuable cash crop after rice. In 2004, betel nut production totaled 143,368 tons. In 2004, Taiwan's major crop production was valued at nt$259 billion, with crops accounting for 63%; vegetables, 14%; mushrooms, 1%; and fruits, 22%. Between 2001 and 2004, fruit and horticultural production increased by 6% and 8%, respectively, while rice production fell by 16.7%.

Generally, Taiwanese agriculture is characterized by high yields, irrigation, terracing, multiple cropping, intertillage, and extensive use of fertilizers. Farms are small, averaging 1.1 hectares (2.7 acres) of cultivable land per farm family. Mechanization, once confined largely to sugarcane and rice production, is increasing rapidly as a result of government subsidies and other incentives. Since there is an oversupply of rice, the government has encouraged farmers to grow soybeans, wheat, and corn, which are more profitable. The growing scarcity of land on Taiwan is causing serious disagreements over land resources between agricultural, industrial, and housing interests.


Pastures in Taiwan occupy only 0.1% of the total land area. In 2004, livestock sector production was valued at nt$125 billion. That year, Taiwan produced 891,776 tons of pork and 631,640 tons of poultry from chickens. Hog production is Taiwan's most valuable farm product. In 2004, Taiwan's pork production was valued at nt$64.4 billion. In 1997, a major outbreak of hoof and mouth disease affected 6,147 hog farms. As a result, one-third of the hog population had to be destroyed. The government helped compensate pig farmers with $1.1 billion in low interest loans. Livestock production declined by 13% from 1996 to 2001, and fell another 3.9% from 2001 to 2004. Chickens and ducks are raised by most households.


Production of fish products totaled 1498,866 tons in 2003 (19th in the world). Exports of seafood products totaled $1,299 million in 2003. In 2003, Taiwan accounted for 14.9% of the world's fresh, chilled and frozen fish exports, valued at $1,175 million, and 0.6% of the canned fish exports, valued at $38.1 million. Squid, skipjack and yellowfin tuna, chub mackerel, shark, and milkfish are the main species of the marine catch. Deep-sea fishing, which was practically wiped out by World War II (193945), has shown strong gains following heavy investments in vessels and harbors. Milkfish, tilapias, clams, oysters, and eels are the main species farmed. In 2004, the aquacultural area covered 42,047 hectares (103,898 acres), with production of 299,066 tons, valued at nt$28.2 billion.


Native stands of cypress, fir, camphor, and oak were cut to help fund Japan's development when Taiwan was under Japanese imperial rule (18951945). Logging provided hard currency exports for the Nationalist Chinese regime after its retreat from mainland China to the island in 1949. Nearly 60% of Taiwan is covered with forests, with the total forest area estimated at 2.1 million hectares (5.2 million acres) in 2004. The roundwood harvest was estimated at 40,041 cu m (1.41 million cu ft) in 2004 (90% softwood, valued at nt523.8 million). Although forestry production increased by 21.3% between 2000 and 2004, domestic timber production only meets 1% of total demand; the value of wood imports totaled $1.23 billion in 2004. Taiwan's timber production has declined since the 1980s due to local labor shortages, intensifying environmental concerns, and logging restrictions. In 1992, Taiwan banned all logging from nonplantation forests. Principal timbers are oak, cedar, and hemlock. Taiwan is a major furniture exporter that relies heavily on imported wood products to support the industry.


Mining in 2004, accounted for only 0.1% by value of Taiwan's total industrial output. Iron and steel was the leading metal production sector on the island. Value-added products made from aluminum and copper were dependent upon scrap or imported metals. Dolomite, limestone, and marble were the most important nonfuel mineral commodities. The western third of the island had adequate amounts of sand, gravel, and limestone for building purposes, although there has been a recent slowdown in the construction sector. The demand for mineral products has increased over the years, while local supplies were dwindling. Mineral production in 2004 included (in metric tons): dolomite, 115,000, up from 54,000 in 2003; limestone, 213,000, down from 1,434,000 in 2003; marble, 22,970,000, up from 21,041,000 in 2003; and serpentine, 229,000, up from 194,000 in 2003. Taiwan also produced hydraulic cement, fire clay, feldspar, precipitated gypsum, lime, mica, marine salt, caustic soda, soda ash, sulfur, and talc. No kaolin clay was produced in 2004.


Taiwan's domestic energy resources are modest and the country is nearly totally dependent upon imports.

Oil is the biggest part of Taiwan's energy mix, accounting for 48% of energy demand, followed by coal at 34%, nuclear power at 9%, natural gas at 8% and hydroelectric power at under 2%. Taiwan's proven reserves of oil are miniscule. As of 1 January 2004, these reserves were estimated at four million barrels. In 2003, production of oil was estimated at an average of 3,806 barrels per day, of which an average of 800 barrels per day consisted of crude oil. Demand for oil, however, in 2003, was estimated at an average of 896,000 barrels per day, making the country a net importer of oil at an estimated average of 892,200 barrels per day. As of 1 January 2004, Taiwan's refining capacity was estimated at an average of 920,000 barrels per day.

As of 1 January 2004, Taiwan's proven reserves of natural gas were estimated at 2.7 trillion cu ft. In 2002, natural gas output came to an estimated 30 billion cu ft, while demand totaled an estimated 287 billion cu ft, and imports totaled an estimated 257 billion cu ft.

Taiwan's domestic consumption of coal in 2002 was estimated at 55.8 million short tons, while imports for that year were estimated at 54.7 million short tons. Although Taiwan has proven coal reserves of 1.1 million short tons, the active production of coal ended in 2000.

In 2002, Taiwan's installed electric power generating capacity totaled 30.134 million kW, of which conventional thermal fuel sources accounted for 20.568 million kW of capacity and nuclear power for 5.144 million kW. Hydroelectric power accounted for 4.422 million kW of capacity in that same year. Total electric power output in 2002 reached 158.537 billion kWh. Of this total, 72% was from fossil fuels, 3.9% from hydropower, and 23.9% from nuclear power. Consumption of electricity in 2002 was 147.439 billion kWh. Reported as of July 2004, Taiwan had three nuclear power plants (the Maanshan station in the south, and the Kuosheng and Chinshan stations in the north), with a combined installed capacity of 4,884 MW. Construction of the 2,700 MW Kungliao nuclear power station had become a controversial issue by 2000, when the Democratic People's Party government had it halted. However, through legislative and judicial efforts, work on the project was resumed in 2001. The Kungliao station is slated to start operations in 2006.


Under the Japanese, about 90% of the industrial enterprises were owned by the government or by Japanese corporations with govvernment assistance. After the restoration of Taiwan to China in 1945, the ROC government took over these enterprises. Some were sold to private owners, and the rest were grouped under the management of 18 public corporations, operated either by the national government or by the provincial government, or by both. Added to the confiscated enemy properties were public enterprises evacuated from the mainland. As a result, government-operated enterprises came to dominate Taiwanese industry. Although the proportion accounted for by these enterprises in the production value of manufacturing industries has been falling in recent years in contrast to the private sector, it still accounts for a significant amount of value added. Beginning in 1992, Taiwan authorities have made efforts to reduce the size of the public sector. These efforts have gained momentum after democratization in 1996. By 2002, the government had sold equity shares and reduced public ownership to below 50% in 23 state-owned enterprises (SOEs), mostly banks and insurance companies, but including a steel mill and one fertilizer company. In 1998 and 1999 privatization announcements included the Chinese Petroleum Corp., Chunghwa Telecom Corp., and Taiwan Power Corp. Plans for privatization have been announced for SOEs involved in power, oil, tobacco, wine, railway transport, mining and telecommunications. Since 1998, also, a number of construction projectsthe north-south high speed railway, the mass rapid transit (MRT) systems in Kaohsiung (KMRT) and the between T'aipei and the CKS Airportwere given to private firms, including many foreign companies, on a build-operate-transfer (BOT) basis.

The average annual growth rate in manufacturing was 13% during 195362, 20% during 196372, 9.6% during 197385 and 5.9% for 198692. The private sector outpaced the public sector during each of these periods. The number of workers in manufacturing rose from 362,000 in 1952 to 736,000 in 1967 and to almost 2.8 million in 1987. By 1992, however, this number declined to about 2.6 million as the rapidly expanding service sector absorbed more of the workforce. Manufacturing for export has been encouraged by the establishment of free-trade export-processing zones (EPZs) in the Kaohsiung harbor area, at Nantze (near Kaohsiung), and at T'aichung. Since the late 1980s rising production costs and a 40% appreciation of the New Taiwan dollar have prompted many export-oriented companies to relocate their manufacturing plants to mainland China and Southeast Asia. In particular; labor-intensive industries, such as toys, footwear, umbrellas, and garments, have relocated. In 1986, industrial production accounted for nearly half of GDP. By 1997 this figure had dropped to about 35% and in 2000, it was an estimated 31/.9%, including manufacturing at 26.4% of GDP; construction at 3.4% and electricity, gas and water at 2.1% of GDP. For to June 2001, industrial production accounted for 29.4% of GDP., with manufacturing accounting for 24%.

Production rose spectacularly after the end of World War II, especially between 1952 and the early 1980s. Slower economic growth since the mid-1980s and greater investment emphasis on heavy and high-technology industries as well as services has resulted in declining production figures for traditional manufactures such as cotton yarn and fertilizer. Labor intensive industries have gradually been replaced by capital and technology intensive industries. In 2000 electronics and information technology (IT) products accounted for 27% of industrial output. The two largest made-to-order computer chip manufacturers are Taiwan Semiconductor Manufacturing Company (TSMC), Taiwan second-largest company, and United Microelectronics Company (UMC). In 2000, Taiwan global share in scanner production was 90%; in motherboards, 65%; monitors, 57%; in notebook PCs, 57%; in digital cameras, 45%, and in D/DVD drives, 39%. Strong growth in IT products continued in many IT products despite the overall 10.4% contraction in industrial production in 2001. Sales of LCD monitors, for instance, reached $3.13 billion, a 66% increase over 2000, while sales of digital cameras reached $7.132 billion, a 95.5% yearly increase. In 2000, Taiwan was the world's fourth-largest computer hardware supplier. Taiwan has become the world's leading supplier of computer peripherals, including motherboards, monitors, mice, interfaces, network cards, and graphic cards; and holds the largest market share of notebook computers and semiconductors. The structure of Taiwan's IT industry is a pyramid with a handful of large companies that make the major investments in research and development, and over 1000 small and medium-sized operations that account for about 85%s of the output. The sector employs about 130,000.

Taiwan's petrochemical industry consists of mainly of 45 upper and middle-stream manufacturers, many concentrated in the Kaohsiung special chemical zone. In 1999, Taiwan's petrochemical production capacity was only 51% of domestic demand. As of 2000, this was raised to 79% with the completion of a naphtha cracking plant in the Mailiao industrial zone. The Mailiao zone also includes its newest oil refinery, a 450,000 barrels per day facility built by Formosa Petrochemical Company (FPC), which, with Taiwan's three other refineriesa 270,00 barrels-per-day refinery at Kaohsiung, a 270,000 barrels-per-day refinery at Ta-Lin, and a 200,000 barrels-per-day refinery at Taoyuanestablishes refinery capacity in excess of domestic demand. In December 2002, an export contract was concluded with the mainland China state petroleum company

In heavy industry, Taiwan has 10 manufacturing companies, most of them contractual joint ventures with Japan. The production value of the automotive industry reached $10 billion in 2000, about 4% of its aggregate manufacturing. Taiwan's small size and the availability of efficient MRT lines limits the demand for automobiles. Domestic demand for vehicles fell from 542,000 in 1995 to 420,000 in 2000.

Textiles were the leading export until the 1980s when labor costs, land prices and environmental protection concerns led to a relocation of much of the industry to Southeast Asia and China. The domestic industry is based on man-made fibers. In 2000, Taiwan was third in the world in the production of man-made fibers, and second in the production of polyester, which constitutes 80% of its output.

Overall industrial production fell 2.6% in 1998 from an increase of 7.4% in 1997, due largely to the effects of the Asian financial crisis. Industrial production recovered quickly to growth rates of 7.5% and 7.4% in 1999 and 2000, but then slid 10.4% in 2001 in the wake of the bust. In 2002, the economy recovered, registering a 3.3% growth rate, and in the first quarter of 2003, industrial production had risen 6.4%.

In 2004, the industrial production growth rate was 12.2%, well above the overall growth of the economy. Industry made up 30.9% of the economy, and employed 35% of the working population. Agriculture is an insignificant part of the economy, but services seem to be the main driving force, with 67.4% participation in the GDP and 57% representation in the labor force.


In the 1970s, Taiwan instituted its Science and Technology Development Program. Coordinated by the National Science Council, the program seeks to encourage the development of "knowledge-intensive" industries through grants for the training of scientific personnel, subsidies for recruitment of distinguished scientists from abroad, and grants to universities to promote scientific research. Specific goals of the program are to integrate and promote research in geothermal energy, battery-powered vehicles, electronics, cancer treatment, pharmaceuticals, nuclear safety, and the development of high-precision instrumentation and computers.

The Industrial Technology Research Institute is charged with the transfer of pertinent technologies developed to manufacturing and other industries. College students are encouraged to build careers in engineering and science. In 1979, the Science-Based Industrial Park was established at Hsinchu, near the National Tsinghua University, with the objective of encouraging computer manufacturing and other high-technology industries by offering loans, tax incentives, and low-cost housing and factory buildings. By 1990, over 60 companies had established research and development (R&D) and joint production facilities there. These include computer, semiconductor, precision electronics and instrumentation, telecommunications, and biotechnology firms.

The highest institution for scientific research on Taiwan is the Academia Sinica (Chinese Academy of Sciences), founded in 1928 and now located in T'aipei. Its 18 associated institutes carry on research in mathematics, statistics, history and philology, economics, modern history, physics, botany, zoology, ethnology, chemistry, molecular biology, biological chemistry, biomedical sciences, atomic and molecular sciences, earth sciences, information science, nuclear energy, social sciences and philosophy, and American culture. An Atomic Energy Council, founded in 1955, promotes atomic research.

In T'aipei, the National Taiwan Science Education Center has a planetarium and various exhibits; the Taiwan Museum has exhibits on natural history, geology, and ethnography, and a spectroscopic dating laboratory for fossils. Taiwan has 23 universities and colleges that offer courses in basic and applied sciences.


The marketing system is partly free and partly controlled. Salt, tobacco, alcoholic beverages, and certain commodities are produced and distributed by the government. Prices of basic living commodities are controlled. Retail sales in cities are handled by small department stores, specialty shops, general stores, convenience stores, roadside stands, and peddlers. In 2000, Taiwan had over 1,000 supermarkets and 3,200 convenience stores. Since roadside stands and peddlers have little overhead and are satisfied with a small profit, their prices are generally lower than those of the large stores and shops, if the customer bargains. In recent years, wholesale discounters, hypermarkets and franchises have become significant distribution channels for consumer goods, increasing the efficiency of the marketing system overall. The nation's first shopping malls opened in 1999 and 2001, with development plans to build 20 to 30 more within the next few years.

Chilung and T'aipei are the distribution centers for the northern end of the island, while Kaohsiung and T'ainan are the principal distribution centers for the southern area. Most registered import and export trading firms are located in T'aipei. Accounts are usually settled during festival periods, according to Chinese custom.

Local markets open about 7 am and close at 6 pm or later. Business firms and stores are usually open from 9 am to 5:30 pm, and in the morning on Saturdays, and some stores close as late as 10 pm. Most stores are open seven days a week. Banks are open six days a week: MondayFriday, 9 am to 3:30 pm, and Saturday, 9 am to noon. As of January 1998, government employees (excepting the police, health bureau, and customs) and most private companies take the second and fourth Saturday of the month off.


Foreign trade is of ultimate importance to the island economy. To fulfill both production and consumer needs, Taiwan must import large quantities of energy, industrial raw materials, food, and manufactured goods. With rising consumer wealth within Taiwan as well as tariff reductions and other liberalization measures by the government, imports have risen rapidly from $24 billion in 1986 to an estimated $122 billion in 2000.

The export pattern has changed significantly since the end of World War II. In 1952, industrial products represented only 10% of Taiwan's total exports and agricultural exports made up the rest; but by 1992, industrial exports (excluding processed agricultural products) had jumped to an overwhelming 95.7% share of the total. Exports increased from $8.2 billion in 1976 to an estimated $112 billion in 2000. However, the export growth rate has declined steeply in recent years, from 23% in 1986 to 13% in 1991 and 0.4% in 1992, due to recession in Taiwan's major markets and the movement of export-oriented manufacturing plants to China and Southeast Asia. Exports leveled off in 1997, and dropped by 9.4% in 1998, in part due to the financial crisis in all of Asia. The growth in services has overtaken that of industrial production.

Most of Taiwan's export commodities are electronic equipment and other small manufactured goods.

The United States remains Taiwan's single most important trade partner, although Japan has made major gains, becoming Taiwan's major supplier in the 1970s and 1980s. Over 18% of imports come from the United States, while Taiwan exports more than 27% of goods to the United States. Trade with mainland China via Hong Kong expanded rapidly during the late 1980s and early 1990s, resulting in a sharp increase in Taiwan's trade surplus with the latter country. Following cross-strait tension from 1995 onwards, Taiwan investors have limited their relations with mainland China, resulting in a 50% drop in investment during 1998. Exports to China fell by 13% in 1998.

In 2004, exports reached $171 billion (FOBFree on Board), while imports grew to $165 billion (FOB). The bulk of exports went to China, including Hong Kong (37%), the United States (16%), and Japan (7.7%). Imports included machinery and electrical equipment, minerals, and precision instruments, and mainly came from Japan (26%), the United States (13%), China, including Hong Kong (11%), and South Korea (6.9%).


There was a consistent trade surplus after the mid-1970s, which exceeded $10 billion after the mid-1980s through the mid-1990s. The current account surplus was $19 billion in 2001 and was forecast to remain substantial in 2003. Taiwan's total foreign exchange reserves are the world's third-largest after Japan and China; they stood at a record $175.2 billion in May 2003. Total foreign debt was only $24 million in 2001.

The US Central Intelligence Agency (CIA) reported that in 2001 the purchasing power parity of Taiwan's exports was $122 billion while imports totaled $109 billion resulting in a trade surplus of $13 billion.

Exports of goods and services reached $173 billion in 2004, up from $143 billion in 2003. Imports grew from $119 billion in 2003, to $157 billion in 2004. The resource balance was consequently positive in both years, reaching $24 billion in 2003, and $16 billion in 2004. The current account balance was also positive, deteriorating though from $29 billion in 2003, to $19 billion in 2004. Foreign exchange reserves (including gold) grew to $242 million in 2004, covering more than one and a half years of imports.


Many banking institutions are either owned or controlled by the government. There were 11 public banks in 1998, with total assets of $261 billion, or 44%. The Bank of Taiwan (with 75 branches) used to issue currency notes, handle foreign exchange, act as the government's bank, and perform central banking functions in addition to its commercial banking activities; before reactivating the Central Bank of China (CBC) in T'aipei in 1961. The functions of the Central Bank include regulation of the money market, management of foreign exchange, issuance of currency, and service as fiscal agent for the government. The Bank of China is a foreign exchange bank with branch offices in major world capitals. The Bank of Communications is an industrial bank specializing in industrial, mining, and transportation financing. The Export-Import Bank of China, inaugurated 1 February 1979, assists in the financing of Taiwan's export trade. The Central Trust of China acts as a government trading agency and handles most of the procurements of government organizations. The Postal Savings System accepts savings deposits and makes domestic transfers at post offices.

At the end of 2002 there were 48 domestic commercial banks, five medium business banks, and 39 foreign banks. There were also 48 credit cooperatives, 287 farmers' credit unions, and 27 fishermen's credit unions. The government holds majority status in several of the most important banks, including the Bank of Taiwan, the Cooperative Bank of Taiwan, and the First Commercial Bank. The two largest private banks are the International Commercial Bank of China and the Overseas Chinese Commercial Banking Corp. By 1998, three large government-owned provincial banks were privatized, and others were set to follow.

In 1990 the government announced the goal of establishing the island as a regional financial center. Its original target of 1996 was far too optimistic, and liberalization will have to be far more thoroughgoing than that to which the authorities are at present committed, but various steps are being taken towards this end. Restrictions on bringing in capital from abroad, limits on capital transfers both in and out of Taiwan by domestic firms and individuals, and the operations of foreign banks have been liberalized. On 18 February 1997, the Finance Ministry set up a 37-member financial reform task force, headed by the finance minister. This group spent 10 months devising proposals in the following four areas: improving the overall efficiency of the banking system; development of capital and derivatives markets, and relaxation of the rules governing the kinds of business banks may conduct; improving market-regulating procedures such as credit evaluation systems, asset management, investor insurance, and insider trading rules; and strengthening banks' internal financial controls.

Taiwan's first private corporate bond issue was floated in 1958. The first stock exchange in Taiwan opened on 4 February 1962. Volume was low until liberalization measures opened the market to foreigners, and the Taiwan stock market surged in the early months of 1997, with the index smashing through the 8,000-point barrier for the first time since 5 March 1990. This milestone immediately prompted rumblings from the CBC that the market was overheated. Yet by May 1997, the market was flirting with the next resistance level, at 8,500 points. Authorities raised the limits to foreign ownership in companies listed on the TAIEX from 30% to 50% in 1999. Most limits on foreign ownership were ended in 2000, and the index was up by the 10,000 mark in that year. However, it has since dropped off considerably, especially in the wake of the Asian financial crisis of 1998. The TAIEX was at 5,551.2 at the end of 2001, and trading value, at $545 billion, was only slightly more than half of the previous year's level. As of 2004, the TAIEX stood at 6,139.7, up 5% from the previous year. Trading value that year totaled $718.619 billion. In 2004, a total of 697 companies were listed on the Taiwan Stock Exchange, which had a market capitalization of $441.436 billion.


Insurance in Taiwan is supervised by the Ministry of Finance and may be written only by a limited liability company or a cooperative association. Aside from group insurance operated by the government, life and annuity insurance are comparatively undeveloped in Taiwan. The Chinese tradition that the family should take care of its members in sickness and old age lowered demand in the past, but social change and rapid economic growth have modified this situation, especially in industrial areas. In 1986, the Taiwanese government agreed to allow US companies to compete equally for insurance business. In 1999, nine foreign nonlife insurers were authorized to run full branches in Taiwan. Foreign insurers must receive approval from the government, however, and secure a business license. In Taiwan, third-party automobile liability, health insurance, pension, unemployment insurance, and workers' compensation are all compulsory. In 2003, the value of all direct insurance premiums written totaled $32.402 billion, of which life insurance premiums accounted for $23.739 billion. For that same year, Taiwan's top nonlife insurer was Fubon, which had gross written nonlife premiums totaling $847 million, while Cathay Life was the country's leading life insurer, with gross written life insurance premiums of $7,972.7 million.


Central government revenues come mostly from taxation, customs and duties, and income from government monopolies on tobacco and wines; other revenues are derived from profits realized by government enterprises. Government accounts showed surpluses through the early 1980s. Public authorities anticipated a growing fiscal deficit throughout the 1990s as Taiwan's six-year development plan required over $300 billion of investment in public infrastructural construction projects and in upgrading industries. In 1996, the government's deficit was equal to 4% of GDP. Growing demands for social welfare spending and increased defense spending (up 20% in 1996/97, the largest rise in over a decade) continued to put pressure on the budget. Outstanding debt reached 16% of GDP in 1998, up from 6% in 1991, and debt service payments consumed 15% of the central budget in 1999. The government was committed to balancing the budget by 2001. Austerity measures included controlling public sector consumption expenditures, limiting expansion of government expenditures, freezing government employment, limiting public employee pay raises, and encouraging private participation in major public projects. The government was also committed to reducing the public sector's role in the economy. National defense expenditures as a portion of the central budget dropped from over 40% in 1960 to 20% in 1999, and were set to fall to 15% in 2000.

The US Central Intelligence Agency (CIA) estimated that in 2005 Taiwan's central government took in revenues of approximately $70.9 billion and had expenditures of $80.1 billion. Revenues minus expenditures totaled approximately -$9.2 billion. Public debt in 2005 amounted to 33.3% of GDP. Total external debt was $81.64 billion.


All taxes are collected by the local government and transferred to the relevant provincial or central government agency. Tax revenues reserved for the central government include the income tax, estate (inheritance) tax, gift taxes (450%); customs duty, stamp tax, commodity tax, securities transaction tax, and mine tax.

As of 2005, individual income taxes were progressive with a top rate of 40%. Dividends paid to resident individuals is not subject to a withholding tax. Non resident individuals were subject to a 30% withholding rate. Interest and royalty income paid to resident individuals were subject to withholding taxes of 10% and 15%, respectively, but increases for each to 20% for nonresidents.

Corporate income taxes range from 0 to 25%. Capital gains are subject to the same corporate tax rates, although gains incurred by a nonresident company are taxed at a flat rate of 25%. Dividends paid to nonresident firms are also taxed at the flat 25% rate. Banking, insurance and investment services are subject to a 2% turnover tax. Higher rates apply to entertainment.

Taiwan also has a value-added tax (VAT) of 5% on sales and services. Items zero-rated from the VAT include international transport, exports, services performed in Taiwan but for use abroad, and services performed overseas. Basic foodstuffs, land, water, certain agricultural inputs, some financial and insurance products, and education and health are exempt from the VAT. However, certain businesses not subject to the VAT pay a tax on their gross business receipts that ranges from 025%. Sales taxes are 1% for reinsurance activities, 5% for bank activities, insurance and brokerage services; and 1525% for bars and restaurants. There is a 60% ad valorem merchandise tax on petrol. Other taxes include building, commodity, deed, estate, gift and land value taxes. There are no social security or local income taxes in Taiwan.


Customs duties are important revenue earners and consist principally of import duties and tonnage dues. The former are levied on dutiable commodities, the latter on ships that call at Taiwan ports. Duties range from 260%and are assessed on seven commodity categories that include rubber tires, cement, beverages, oil and gas, electrical appliances, flat glass, and automobiles. Articles imported for military use, for relief, or for educational or research purposes are exempted from import duty. Duties on imported raw materials for business can be rebated. Some agricultural products are prohibited from importation, such as rice, sugar, chicken, some pork cuts, peanuts, and certain dairy products. Imports from Japan and mainland China are restricted due to balance of payments problems. There is also a 5% VAT that is applied to the CIF (cost, insurance, freight) value, plus the duty and a 0.3% harbor fee that is not applied to items arriving by parcel post or air freight duty.


From 1952 to 2000 cumulative foreign direct investment approvals came to $44.8 billion of which 24% was in the electronics and electrical industries. Other industries attracting relatively heavy foreign investment include banking and insurance services, chemicals, trade and basic metals. The government reported Taiwan received $3.27 billion in foreign investments in 2002, and had received an average of $2.7 billion a year 1991 to 1999. The rate of foreign investment has been rapidly accelerating as in preparation for its accession to the World Trade Organization (WTO) Taiwan has liberalized its economy and improve its investment environment. Foreign firms are generally accorded national treatment and trade-related capital flows are unrestricted. In January 2001 the 50% foreign ownership limit was lifted with exceptions in a few designated industries. Most limits on the amount of portfolio investment in companies listed on the Taiwan Stock Exchange (TSE) were also lifted. About 1% of manufacturing industries and 5% of services industries continue to have limits on foreign ownership. Investment incentives are offered for investments in emerging or strategic industries, pollution control systems, production automation, and energy conservation. Since the goal was first announced in 1995, increasing effort has been put in making Taiwan an Asia-Pacific Regional Operations Center (APROC). A goal is to have about 1,000 corporations establish headquarters in Taiwan by 2011.

The United States has been the largest source of foreign investments in Taiwan with investment approvals totaling $10.7 billion in the period 1952 to 2000, 24% of the total. Another $9.2 billion is approvals during this time from the British Virgin Islands, the Cayman Islands, and other offshore havens in Central America, should also be largely attributed to US multinationals. Japan has ranked second with approved investments totaling $9.2 billion or 21% of the total. Twenty-seven percent has been in electronic and electrical products and 20% in services and trade. Investment approvals totaled 1,410 equal to potential investment of $7.6 billion, an increase of 80% over 1999. Most of these investment applications came from British territories in Central America (mainly the British Virgin Islands, the Cayman Islands, and other conduits of mostly US investments), the United States, Singapore, Japan and the United Kingdom.

Taiwan outward investment has been such that by 2000 over 50% of Taiwan manufacturing was being conducted outside of the country, and by 2001, 53% was being out-sourced. The top five sectors for outward investment were banking and finance, services, electronics and electrical appliances, marketing, and transportation. In 1992, investment in mainland China was legalized and despite a fall off due to tensions in 1996, by 2001 Taiwan had become China's fourth-largest source of foreign investment. In 2002, the government changes its official investment stance towards China from "patience over haste" to "active opening and effective management."

Taiwan uses the cheap labor force from the mainland to assemble and process domestic produced high tech goods, and then exports them to the developed markets (like the United States, Japan, and Europe). Taiwan's direct investments in China grew from $1.3 billion in 1999 to $5.4 billion in the first 10 months of 2004. China (including Hong Kong) have thus become Taiwan's largest export market. Capital inflows have also been high, with FDI levels amounting to 20.8% of the GDP in 2003. Investors complain however that the business environment is not as streamlined and transparent as it could be.


Since 1950, the government has adopted a series of economic plans to help guide and promote economic growth and industrialization. The first four-year economic development plan (195356) emphasized reconstruction and increased production of rice, fertilizers, and hydroelectric power; it resulted in an increase of 37% in GNP and 17% in income per capita. In the second four-year plan (195760), import substitution industries were encouraged. Industry and agriculture both registered significant gains; GNP increased by 31%, and national income per capita by 13%. The third four-year plan (196164) emphasized labor-intensive export industries, basic services, energy development, industries contributing to agricultural growth, and exploration and development of the island's limited natural resources. The results were a 42% increase in GNP and a 31% increase in per capita income. US loans and grants, totaling $2.2 billion, and foreign (mostly overseas Chinese) investment financed these early stages of development.

Following the curtailment of AID assistance in 1965, the fourth four-year plan (196568) was introduced, followed by the fifth four-year plan (196972); increases in GNP for these periods were 46% and 55%, respectively. By 1971, exports of manufactured goods had registered spectacular increases, and Taiwan's foreign trade pattern changed from one of chronic deficit to consistent trade surpluses. At this point, the government began to redirect its priorities from labor-intensive industries to the development of such capital-intensive sectors as shipbuilding, chemicals, and petrochemicals. The sixth four-year plan (197376), adversely affected by the worldwide recession, was terminated in 1975 after producing only a 19% increase in GNP. It was replaced by a six-year plan (197681) that focused on expansion of basic industries and completion of 10 major infrastructural projects, including rail electrification, construction of the North Link railroad, development of nuclear energy, and construction of the steel mill at Kaohsiung and of the new port of T'aichung.

In 1978, the six-year plan was revised, and 12 new infrastructural projects were added, including completion of the round-the-island railroad, construction of three cross-island highways, expansion of T'aichung Port's harbor, and expansion of steel and nuclear energy facilities. A subsequent four-year plan (198689), designed to supplement a longer-range 10-year plan (198089), had as a target average annual GNP increase of 6.5%. Among its goals were price stability, annual growth of 7.5% in the service sector, trade liberalization, encouragement of balanced regional development, and redirection of new industrial growth into such high-technology industries as computers, robotics, and bio-engineering. In response to flagging export growth and a slowdown in private investment following a stock market collapse in 1990, the government devised a six-year plan for 199197 aimed at economic revitalization. This plan targeted investment mainly in transportation, telecommunications, power generation, and pollution control. A "Statute for Upgrading Industries" enacted in early 1991 continued the government's efforts to provide incentives for private investment in research and development and high-technology sectors of the economy. Economic development in the late 1990s focused on a continuing privatization of government enterprises, the opening of the Taiwan market to foreigners, and high investment in the technological sector.

Taiwan's six-year national development plan for 200208 is titled "Challenge 2008." It is estimated to cost $75 billion and has seven specified goals: 1) expanding the number of products and technologies that meet the world's highest standards; 2) doubling the number of foreign visitors; 3) increasing expenditures on research and development to 3% GDP; 4) reducing unemployment to less than 4%; 5) increasing the average growth rate to over 5%; 6) increasing number of broadband internet users to over six million; and 7) creating about 700,000 jobs. There are 10 major areas of emphasis, including cultivating talent for the E-generation (with a special emphasis on mastering English); developing the cultural arts industry; developing a digital Taiwan, using information technologies to make government more efficient and industries more competitive; developing Taiwan as a regional headquarters for multinational corporations; and constructing culturally rich hometown communities as a means of retaining talent, in addition to more standard goals of increasing value-added, improving the transportation infrastructure, conserving water resources and doubling the number of tourists.

Taiwan's economy is estimated to grow by 3.7% in 2005, a clear set-back from the 5.7% growth rate registered in the previous year. Reason for this is the weaker growth in the demand for the country's key manufactured exports. However economic expansion is expected to pick-up again in 2006 as a result of increased world trade.


A social insurance system provides medical, disability, old age, survivor, and other benefits, with employers paying 3.85% of payroll and workers contributing 1.1% of earnings. Benefits are paid in lump sums depending on years of contribution. The retirement age is set at age 60 for men and 55 for women. The National Health Insurance Bureau provides medical care for all workers and dependents. Firms with five or more employers are required to fund a workers' compensation program. Unemployment benefits are funded by employers, employees, and the government.

All enterprises and labor organizations must also furnish welfare funds for workers and "welfare units," such as cafeterias, nurseries, clinics, and low-rent housing. Fishermen, farmers, and salt workers have their own welfare funds. Government programs include relief for mainland refugees, calamity-relief assistance, and direct assistance to children in needy families.

The law provides equal rights to women, and protects against sex discrimination. Sections of the legal code that discriminated against women have been eliminated. Now the law permits married women to retain their maiden names, gives them an equal voice in child custody disputes, and clarifies their property rights. In the workplace, women tend to receive lower salaries and less frequent promotion, and are often denied federally mandated maternity leave. Violence against women, especially domestic abuse, is extremely widespread. Child abuse is also a serious problem. The Child Welfare Act mandates that any citizen aware of child abuse or neglect must report it to the authorities. As of 2004, Taiwan remained a significant transit point for trafficked persons.

Human rights are generally well respected, but some cases of police abuse continue to be reported.


As a result of improved living conditions and mass vaccinations, significant progress has been made in controlling malaria, tuberculosis, venereal disease, leprosy, trachoma, typhoid, diphtheria, and encephalitis. As of 2002, the crude birth rate and overall mortality rate were estimated at, respectively, 14.2 and 6.1 per 1,000 people. In 2005 the infant mortality rate was 6.4 per 1,000 live births and life expectancy was 77.26 years. Taiwan's public health facilities include 55 general hospitals and approximately 900 health stations. In 1990, there were 22,300 doctors.


The evacuation of more than two million persons from the mainland to an already densely populated island in 1949 made the provision of low-cost housing an early priority. By 1979, more than 150,000 units of public housing had been built. Since the 1970s, government housing programs have focused on the cities, with slum clearance and the construction of high-rise apartment dwellings for low-income groups the major priorities. Two new towns were constructed in the early 1980s and a third was planned. The government set a target of 600,000 new housing units for the 197989 decade, but only 236,106 units were completed as of 1986. In 2000, the total housing stock was at about 6,977,770 units with about 3.4 people per dwelling. Some 29% of all housing was built in the period 197180; about 32% was built in the period 19912000. About 83% of all dwellings were owner occupied.


All children receive nine years of free and compulsory education provided at government expense, including six years in public primary school and three years in junior high. After completing nine years of compulsory schooling, approximately 90% of students continue their studies at a senior high (general studies) or vocational school. Agriculture, engineering, commerce, maritime navigation, home economics, and nursing are some of the skills taught in vocational schools, which offer three-year programs. In order to attend high school, students must pass an examination after junior high. Salaries of the teaching staff are paid by local governments.

In 2003/04, there were 1,912,791 students enrolled in primary schools and 1,676,970 students enrolled in secondary schools. The same year, there were 103,793 primary school teachers and 97.738 secondary school teachers.

As of 1997, Taiwan had over 100 institutions of higher education. More than 100,000 students take the joint college entrance exam each year. Approximately 61.9% of the candidates are admitted to a college or university. The government relaxed many restrictions which prevented students from studying abroad in the 1980s. Although Taiwan has a highly developed college curriculum, many students do travel abroad to study. Taiwanese college and graduate students are particularly interested in engineering, computer science, natural science, and business management. In the latter half of the 1990s, about 13,000 students annually pursued graduate study in the United States. In 2003/04, there were 981,169 students enrolled in universities and colleges with 45,702 teachers.


The National Central Library in T'aipei holds more than 1,615,000 items, including a collection of rare Chinese books (180,000 volumes). The National Taiwan University in T'aipei has more than 1,500,000 volumes in collected holdings. The T'aipei Public Library of Taiwan consists of a main library, 30 branch libraries, and 12 neighborhood reading rooms within the metropolitan area with a combined collection of about 4,386,601 volumes, plus periodicals and multimedia materials.

The major museums, all in T'aipei, are the National Palace Museum, National Museum of History, and the Taiwan Museum. The National Palace Museum houses one of the world's largest collections of Chinese artthe collection consists primarily of treasures brought from the mainland. The T'aipei Contemporary Arts Museum was completely renovated in 2001. The National Museum of History, founded in 1955, has more than 30,000 items in its collections of oracle bones and ritual vessels of the Shang and Chou dynasties, earthenware of the Sui and T'ang dynasties, stone engravings of the Han dynasty, and jade articles of the Chou dynasty. The Taiwan Museum has the most complete collection of natural history specimens in the country. The National Taiwan Science Education Center in T'aipei houses a planetarium and scientific exhibits.


Telecommunications services are owned by the government. Nearly all telephone service is automatic. In 2003, there were 13.3 million mainline phones and 25 million mobile phones in use nationwide. The postal service is managed by the Directorate General of Posts under the Ministry of Communications.

Radio broadcasting stations in Taiwan are under the supervision of the Ministry of Communications. As of 1999 there were 218 AM and 333 FM radio stations and 29 television stations. In 2004, there were about 100 cable television stations. The largest network is the Broadcasting Corp. of China, which operates three systems: an overseas service, known as the Voice of Free China; the mainland service, known as the Central Broadcasting Station, aimed at the Chinese mainland; and the domestic service. These stations broadcast in 14 languages and dialects. Television was introduced in 1962. In 1997 there were 386 radios and 48 television sets per 1,000 population. In 2005, there were 13.8 million Internet subscribers.

The leading newspapers with their estimated 2002 daily circulation rates are: United Daily News, 1,200,000; China Times, 1,200,000; Central Daily News, 600,000; Min Sheng Daily, 556,640; Liberty Times, 500,000; Taiwan Hsin Sheng Pao, 460,000; China Times Express, 400,000; and China Daily News, 670,000. The Central News Agency was established on the mainland by the KMT in 1924.

Though authorities generally respect constitutionally provided rights to free speech and free press, these rights are formally circumscribed by a law excluding the advocacy of communism or division of national territory. Controls over radio and television are said to be under a process of liberalization and privatization.


The most influential private organizations are the occupational or trade associations. These include associations of farmers, fishermen, trade unions, business leaders, and professional persons. Organizations devoted to social welfare and relief work are sponsored by the government, by religious groups, and by civic clubs. The Taiwan Federation of Chambers of Commerce has branches in all the principal cities.

Cooperatives are an important adjunct to economic life, especially in the urban centers. In rural areas, agricultural cooperatives help the farmers transport and market special farm products such as fruits, tea, citronella oil, and handicrafts. Cooperative farms, organized with the help of the government, operate either on a community basis, with the products distributed among the members, or on an individual basis, with the cooperative functioning as a purchasing, processing, and marketing agency.

Agricultural services and 4-H clubs in various parts of Taiwan provide training and social activities for boys and girls. Both the YMCA and YWCA are active in Taiwan, as is Little League baseball. There is an active Junior Chamber in Taiwan and there are several other sports associations based in T'aipei.

Cultural and educational organizations include the Historical Research Commission of Taiwan, the National Science Council, Academia Sinica, and Modern Fine Arts Association of Southern Taiwan. The Taiwan Medical Association is one of many professional organizations that also promotes research and education in medical and scientific fields.

Social action groups include the Taiwan Grassroots Women Worker's Center and the Taiwan Association of Human Rights. Volunteer service organizations, such as the Lions Clubs and Kiwanis International, are also present. There are national chapters of Amnesty International and the Society of St. Vincent de Paul.


T'aipei is the chief tourist attraction, with such popular sites as the seat of government in Presidential Square, Lungshan Temple, and the nearby National Palace Museum and famous Yangmingshan National Park. Attractions outside the capital include the Shihmen Dam recreation area, Lake Tzuhu, and the mausoleum of Chiang Kai-shek. The many temples and Dutch relics of T'ainan, Taiwan's oldest city, and Sun Moon Lake near T'aichung also attract numerous visitors. The national sports are baseball, football (soccer), and basketball.

In 2003, tourist arrivals totaled 2,248,117, of whom 60% were from East Asia and the Pacific. Tourism receipts totaled us$3.5 billion. Hotel construction has boomed as a result of government investment. That year hotel rooms numbered 21,896 with an occupancy rate of 56%. All visitors need a valid passport and visa.

In 2005, the US Department of State estimated that the daily expense for a stay in T'aipei was us$298.


Among the many Chinese scholars who have lived in Taiwan since 1949 are Hu Shih (18911962), philosopher and president of the Academia Sinica; Chiang Monlin (18861964), educator and chairman of the Joint Commission on Rural Reconstruction; Li Chi (18961979) and Tung Tso-pin (18951963), archaeologists, whose discoveries at the Anyang site laid the foundation for modern Chinese archaeology; and Tsiang Ting-fu (Ting-fu Fuller Tsiang, 18951965), historian and long-time delegate to the UN. Chang Ta-chien (18991983) is known for his painting of landscapes and figures and his copies of the famous Buddhist mural paintings of Tunhwang caves in Gansu Province. Lin Yutang (18951976), poet, philosopher, lexicographer, and historian, was one of China's foremost interpreters for Western cultures.

The outstanding political and military figure of Nationalist China and postwar Taiwan was Chiang Kai-shek (Chiang Chung-cheng, 18871975), who was responsible for sustaining the spirit of anticommunism in Taiwan. His son, Chiang Ching-kuo (191088), assumed leadership of the Taiwan government from Chiang Kai-shek's death to his own. Chen Shui-bian (b.1950) became president in 2000; his controversial views regarding Taiwanese independence have caused consternation with mainland China.


Taiwan has no territories or colonies.


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Hsiung, Ping-Chun. Living Rooms as Factories: Class, Gender, and the Satellite Factory System in Taiwan. Philadelphia, Pa.: Temple University Press, 1996.

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Yu, Bin. Dynamics and Dilemma: Mainland, Taiwan and Hong Kong in a Changing World. New York: Nova Science Publishers, 1996.

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Republic of China

Chung Hwa Min Kuo



The island of Taiwan, in Eastern Asia, is about 161 kilometers (100 miles) away from the southeast part of mainland China, and about 483 kilometers (300 miles) north of the Philippine island of Luzon. The East China Sea forms the northern border of Taiwan, the Taiwan Straits are to the west, the Philippine Sea to the south, and the Pacific Ocean on the east coast. The territory is slightly smaller than the combined area of Maryland and Delaware in the United States. Taiwan occupies a total area of 35,980 square kilometers (13,892 square miles). Its capital city, Taipei, is in the northeast, and is the most densely populated area in the territory.


As of November 2000, the population of Taiwan was estimated at 22,257,000. People aged 14 years and under comprise 22 percent of the total population, while 70 percent belong in the 15 to 64 age bracket. The earliest government census records, dated 1905, set the island's population at 3.12 million, which doubled to 6.02 million by 1945. Subsequently, the Taiwanese population increased at an average of 3.84 percent, prompting the government to implement strict population control measures such as family planning. By 1997, the population growth rate had dropped to 1 percent.

Besides government family planning programs, the decline in population growth can be linked to the change of attitude in the younger generation who, due to better education and career opportunities, now tend to marry later. There has been a decrease in potential mothers between the ages of 20 and 34. Of the 326,002 births registered in Taiwan in 1997, the ratio was 109.04 boys for every 100 girls. The greater male-to-female ratio on the island is in keeping with Chinese culture, which traditionally values sons above daughters.

The population distribution curve measured by age groups indicates an aging population. In 1990 people aged 65 and over comprised about 6.1 percent of Taiwan's population. This figure increased to 8 percent in 2000 and, with average life expectancy at 76.35 years, the government estimates that the percentage of its elderly population will increase to 19.1 percent by 2030. In an attempt to encourage a moderate increase in population, the government modified its former population reduction slogan from, "One [child] is not too few; two are just right," to "Two are just right."

Because of the increasing industrialization of Taiwan, people are flocking to the urban-metropolitan areas of the island, which absorb 67.8 percent of the total population. In 1997 the population density of Taiwan was the second highest in the world next to Bangladesh, with 601 people per square kilometer (1,557 per square mile). The capital city, Taipei, which covers 272 square kilometers (105 square miles), is the most densely populated area with 9,560 persons per square kilometer (24,760 per square mile). Second to Taipei is Kaohsiung City with an area of 154 square kilometers (59 square miles), which is home to 9,350 persons per square kilometer (24,216 per square mile), while Taichung City, with an area of 163 square kilometers (63 square miles), has 5,519 inhabitants per square kilometer (14,294 per square mile).


The economic development of Taiwan can be broken down into 5 stages. In the 1950s, the main goal of the government was to stabilize the economy and ensure an adequate and regular food supply for the population. Hand in hand with agricultural production, the government encouraged the development of labor-intensive industries to provide much-needed employment to a growing labor force , and to ease the need for imported products by manufacturing substitute products locally.

In the 1960s, the government continued to promote the same labor-intensive industries, but this time the focus was on manufacturing products for export. By the end of the decade, the export industry was thriving and had stimulated local demand for the machinery needed to produce export goods. This export-led strategy had several positive results. Employment opportunities increased and a greater variety of manufactured products were developed. Expansion advanced local knowledge of management skills and the development of industrial technology. Moreover, receipts of foreign currency greatly enhanced the financial standing and stability of the government.

Supported by these developments, in the 1970s the government shifted its strategy to the encouragement of basic and heavy industries. These industries were designed to produce and promote domestic substitutes for imported products, and to develop those industries that would require heavy capital expenditures. By thus reducing Taiwan's reliance on foreign suppliers for components, government expenditure decreased.

By the 1980s, Taiwan's foreign trade was posting huge surpluses. The government directed these funds to building infrastructure such as roads, bridges, airports, and seaports, and to improve the quality of life on the island. The surplus was also able to finance the further development of capital-intensive and high-technology industries such as electronics, information, and machinery. At the turn of the decade, the government focused on building a world-class infrastructure and 1994 saw the approval of a plan known as the Twelve Major Construction Projects. The scope of the plan included transportation, culture, and education, improvement of living standards, development of water resources, and environmental protection.

In just 50 years, Taiwan had achieved rapid economic growth, characterized by stable prices and equitable distribution of income. Its rapid industrial advancement between 1980 and 2000 has earned the island recognition as one of the "tiger" economies of Asia.

One of the most important events that set the stage for Taiwan's economic development was its implementation of genuine land reform. Under this program, rents were reduced, public lands were distributed to the landless, and farmers were given the opportunity to own the land they had been tilling for many years. In 1953, 60 percent of the rural population became owner-farmers, and owner-cultivated land increased to more than 75 percent of the total land tilled. In the meantime, those land owners who were compelled to sell their property under the land reform program were compensated in government bonds. Dissatisfied with the government's action and highly suspicious of the value of the bonds, many of the landowners immediately sold them. At the same time, land prices went down in anticipation of the effects of land reform. Taken together, these events contributed to eradicating the land-owning class and the landlord-tenant relationship, a transformation that saved Taiwan from the fate of other societies where huge income disparity between landowners and their workers set the stage for social and economic injustice.

Land reform also led to the reorganization of rural Chinese society. It brought the end of patriarchy, whereby authority was vested only in men, and saw the loosening of family ties. As agricultural processes were modernized, production became more efficient, allowing younger people to leave the farms and pursue other careers in the urban areas. This migration triggered urbanization which, in turn, fostered job specialization, lowered class barriers, promoted social equality, and increased cultural and social interaction.

As social interaction increased, people no longer confined close relationships to the family circle but made outside friends, thus further contributing to social stability and harmony. Under government guidance, the Taiwanese found themselves sharing a common vision and working toward a common goal. Besides economic policies, the government implemented policies that extended compulsory education to 9 years and established schools for vocational and technical training. By encouraging young people to acquire new ideas and skills, Taiwan created a well-trained and industrious labor force, which has served as the backbone of the nation's economic development.

The major economic sectors in Taiwan are composed of services, manufacturing, and agriculture. Since 1985, the service sector has contributed greatly to economic development by generating more than half the gross domestic product (GDP), increasing to 64 percent in 1999, while industry and agriculture accounted for 33 percent and 3 percent of GDP, respectively.

Small and medium enterprises (SMEs) in Taiwan are engaged in the manufacturing of products from toys and textiles to personal computers. SMEs can also be found in the construction industry, and in the service sector, particularly in financial, social, and personal services. According to the Ministry of Finance, 97.76 percent of the businesses in Taiwan can be classified as SMEs. In 1998, SMEs provided employment for 4 out of 5 workers in Taiwan, or 7.27 million out of 9.55 million workers.

The government of Taiwan is optimistic about the island's continued economic growth. Its optimism is based on past economic performance. Even at the height of the 1997 Asian financial crisis, which had a negative impact on the leading economies of Asia, Taiwan's gross domestic product still amounted to US$283.4 billion.

Taiwan's government is continually drawing up plans to create more businesses on the island to provide more employment and to strengthen its position against the re-occurrence of a regional or global economic crisis. For the 21st century, the government is working hard to secure the next step of that process. In his inaugural speech of May 2000, President Chen declared that Taiwan must respond to international developments by moving toward a knowledge-based economy in which high-tech industries constantly innovate, while traditional industries progressively transform and upgrade.


In the early stages of its development, in the 1950s, Taiwan's economy was closely managed and controlled by the government. After the economy showed signs of rapid growth and continued development, government gradually exerted less control to give the economy free rein.

Government control during the early stages of Taiwan's economy was crucial to the provision of much-needed direction, guidance, and motivation of the population. The government's role included the maintenance of a stable and law-abiding society, strict implementation of their policies, and the formulation of programs to spur national development.

From the 1950s to the 1960s, the government assumed the role of an economic caretaker, exercising control and influence. The government gave support to emerging industries and acted to protect them against external competition. In the 1950s, foreign aid from the United States assisted the development of the textile and milling industries, while export industries tapped the country's limited foreign reserves. During this period, the government also encouraged the growth of Taiwan's domestic automobile industry by shielding it from foreign competition. Citizens wanting to buy foreign-made cars were penalized by a tax equivalent to the price of the imported car itself.

At this stage of Taiwan's economic development, the government demonstrated creativity in its plans to advance economic development. First, it maximized the contribution of state-run enterprises to the national coffers by taking a part of the profits in indirect tax . Second, the government provided incentives for private enterprise to thrive, lowering the price of electricity for industrial use, while increasing the price for commercial use. As intended, this ploy encouraged business into the manufacturing rather than the retail sector.

In the 1970s, the government took the initiative in building necessary infrastructure such as roads, bridges, airports, new cities, highways, and railways. It launched large-scale public investment projects, since dubbed the Ten, Twelve, and Fourteen Major Construction Projects; the Six-Year National Development Plan; and the Twelve Economic Construction Projects.

Because of the government's protection and economic intervention, Taiwan's economy grew by leaps and bounds in just 4 decades. By the 1990s, private enterprise had grown strong and steady and needed little state assistance, although the expectation remains that government will continue to foster a healthy investment environment and move with the times in implementing new regulations. The role of the government, in short, has shifted from that of caretaker to that of teacher. As teacher, it has provided private enterprise with information on economic growth and technology, as well as assistance in training personnel.

Over the years, the government and people of Taiwan have attempted to uphold democratic principles and strengthen the island's political institutions. Political activities, especially elections which appear tainted by corrupt practices (buying votes, peddling influence, or provoking violence) are greeted with outrage. Beginning in the mid-1990s, certain reform-minded politicians campaigned for electoral reform. They tried to strengthen the role of political parties, improve their image, and highlight the importance of issues in elections. They aimed, too, to attract political candidates of a higher caliber, reduce the influence of personal connections and, finally, to combat factionalism (the breaking into smaller, differing factions or groups within a political party).

Taiwan's government is a multi-party democracy based on a constitution created in 1947 and amended in 1992, 1994, 1997, and 1999. The president and vice president are elected on the same ticket by popular vote and serve a 4-year term. The legislative branch consists of a unicameral (single-house) Legislative Yuan with a total of 225 members serving 3-year terms, 168 of whom are elected by popular vote, 41 of whom are elected by proportional vote by party, 8 elected from overseas constituencies based on proportional vote, and 8 elected by popular vote from among the country's aboriginal population, which constitutes 2 percent of the population. There is also a unicameral National Assembly of 300 members, all of whom are elected by proportional representation based on election of the Legislative Yuan and serve 4-year terms.

The year 2000 marked a significant political event in Taiwan when the candidates of the Kuomintang (KMT), Taiwan's ruling party for over 50 years, were defeated by the candidates of the leading opposition party, the 14-year-old Democratic Progressive Party (DPP). Taiwan's highest political office, the presidency, went to the DPP's Chen Shui-bian, the country's tenth president. His running mate, Hsiu-lien Annette Lu, became vice president, marking a victory not only for the DPP but also for the women's movement. Vice President Lu is known to have championed gender equality and women's rights since the beginning of her political career.

In the 2000 national elections, there were 3 major issues aside from the economy on which candidates had to make their attitudes clear to win votes. These were mainland policy, national defense, and foreign relations. Mainland policy dictates whether Taiwan should pursue its independence from mainland China or maintain the status quo. Currently, Taiwan upholds the principle of "one China, two political entities." Under the constitution, Taiwan is referred to as the Republic of China and regards itself as the national government of China, while the People's Republic of China is a political entity that controls mainland China. The issue is a cause of political tension not only for the 2 territories but also for other countries. Mainland China continues to use the threat of political and economic sanctions against those countries willing to recognize Taiwan as a separate country. Due to the scale of China's economic resources, its huge population, and its military capability, the threats are not taken lightly.

The KMT, or Nationalist Party, has the longest running political record in Taiwan. Founded by Dr. Sun Yatsen in 1894, the KMT celebrated its one hundredth anniversary on 24 November 1994. The party is of major significance in Taiwan's history, and was involved in the war against Japanese invaders, struggles against communist rebellion, implementation of the constitution, and the economic development of the island. The KMT enjoys wide support, with a membership of approximately 2.1 million. At the lowest level, members are organized into cells. Moving upwards, there are district, county, and provincial congresses and committees. The highest level includes the National Congress and the Central Committee. With its historic defeat in 2000, KMT's leadership began an evaluation of the party platform, direction, and standing, compared with the other political parties.

The Democratic Progressive Party (DPP) was long the leading opposition party to the KMT. It was established on 28 September 1986 and has approxima tely 200,000 members. Its main policy is in direct opposition to the KMT because it calls for Taiwan's complete independence from mainland China. In recent elections, the more senior officers of DPP have tended to attach less importance to the party's stance on independence in an attempt to attract more voter support. The lack of consensus on this issue has caused some dissent within the party and has resulted in the breaking away of members who are passionate advocates of Taiwanese independence. Several of these dissatisfied DPP members have left the party and, with new recruits, have formed the Taiwan Independence Party and the New Nation Association.

In the 2000 elections, the economic platform espoused by the DPP included the introduction of a progressive tax system, elimination of unemployment, the promotion of balanced development in every sector of the economy, the opening of state-run enterprise to private investment, and protection of the environment against further destruction.

Another opposition party that has emerged is the New Party (NP), formed in August 1993 by a KMT breakaway group composed of 6 Legislative Yuan (a branch of government) members and 1 former lawmaker. Their official statement of resignation from the KMT, as documented in Taiwan's 1999 Yearbook, gave as their reason the "un-democratic practices of the KMT" as well as ideological differences. The New Party has been led by such prominent political personalities as the former finance minister, Wang Chien-shien, and former head of the Environmental Protection Administration, Jaw Shau-kong. The party champions 2 major issues: anti-corruption and social justice. The goal of the NP is to attract those voters who were dissatisfied with the performance of the ruling KMT, but who are opposed to the DPP's support for independence. The NP now claims a registered membership of nearly 68,500.

One of the newest parties to emerge because of Taiwan's ongoing democratization is the People First Party (PFP), established on 31 March 2000 by former Taiwan governor James Soong. The PFP is distinct from the other parties in allowing eligibility for membership at age 16, 2 years younger than the minimum age required by the other parties. James Soong, who was elected as the party's first chairman, ran as an independent in the 2000 presidential elections, but was defeated. The PFP is still in the process of establishing its structure and political base.


Data generated by the Directorate General of Budget, Accounting and Statistics (DGBAS) shows that the government spent NT$1.164 trillion in 1999. A big percentage of the budget went to national defense (22.6 percent); followed by education, science, and culture (17.4 percent); economic programs (14.8 percent); social welfare (13.5 percent); general administration (11.6 percent); and pension and survivor's benefits (11.1 percent). In the same year, the government posted a budget surplus amounting to NT$64.6 billion, while external debt amounted to US$35 billion.

Taiwan's government collects 18 different categories of taxation, which provide the revenue for national expenditures. Nine of these categories are classified as direct taxes : corporate income tax , individual income tax, rural land tax, land value tax, land value increment tax, estate and gift tax, mining-lot tax, house tax, and deed tax. The other 9 taxes are indirect and include customs duty , business tax, commodity tax, stamp duty, vehicle license tax, securities transaction tax, amusement tax, slaughter tax, and harbor dues.

Taxes are collected by the National Tax Administration, which administers different tax collection offices in the different provinces and municipalities. In 1999 tax revenue alone accounted for 62.7 percent of the govern-ment's total revenues. In the same period, the government was able to collect a little over NT$770 billion in taxes according to DGBAS statistics.


One of the key factors in Taiwan's rapid economic development is its well-planned and efficient transport network. As an export-oriented economy, its many businesses are heavily dependent on shipping, by air and sea, for the transport of their goods to overseas markets.

On 5 January 1995, Taiwan approved the Asia-Pacific Regional Operations Center (APROC) Plan, an

Country Telephones a Telephones, Mobile/Cellular a Radio Stations a Radios a TV Stations a Televisions a Internet Service Providers c Internet Users c
Taiwan 12.49 M (2000) 16 M (2000) AM 218; FM 333; shortwave 50 (1999) 16 M (1994) 29 8.8 M (1998) 8 6.4 M
United States 194 M 69.209 M (1998) AM 4,762; FM 5,542; shortwave 18 575 M 1,500 219 M 7,800 148 M
China 135 M (2000) 65 M (2001) AM 369; FM 259; shortwave 45 417 M 3,240 400 M 3 22 M (2001)
Singapore 1.928 M (2000) 2.333 M (2000) AM 0; FM 16; shortwave 2 2.6 M (2000) 6 (2000) 1.33 M 9 1.74 M
aData is for 1997 unless otherwise noted.
bData is for 1998 unless otherwise noted.
cData is for 2000 unless otherwise noted.
SOURCE: CIA World Factbook 2001 [Online].

ambitious project that will transform the island into a center of business and investment in the Asia-Pacific region. With APROC, Taiwan plans to attract the establishment of new local, as well as foreign, companies on the island. Taiwan's world-class and well-organized facilities would see such companies conveniently placed to take advantage of opportunities in the flourishing Southeast Asian markets, and the much coveted market of mainland China.

There are a total of 34,901 kilometers (21,687 miles) of roads in Taiwan, 90 percent of which are paved. Taiwan has a modern railway system that provides frequent and convenient passenger service between major cities on the island. As of 1999, Taiwan's railway network totaled 2,481 kilometers (1,542 miles). Railways in Taiwan are operated by the Taiwan Railway Administration (TRA), the Taiwan Sugar Corporation, and the Taiwan Forestry Bureau. The TRA provides passenger and freight services to the general public, while the Taiwan Sugar Corporation and the Taiwan Forestry Bureau haul their own products and offer only limited passenger service.

The government has already begun the development of a high-speed railway (HSR) that is expected to begin operating in June 2003. The planned HSR route, 340 kilometers (212 miles) long, will pass through the west corridor of the island. Ten stations will be located from Taipei to Kaohsiung to serve about 22 million residents in the region. The estimated construction cost of the project is US$13.05 billion, and the HSR will cut the present travel time from north to south by train or highway vehicles from 4 hours to 90 minutes.

As of December 1997, Taiwan's shipping industry had a fleet of 255 vessels weighing over 100 gross tons. Taiwan claims to have one of the largest fleets of cargo container ships in the world. Taiwan has 6 international harbors: Chilung, Suao, Taichung, Hualien, Anping, and Kaohsiung. Waterborne imports and exports handled by these ports amounted to 166.1 million tons in 1997.

As of 1997 51 airlines have been providing flight services to destinations in Taiwan. There are 34 foreign carriers, and 5 domestic-based airlines: EVA Airways, Mandarin Airlines, China Airlines, Transasia Airways, and Far Eastern Air Transport Corporation. Three Taiwan-based carriers offer international charter services: UNI Airways Corporation, Great China Airlines, and U-Land Airlines.

Taiwan has 2 international airports: Chiang Kai-shek International Airport at Taoyuan in northern Taiwan and Kaohsiung International Airport in the south. In addition, there are several domestic airports.


The government is laying the foundation for a national information infrastructure through 30 different projects designed to make the country into a competitive and knowledge-based society. The different projects are focused on enhancing broadband access, improving the quality of Internet service, improving and diversifying the content of local web sites, and promoting electronic commerce and other Internet-based applications. As of 1 July 1999, Taiwan had 15 Internet service providers and 4.13 million Internet users. Based on official estimates, there are at least 52,000 locally authored web sites in Taiwan, 89.6 percent of which are dot-coms (Internet-based companies offering different types of conventional and innovative goods and services). Most of these web sites are written in Chinese, although many provide English versions.

As of April 2000, the Directorate General of Telecommunications estimated the mobile phone subscribers at 13.78 million, a number that was higher than the estimated 12.49 million telephone main lines. In July 2000, Taiwan reduced its international direct dialing (IDD) fees by an average of 15 percent. Earlier, charges on local and mobile phones, leased lines and Internet service had seen reductions of between 2 percent and 5 percent. Further reductions are expected once a separate accounting system has been established and an evaluation of the state-run telecom company carried out.


According to a study by the Nomura Research Center of Japan, the competitive advantage of Taiwan's manufacturing industry lies in information, telecommunications, and other high technology industries. Correspondingly, the government has identified and appropriated funding for the development of 10 high technology industries that will be the foundation of Taiwan's economic success in the first few decades of the 21st century.

The 10 industries are: (1) communications, (2) information, (3) consumer electronics, (4) semiconductors,(5) precision machinery and automation, (6) aerospace,(7) advanced materials, (8) specialty chemicals and pharmaceuticals, (9) medical and health care equipment, and (10) pollution control and treatment.

Labor-intensive industries such as processed foods, leather products, and wood and bamboo products have gradually been replaced by capital-and technology-intensive industries. Examples of these industries are chemicals, petrochemicals, information technology, electrical equipment, and electronics. Electronics and information technology are the biggest players in the manufacturing sector, which employs 26 percent of the national workforce.

The service sector is thriving and shows promise of further growth as the spending power of the population increases. By the end of 1995, the growth of the service sector exceeded that of the agricultural and manufacturing sectors by more than 60 percent and has continued to do so. The different businesses that fall under the service sector in Taiwan are: finance, insurance, and real estate; commerce, including wholesale and retail business, food and beverages, and international trade; social and individual services; transport, storage, and telecommunications; commercial services, including legal, accounting, civil engineering, information, advertising, designing, and leasing; governmental services, and miscellaneous others. Among these businesses, finance, insurance, and real estate are the most dominant. The service sector creates the largest competitive employment opportunities and employs the bulk of Taiwan's labor force.

Meanwhile, the contribution of the agricultural sector to GDP has been steadily declining since the 1980s when Taiwan's government shifted the focus of its economic strategy to industrialization. Few of the younger generation are willing to work in the agricultural sector, preferring to pursue better opportunities in the other sectors. Farmers make up only 8 percent of the labor force and produce less than 3 percent of the island's total GDP according to 1999 statistics. Consequently, the sector diminished in importance while the manufacturing sector has risen to the forefront. The agricultural sector will face even more problems when the country is finally accepted as a member of the World Trade Organization (WTO). To comply with the WTO's requirements, the government has been systematically reducing the trade barriers on its traditionally well-protected agricultural goods, leaving local produce to face increased competition from the foreign agricultural products that will flood the domestic market when Taiwan becomes a full-fledged member in the WTO.

Manufacturing has long been overtaken by the service sector in terms of contribution to GDP. In 1999, the service sector contributed the biggest slice of GDP at 64 percent, with industry accounting for 33 percent, and agriculture 3 percent.


In the 1950s, 90 percent of Taiwan's residents lived in farming communities growing rice, sugar, tea, camphor, and other crops. Two decades later, the government aggressively pursued industrialization, causing agricultural exports to fall behind agricultural imports. By 1999, agriculture constituted only 3 percent of Taiwan's GDP compared with 32.2 percent in 1952. Although the total area under cultivation decreased by one-third between the 1960s and the 1990s, the value of agricultural output to the national economy has increased by half because of improvements in overall productivity. Taiwan's biggest export markets are Japan, Hong Kong, and the United States.

In 1998, rice was Taiwan's most valuable crop, followed by betel nuts, corn, sugar cane, mangos, water-melons, tea, pineapples, pears, and grapes. In the 2 crop seasons of 1998, Taiwan harvested 1.49 million tons of brown rice. According to the Taiwan Provincial Department of Food (TPDF), this was more than was needed to meet local demand. The oversupply of rice is expected to peak as Taiwan braces itself for intensive competition from foreign rice imports as the country moves toward membership in the WTO.

Next to hogs, rice, and chickens, betel nuts rank as Taiwan's fourth most valuable farm product according to TPDF. Demand steadily increased in the 1990s, resulting in the expansion of areas cultivated for betel nuts. In 1997, 56,300 hectares of land were planted with betel nuts and produced almost 156,000 metric tons. Farmers were keen to plant betel nuts because, in a good year, the income can be 10 times higher than that from growing rice.

In 1998, 178,000 hectares of land were devoted to vegetable cultivation, which yielded 2,872,571 metric tons of produce. More than 100 kinds of vegetables are grown in Taiwan. The primary vegetables grown in planted areas are bamboo shoots, watermelon, leafy vegetables, vegetable soybeans, cabbage, cantaloupe, garlic, scallions, celery cabbage, Chinese cabbage, and radishes.

Taiwan produces 30 varieties of fruit, including apples, pears, peaches, citrus fruits, bananas, pineapples, lychees, longans, mangos, papayas, persimmons, loquats, and guavas. The main crops are citrus, mangos, lychees, bananas, pineapples, wax apples, and Asian pears. Pineapples and lychees are canned to satisfy domestic and international demand, while other fruits are processed into juice for local consumption.


From 1986 to 1998, Taiwan's floriculture (flower-growing industry) underwent huge and profitable expansion, and its export value increased from US$3.7 million to US$41.5 million. As demand and sales increased, Taiwan's floral nurseries were expanded from 3,500 hectares to 10,000 hectares. The major export markets for flowers are Japan, Hong Kong, and the United States. Most flower farms allocate half of their planting area to producing cut flowers, that is, flowers sold as single stems for vases and floral arrangements, while the other half is used for nursery production. Annual production of cut flowers is 1.4 billion stems and 25 million potted plants.


In 1998, the Taiwanese fishing industry harvested fish worth US$2.9 billion, of which 62 percent came from deep-sea fishing, 20 percent from aquaculture, 15 percent from offshore fishing, and 3 percent from coastal fishing. Skipjack and eel are Taiwan's biggest water-based export items. The export value of eel, most of which goes to Japan, exceeded US$400 million in 1998.

To protect natural resources and further develop the island's fishing industry, Taiwan's government invested in the construction of fishing harbors, wholesale markets, modern equipment, and other infrastructure during the 1980s. During the 1990s, the government complemented this initiative with renewed efforts to raise public awareness of environmental and conservation issues. Several environmental laws were passed, such as the Water Pollution Control Act in 1991 and the Environmental Impact Assessment Act in 1994.

Taiwan's mountainous terrain serves as a natural hazard to its thriving fishing industry, especially in the rainy season when mud and silt are deposited in the island's wide and shallow river beds. The government, therefore, set aside and developed areas especially suited to aquaculture (the production of scientifically farmed fish), and Taiwan has become a world leader in aqua-cultural development. The industry flourished in the 1980s, but received a setback when the grass shrimp industry was hit by an epidemic in 1987. During the 1990s, government further boosted production by promoting automation, encouraging the use of biotechnology, and improving its marketing strategy.


In the 1950s, the farming of livestock in Taiwan was a backyard enterprise. In just 4 decades since, livestock grew into a multi-billion dollar industry and has become a major export product. In 1998, livestock production was valued at more than US$3.6 billion, accounting for 41.56 percent of the total value of agricultural production. Hog farming still ranks first in the livestock industry, followed by broiler chickens, eggs, and milk. However, an outbreak of foot and mouth disease in March 1997 caused a temporary decline in export sales. The official estimate of hog farms stricken by the disease is 6,147 across 20 cities. To control the spread of the disease, the government ordered the extermination of all affected animals and the immediate vaccination of those unaffected. Roughly 21 million doses of vaccines were used to bring the disease under control. Since then, the hog industry has recovered and export sales have returned to the normal level.

Taiwan attributes the growth of its agricultural industry to the dedication of its farmers, the development of a farmers' organization, continual improvements in techniques and infrastructure, and the implementation of a beneficial land reform program. The government continues to support its farmers with price guarantees, low-interest loans, economic incentives, and other helpful measures.

Through technological improvements such as new cultivars, growth regulators, and mechanization, crop yields per hectare of land jumped from 8,600 kilos in 1945 to 16,384 kilos in 1998. Taiwanese fruit growers have applied advanced horticultural technology to modernize their operations. Through the effective control of plant diseases, adjustments to fruit maturation periods, the cultivation of improved fruit strains, and the implementation of multiple annual harvests, the fruit sector has witnessed profitable growth.

Taiwan has used information technology to create the National Agricultural Information Service, an integrated agricultural information database that includes planning, production, and marketing information related to domestic farming, forestry, fishing, and animal husbandry. This database provides rapid access to information and communication, and allows players in the agricultural sector to exchange ideas at an international level.

Taiwan's agricultural sector faces several challenges. Efficient farming is hindered by the rapidly aging agrarian workforce and a severe shortage of new young workers, who have abandoned the rural life for more profitable careers in the cities. Farmers are having to confront falling incomes, rising costs, and increased foreign competition, and as Taiwan's entry into the WTO approaches, the farmers' predicament will worsen before it gets better.

Another factor that serves to hinder agricultural growth is the island's mountainous topography, which restricts farming to the arable western slopes and alluvial plains. To make matters worse, plots are small with most farmers having less than 1 hectare of cultivable land. This restricts the application of advanced agricultural methods such as mechanization, since these depend on economies of scale (large output) to be cost-effective. Promotion of efficiency in the farming industry has not kept pace with other sectors. About 10 percent of Taiwan's total farmland has been neglected because farming has ceased to be profitable.

The development of aquaculture is seriously threatened by environmental degradation. Freshwater aquaculture uses huge amounts of ground water, sometimes causing land to shift or cave in. Two of Taiwan's government agencies, the Ministry of Economic Affairs and the Council of Agriculture, have jointly promoted recycling systems that use fresh water more efficiently, and have encouraged aquaculturists to switch to marine ranching.

Taiwan's fishing and aquaculture industries are endangered by the pollution of its rivers and coastal waters caused primarily by the expansion of urban communities. There are 21 primary, 29 secondary, and 79 ordinary rivers in Taiwan. According to the Environmental Protection Administration (EPA), 33.8 percent of primary and secondary rivers are polluted to different degrees. Most industrial, agricultural, and residential wastewater drains directly into rivers, seriously polluting the water downstream. By April 1998 only 240,000 households (33.25 percent) were connected to the sewage system.



According to the Institute for Information Industry, Taiwan's software market will have reached up to NT$150 billion in production value by 2001 due to rising global demand for software. Continued investment and a steady supply of competent human resources are 2 major factors behind the sharp growth of Taiwan's software industry in recent years. The industry will have the opportunity to upgrade its production value further in the future, especially as e-commerce becomes increasingly popular among domestic enterprises in Taiwan.

In 1998 Taiwan's hardware information technology industry registered a total production value of US$33.8 billion, up by 11.9 percent from US$30 billion of the previous year, making it Taiwan's most important foreign exchange earner. Since 1995, Taiwan has been the world's third-largest computer hardware supplier after the United States and Japan. Taiwan has about 900 computer hardware manufacturers employing close to 100,000 workers. These companies manufacture laptop computers, monitors, desktop PCs, and motherboards which, in 1998, accounted for about 80 percent of the production value of the information technology industry. To secure a lion's share of the world market, Taiwan's manufacturers strive to maintain high quality and competitive prices. According to statistics released by the Institute for Information Industry, Taiwan has already replaced Singapore as Japan's second largest supplier of information products after the United States. In March 2000, Taiwan earned the distinction of becoming the world's leading manufacturer of CD-ROM drives, a feat made possible by Japan's withdrawal from the CD-ROM market in 1998. In 1999 Taiwan also claimed to be the world's largest supplier of notebook PCs, with an estimated world market share of 49 percent.


Thirteen automobile manufacturers have plants in Taiwan. Most of these are working in partnership with foreign carmakers, mostly Japanese. These companies produce and import automobiles. In 1998, roughly 402,000 automobiles were produced in Taiwan, and the value of the automotive industry reached US$9.93 billion.

However, limited parking space and the efficient mass transit systems in urban districts have resulted in the decline of the domestic car market. From a high of 542,000 units sold in 1995, only 476,000 were purchased in 1998, with 80 percent of the demand being for sedans. In recent years, competition between locally made and imported vehicles has gradually decreased. In 1998 the domestic automobile industry, although threatened by imports from Japan and the United States, still managed to capture about 84 percent of the market, with over 70 percent of the 292,000 domestically made sedans supplied by 3 companies: Ford Lio Ho Motor Co., Ltd. (20.3 percent), Yulon Motor Co., Ltd. (28.6 percent), and Kuozui Motors, Ltd. (22.4 percent). In the commercial vehicle market, China Motor Corporation maintained its traditional top position, producing over half of the 115,700 commercial vehicles sold.

To strengthen the industry, automobile manufacturers need to invest in research and design (R&D), and to improve their own technology in engines, computerized gearing systems, and several other components, to enhance their design capability. One of the industry's weaknesses is its dependence on foreign engines and its inability to produce other key parts such as airbags, which has curtailed its plans to export vehicles. Since 1999, the Ministry of Economic Affairs has allocated funding to encourage R&D and thus alleviate the automobile industry's dependence on imports from Japan and elsewhere.


The Taiwanese textile industry produces synthetic fibers, yarns, fabrics, clothing, and clothes accessories. In the last few years, local manufacturers have attempted to develop man-made fibers and fabrics to compensate for Taiwan's inability to produce cotton or wool, and its limited production of silk and linen. In 1998, Taiwan produced 3.25 million metric tons of man-made fiber, the third highest volume in the world. The country's output of polyester fiber, at 2.68 million tons, occupied second place globally. Nylon production was the world's highest at 301,000 tons. Taiwan has also started mass-producing carbon, spandex, and viscose fibers. The chief export markets for Taiwan's textile exports are the United States, Hong Kong, and other Southeast Asian countries.


FINANCIAL SERVICES. As in the past, Taiwan's banking system is dominated by state-run institutions. Despite pressure from foreign investors, the financial sector has not been liberalized and remains under government control. Consequently, the financial services sector is underdeveloped. In 1995, the combined factors of the Mexican peso crisis, the flight of foreign capital from Taiwan, and the collapse of several savings institutions brought even more restrictive government controls, the severity of which caused an increase in black market activities. In 1991, the Bureau of Investigation launched a campaign against unlicensed investment houses and underground futures brokers that resulted in prosecutions of certain companies charged with stock manipulation. Despite such moves, the sector continued to draw criticism for its perceived dubious and risky practices.


One of the biggest retailers in Taiwan is the 7-11 chain of convenience stores. In terms of store-to-population density, Taiwan has the highest ratio in the world with one 7-11 outlet for every 10,000 people. Owned by the President Chain Store Group, the company's revenues amounted to US$1.29 billion in 1998. The President Group is a household name in Taiwan, where almost everybody has used its products or services at one time or another. Moreover, it is the largest Taiwanese investor in mainland China. In October 1999, the Ministry of Economic Affairs approved a US$328 million mainland-bound investment project proposed by the President Group. The company is diversifying its operations by reinvesting in the Starbucks coffee shop chain and the Conforama home furniture and appliance chain.

Aside from food and beverages, an emerging retail market in Taiwan is the home improvement and furniture market. With the population's increased spending power, ever-increasing numbers of people are renovating their homes and surroundings. In 1992, internationally renowned companies like Ethan Allen, ID-design, Ikea, and B&Q entered the Taiwanese market. In an interview with the Free China Journal in 1999, an Ikea official estimated the annual value of the furniture sector in Taiwan at US$203 million. This estimate did not include the home improvement sector.

In 1998, Ikea's international chain of stores posted earnings worth US$7.02 billion. According to the Taiwan Furniture Manufacturers' Association, the huge potential of the sector evidenced by the earnings of the foreign companies has attracted Taiwan-based furniture exporters to offer their products to the domestic market as well.


The phenomenal growth of Taiwan's economy can be credited to its brisk foreign trade. From 1970 until 1990, the country amassed huge surpluses from its earnings in international trade, which peaked in 1987 when the trade surplus reached US$18.7 billion. However, several other countries became alarmed at Taiwan's huge surpluses and the corresponding economic power it might exert on other economies. The United States demanded that Taiwan remove trade restrictions and allow more foreign products into the country. Since then, Taiwan has reduced or removed a significant number of trade barriers, thus allowing foreign products to compete with local products in the domestic market. From 1992 to 1996, Taiwan's trade surplus declined by nearly 30 percent. However, from 1998, trade figures have once more shown a steady rise and, according to the Central Bank of China, Taiwan's foreign exchange reserves in 1999 amounted to US$106.2 billion, one of the highest in the world. In 2000, Taiwanese exports reached US$148.38 billion against imports of US$140.01 billion, producing a trade surplus of US$8.37 billion.

Taiwan is a major exporter of industrial products ranging from mechanical appliances and accessories, electronics, electrical appliances, personal computers and peripherals, metal products and transport equipment, to furniture and clothing. The United States has been Taiwan's most important trading partner over decades. However, as Taiwan pursued the expansion of its economy, it began seeking out other trading partners, which resulted in a decrease in trade with the United States. In the 1980s, 40 percent of Taiwan's total exports were U.S.-bound; by 2000 only 23.5 percent of the island's total exports were destined for the American market.

Trade (expressed in billions of US$): Taiwan
Exports Imports
1975 5.302 5.959
1980 19.785 19.764
1985 30.704 20.124
1990 67.142 54.830
1995 111.585 103.698
1998 110.454 104.946
SOURCE: International Monetary Fund. International Financial Statistics Yearbook 1999.

Until 1999, Japan was Taiwan's biggest export destination after the United States. However, since 1999, Hong Kong has replaced Japan as the second leading export partner, since Taiwan uses it as an indirect link to send goods to mainland China. Major items exported to Hong Kong include electrical and electronic equipment and peripherals, machinery, accessories, raw plastic materials, and textiles. In 2000, exports to Hong Kong amounted to 21.1 percent of Taiwan's total exports, while those to Japan, due also to the slowdown of the Japanese economy, only accounted for 11.2 percent.

Southeast Asia has become an attractive trading partner for Taiwan. Many Taiwanese businesses have set up in Southeast Asian countries such as Thailand and the Philippines to take advantage of abundant skilled labor, availability of raw materials, and lower land prices. In 1986, only 5 percent of Taiwan's exports were bound for countries in the Association of South-East Asian Nations (ASEAN), but by 2000 the figure had climbed to 12.2 percent.

Taiwan has also set its sights on the large and economically strong European market. In 2000, Taiwan recorded exports to Europe at 16 percent of its total. The country's top 4 European trading partners are Germany, France, the United Kingdom, and the Netherlands, which, together, account for more than 60 percent of exports to the continent.

With huge exports fueling the economy, the spending capacity of the government and the population has multiplied. In the past, the government aggressively discouraged the entrance of imported products to the island by trade barriers and restrictive laws. However, with the new economy, the government has liberalized the situation and, in 2000, Taiwan's total imports amounted to roughly US$110 billion. More than a quarter, or 27.5 percent, of these imports came from Japan. Taiwan's industries, especially the information and automobile industries, rely heavily on the supply of parts and the transfer of technology from Japan. Most of the items imported from Japan are machinery, auto parts, electrical appliances, electronics, chemicals, and metal products. Other imports come from the United States (17.9 percent) and Europe (13.6 percent).

Despite the absence of direct transport links to mainland China, Taiwan's economic ties with the country are strengthening through the substantial Taiwanese investment being poured into China. Taiwanese businesses are eager to invest in mainland China, one of the most sought-after markets in the world. With a population approximately a billion strong, China is not only a huge market for any country's products, but also has one of the biggest manpower resources in the whole world. Trade relations between the 2 economies are so intertwined that breaking them off would bring major repercussions. Mainland China is a big contributor to Taiwan's overall trade surplus. In 1987, Taiwan had a trade surplus of just over US$1 billion with mainland China, and by 1998, this had grown to US$15.7 billion.

Based on data from Taiwan's Mainland Affairs Council, the value of 2-way trade between Taiwan and mainland China amounted to US$23.95 billion in 1998. More than 82 percent of the indirect trade consisted of exports from Taiwan, which totaled US$19.84 billion. Some major items exported to mainland China are industrial machinery and equipment, electronic parts, plastics, man-made fibers, and industrial textiles. Meanwhile, imports from China climbed to 4.1 percent in 1999 from 3.9 percent in 1998. Agricultural and industrial raw materials accounted for a huge percentage of these imported goods. However, in view of the uneasy political relations that prevail between the 2 territories, Taiwan does not concentrate too great a part of its investments in China. Taiwan is mindful that political upheaval in its dealings with China would jeopardize its own economic development.

Taiwan is gearing itself for membership in the WTO and is setting the proper economic policies in motion to ensure its acceptance. One of the long-standing trade issues for which Taiwan is criticized is its violation of agreements on the protection of intellectual property. Piracy in different formssuch as copying and reselling the contents of entertainment and software CDsremains a serious matter. To its credit, Taiwan's government is addressing the problem through a combination of rules and regulations to control piracy, and efforts to raise awareness of the issues involved with it.


The financial industry in Taiwan operates within 3 important legal frameworks: the Banking Law, the Securities and Exchange Law, and the Insurance Law. Three government agencies oversee financial operations: the Ministry of Finance (MOF), the Central Bank of China

Exchange rates: Taiwan
New Taiwan dollars per US$1
2001 N/A
2000 33.082
1999 31.395
1998 32.216
1997 32.052
1996 27.5
SOURCE: CIA World Factbook 2001 [ONLINE].

(CBC), and the Departments of Finance of each municipal or provincial government.

The MOF is in charge of supervising the financial markets and allied financial institutions in Taiwan through its subordinate agencies: the Bureau of Monetary Affairs, the Securities and Exchange Commission, and the Department of Insurance. In addition, it formulates policies that contribute to the development and efficiency of Taiwan's financial service sector. The CBC controls the strict implementation of the monetary policies of Taiwan as outlined in the provisions of the Banking Law and the Law Governing the CBC.

Each of the provincial or municipal governments has its own Department of Finance. Collectively, these departments direct and control community financial institutions such as credit cooperatives and the credit of farming and fishing associations.

The several agencies and institutions that comprise the structure of Taiwan's financial sector offer a wide variety of financial services, designed to cater to clients from big business to individual account holders.

Banks fall into several categories such as commercial banks, specialized banks, local branches of foreign banks, and others, established under Taiwan's banking laws, which undertake savings and trust business and deal in securities. In the past, the sector was dominated by government-owned banks, but, as a result of increasing competition and government privatization policies, 15 new private commercial banks were established in 1991. These new arrivals now dominate the market.

Credit cooperatives provide banking services in regional communities where the customer base is small and it is not economically viable to establish commercial banks. Grassroots organizations such as farming and fishing associations usually have credit departments to take charge of promoting economic development in their particular areas. Investment and trust companies act as fund managers of trust funds and trust properties.

The Postal Savings System of Taiwan has more than 1,600 post offices throughout the island where people can remit or deposit money. Money may be withdrawn and re-deposited into banks, or reinvested in different financial instruments.

The insurance industry offers life and other insurance. Life insurance includes simple life insurance, health insurance, and accident insurance. Other policies offer fire insurance, marine insurance, land and air transportation insurance, liability insurance, and other non-life insurance.

In 1960 the Securities and Exchange Commission was founded in Taiwan, based on American and Japanese models. In 1961, the Taiwan Stock Exchange (TSE) was established and began operating in 1967, and the Securities and Exchange Law was passed in 1968.

The first securities traded in Taiwan were issued by the Taiwanese government in 1949, and were called "Patriot bonds." Trading in stocks began on an informal basis in 1953 when the government launched its "Land to the Tillers" program. The objective of the program was for government to buy land from large landowners and distribute it equitably among farmers with no land of their own. Rather than money, landlords were issued government shares in previously nationalized enterprises. Since the landowners were not interested in holding these stocks, an informal market developed to trade these shares.


Poverty in Taiwan has almost been eradicated, with less than 1 percent of the population (129,968 people or 56,720 households) considered as poor or belonging to the low-income bracket. This means that more than 99 percent of the population enjoys the benefits of Taiwan's economic prosperity and greatly improved quality of life.

Families are classified as belonging to the low-income bracket if their average monthly income does not reach the estimated monthly minimum set by each city or province. To meet the family's basic needs (food, shelter, clothing, and education) in Taipei City, one would need to earn at least US$337 monthly. This amount changes depending on the city's standard of living; for example, one would only need to earn US$171 monthly to live in Kinmen County.

In 1999, the government spent US$5.08 billion on social welfare programs, and offers many kinds of assistance to individuals and families from low-income groups. In addition to cash, job-placement assistance is provided to the wage earners in families, along with educational aid for school-age children and health programs for mothers and children. There are also civic organizations, academic institutions, and private foundations that

GDP per Capita (US$)
Country 1996 1997 1998 1999 2000
Taiwan 920 14,200 16,500 16,100 17,400
United States 28,600 30,200 31,500 33,900 36,200
China 2,800 3,460 3,600 3,800 3,600
Singapore 21,200 24,600 26,300 27,800 26,500
Note: Data are estimates.
SOURCE: Handbook of the Nations, 17th,18th, 19th and 20theditions for 1996, 1997, 1998 and 1999 data; CIA World Factbook 2001 [Online] for 2000 data.

coordinate with government agencies in assisting displaced or disadvantaged citizens.

Aside from low-income families, the government gives support to people, such as the elderly and the handicapped, who are unable to work. In July 1993, the government began providing a monthly subsidy to the low-income elderly. Citizens over the age of 65 whose average family income is less than, or equal to, 1.5 times the minimum monthly expenses are qualified to receive a monthly subsidy of US$174. Elderly people whose average family income is between 1.5 and 2.5 times the minimum expense are eligible for a monthly relief subsidy of US$87. In addition, the government pays the health insurance premium in full for low-income households and emergency aid where needed.


A well-trained labor force is the backbone of a developing economy, and Taiwan's economic growth over the past 50 years has been bolstered by a diversified and skilled workforce of about 9.7 million people. Approximately 6.6 million of these are employees, while the rest are either self-employed or have some other working status. The unemployment rate in 2000 was at a very low 3 percent.

Taiwan protects the rights of workers by law, while other important labor issues such as workers' welfare, gender equality, labor-management relations, safety and health, and appropriate quotas for foreign workers, are also clarified by legislation.

The Labor Insurance Act, which was passed into law in 1958, mandates the provision of insurance coverage to employees in the private sector , including industrial workers, journalists, fishermen, persons receiving vocational training in institutes registered with the government, union members, and those working in non-profit organizations. Teachers and employees working in government agencies who are not eligible for teachers' or civil servants' insurance are also covered under this law.

One of the most important labor laws in Taiwan is the 1984 Labor Standards Law. It supplies the basic legal definitions of worker, employer, wages, and contract, and outlines the rights and obligations of workers and employers. The law prescribes the minimum requirements for labor contracts, and makes provisions for working hours, work leave, and the employment of women and children. Furthermore, the law offers protections against unreasonable work hours and forced labor, and grants workers the right to receive compensation for occupational injuries and layoffs, as well as a retirement pension.

On the initiative of the Employment and Vocational Training Administration of the Council of Labor Affairs (EVTA), the Employment Promotion Measures law was formulated in 1985. This law aims to assist target groups such as women, people aged 45 and above, the disabled, aborigines (people from local indigenous groups), low-income households, and dispossessed workers to find decent employment. Under this program, the government assists women by promoting job equality between the sexes, providing women with vocational training, and surveying the demand for part-time and freelance opportunities to enlarge the employment market for women. The government also provides daycare centers for pre-school children, after-school classes for elementary students, and day care for the elderly to relieve the pressure on women to stay at home.

In 1991 the Labor Safety and Health Law was amended to include many new requirements for the installation of safety and health equipment in work places such as dockyards and fireworks factories. The law covers almost all major industries in the industrial, agricultural, commercial, and service sectors, and specifically prohibits women and employees under the age of 16 from working in dangerous or harmful environments.

Passed into law on 8 May 1992, the Employment Services Act is a comprehensive law that seeks to ensure equal job opportunities and access to employment services for all. Specifically, the act calls for a balance of manpower supply and demand, efficient use of human resources, and the establishment of an employment information network. Further, the act requires the central government to encourage management, labor unions, and workers to negotiate reductions in working hours, wage adjustments, and in-service training to avoid layoffs, and for government to protect workers' rights during times of economic slowdown. The Employment Services Act also regulates public and private employment service agencies.

The Labor Inspection Law replaces the old Factory Law. It empowers the Council of Labor Affairs and local governments to inspect conditions in the workplace to ensure the safety and health of workers. The scope of inspections carried out under the law covers health and safety, labor insurance, employee welfare funds, and the hiring of foreign workers. Employment at potentially dangerous sites requires approval from labor inspectors before employees can begin work on the project. Labor laws ensure the rights of workers to organize unions for the protection of their collective interests.

Under the revised Collective Agreement Law, labor unions are designated as the sole labor representative in the signing of collective agreements. Such agreements promote labor-management cooperation and cover working conditions such as wages, work hours, layoffs, pensions, compensation for occupational injuries, and the handling of labor complaints and disputes.

In Taiwan, women have been traditionally considered inferior to men and are expected to stay at home and submit to the decisions of fathers or husbands. However, new attitudes have slowly developed with the lobbying of women's groups for equal opportunities, and as Taiwan's society has become exposed to modern ideas. Over the last decade, society's expectations of women have changed as more women complete higher education, compete with men in the workplace, become financially independent, and postpone marriage to pursue a career. On average, first-time brides were 28.1 years old in 1998 compared to 25.8 in 1990. Almost half of Taiwan's women are regular wage earners and help support their families financially.

In 1998, the Ministry of Education reported that 56 percent of junior college graduates, 51 percent of university and college graduates, and 26 percent of graduate school graduates were women. This was a significantly large change from the figures of 20 years earlier, and marked the first time that female graduates outnumbered male graduates.

As in any country with a bustling economy, Taiwan cannot depend on its domestic labor force because the demand for workers exceeds available supply. In the high-tech industries, Taiwan produces 20,000 new workers annually, but 30,000 workers are needed. A sample survey of 302 Taiwan-based high-tech industries conducted by the Taipei Computer Association revealed that 80 percent of companies experience difficulty in finding suitable employees, particularly software specialists. Situations such as these call for the hiring of foreign workers to meet the labor shortage and, in August 2000, there were 316,078 foreigners working in Taiwan. Most of these workers come from Thailand, followed by the Philippines and Indonesia.

Aside from the large demand for labor, foreign workers are attracted to Taiwan by the range of job opportunities. The Taiwanese are now reluctant to take low-paying jobs or work in fields that demand heavy physical labor, and the agricultural sector is suffering shortages. An aging population and a low birth rate add to the problem. More workers are retiring than are entering the workforce, and the influx of foreigners is growing. The presence of a foreign workforce has created a degree of tension in Taiwan. Locals have expressed apprehension that their indigenous culture might be destroyed by foreign influences and, in practical terms, there is a possibility that wages will decrease because foreign workers are willing to accept less pay than the Taiwanese.

In July 2000, the unemployment rate of Taiwanese workers increased to 3.06 percent (300,000 workers) from 2.9 percent for the years 1999 and 1998. The main cause of unemployment is the layoffs in traditional manufacturing businesses, which are re-structuring or downsizing (cutting down the number of employees). The availability of sophisticated technology that can do the work of 2 or more people is one reason for downsizing, especially since the government is encouraging industries to shift from labor-intensive operations to high-tech manufacturing and services.


1206. The Island of Taiwan is declared a protectorate of the Chinese Empire.

1622. The Dutch establish a trading post and control much of the Republic of China (ROC) until 1662 when the Chinese expel them.

1887. Taiwan is granted provincial status by the Chinese mainland government.

1895-1945. Taiwan is declared a Japanese colony after the Sino-Japanese war in 1895, and remains a Japanese colony until the end of World War II in 1945.

1947. The Constitution of Taiwan is adopted.

1949. Chinese nationalist forces under Chiang Kai-Shek retreat from the Communist armies on the mainland to Taiwan and take power in Taiwan.

1949-91. Taiwan is officially in a state of war with the Peoples' Republic of China (PRC).

1951-64. The United States injects US$100 million annually into Taiwan's economy, supplying needed capital to Taiwan's industries, which grow rapidly during this period.

1953. The Taiwanese government begins a series of 4-year plans, setting goals and guidelines for economic development.

1961. The Securities and Exchange Commission (SEC) is established.

1969. For the first time, a popular national election is held and a handful of national politicians are elected with tenure for life.

1973-74. Taiwan's economic growth suffers a temporary setback due to the world oil crisis.

1975. President Chiang Kai-shek dies. For the next 3 years, the vast powers of the presidency rest in the hands of Premier Chiang Ching-kuo, chairman of the Kuomintang (KMT), the country's sole political party.

1978. Chiang Ching-kuo is elected president. The United States announces its decision to end recognition of the government of Taiwan and to transfer recognition and the United States embassy to the Peoples' Republic of China.

1983. The government opens the stock market to foreign investment.

1987. A vocal opposition, the Democratic Progressive Party (DPP), is established, thereby challenging the long-running dominance of the Kuomintang (KMT).

1988. The government lifts restrictions on the publication of new daily newspapers.

1989-93. Elections are described by foreign observers as progressively freer, leaving the KMT in power but facing a strong parliamentary opposition.

1993. The Ministry of Finance and the Central Bank of China allow the establishment of foreign exchange brokerage businesses and foreign insurance companies.

1994. The government assigns top priority to the implementation of the Twelve Major Construction Projects. A Comprehensive Physical Development Plan is initiated with a view to rationalizing land use, improving the investment climate, and upgrading the quality of life.

1994. President Lee and Premier Lien initiate the White Paper on China, which redefines Taiwan's one-China principle. The leaders of China bitterly oppose Taiwan's new one-China principle and accuse it of trying to establish an independent Taiwan.

1996. Conduct of the first presidential election results in victory for the KMT, with President Lee Teng Hui garnering 54 percent of the vote.

1996. Foreign mutual fund companies are allowed to invest in the stock market.

1997. The Plan for National Development into the Next Century is introduced. Aimed at accelerating Taiwan's transformation into a modern industrialized society, this plan is centered on the achievement of 3 goals: strengthening national competitiveness, improving the quality of life, and promoting sustainable development.

1999. President Lee provokes Beijing's fury in July when he declares that, in the future, Taiwan and China should conduct relations on a "special state-to-state basis," a move away from the official formula that they constituted one temporarily divided country.

2000. The opposition party, DPP, captures the top national positions as Chen Shui-bian and running mate Annette Lu are elected as president and vice-president respectively, breaking 55 years of uninterrupted rule by the KMT.


Despite the current instability caused by the political realignment in the new administration of President Chen Shui-bian, Taiwan's future remains optimistic. Economic forecasts made by the Taipei-based World Economics Society point to continued growth, estimating that GDP growth over the next 10 years will not fall below 5.5 percent annually. The figure approximates the fluctuations of Taiwan's GDP annual growth performance in recent years: 8.2 percent in 1989, 6.68 percent in 1997, 4.57 percent in 1998, and 5.7 percent in 1999. This means that Taiwan's economy will continue to display stability and expansion, propelled by exemplary performance in the service and manufacturing sectors. Both sectors are expected to perform even better because of technological innovations and improved productivity. Moreover, employment levels and living costs are expected to remain manageable. Taiwan is also likely to benefit from its strategic position in the information technology industry. It aims to be known as the "Silicon Island of East Asia." This goal is not far-fetched since, in 2000, Taiwan ranked third in the world in the production of computer hardware and software, next to the United States and Japan. With its aggressive implementation of its growth plans, Taiwan is likely to attract more foreign businesses to the island and thus become a major international procurement and logistics base. The International Monetary Fund has recognized Taiwan's consistent economic performance by affiliating it with the rest of the world's advanced economies.

Politically, Taiwan's relationship with mainland China is still of major concern. To protect its economic achievement, Taiwan must tread slowly and wisely in setting the direction of its relations with mainland China. It must make sure that the relationship between the 2 territories is based on mutual respect and benefit. With regard to domestic politics, the government must continue to strengthen its democratic institutions.

The government is also taking steps to check the social and environmental impact of its economic programs and policies. Environmental programs focusing on protection and conservation are being implemented across the island in line with President Chen Shui-bian's electoral promises, and research into green technologies is also promised.

Meanwhile, the newfound affluence of Taiwanese society has, inevitably, produced certain social problems that need to be nipped in the bud. The government has realized that the younger generation must be encouraged to retain the work ethic of their elders. This is crucial to the health of the country's economic future. The "nouveau riche" mentality that characterizes the poor who suddenly acquire wealth can result in people opening themselves to financial profligacy, profiteering, corrupt practices, and other social ills that accompany irresponsible wealth. Other emerging social concerns involve the rise in crime and criminal gangs, the breakdown of the family, and the neglect of children as parents become too involved with their careers.


Taiwan has no territories or colonies.


"A Brief Introduction to the Republic of China." Republic of China on Taiwan Government Information Office. <>. Accessed October 2001.

Copper, John F. Taiwan: Nation-State or Province. London: Westview Press, 1990.

Council for Economic Planning and Development. Economic Development, Taiwan, Republic of China 2000. Taipei: Council for Economic Planning and Development, 2000.

Directorate General of Budget, Accounting and Statistics, Executive Yuan. <>. Accessed December 2000.

Economist Intelligence Unit. Country Profile: Taiwan. London: Economist Intelligence Unit, 2001.

Feldman, Harvey, and Ilpyong J. Kim, eds. Taiwan in a Time of Transition. New York: Paradigm House, 1988.

Ministry of Economic Affairs R.O.C. <>.Accessed October 2001.

"The Republic of China Yearbook 2000." Republic of China on Taiwan Government Information Office. <>. Accessed October 2001.

Taipei Economic and Cultural Office in the United States. Taiwan Online. <>. Accessed October 2001.

"Taiwan Factbook." China Economic News Service. <http://www>. Accessed December 2000.

Taiwan Headlines. <>.Accessed October 2001.

U.S. Central Intelligence Agency. World Factbook 2001. <>. Accessed September 2001.

U.S. Department of State. FY 2001 Country Commercial Guide: Taiwan. <>. Accessed October 2001.

Maria Cecilia T. Ubarra




New Taiwan dollar (NT$). One dollar equals 100 cents. There are notes of 50, 100, 500, and 1,000 dollars. There are coins of 50 cents, and 1, 5, and 10 dollars.


Machinery and electrical equipment (51 percent), metals, textiles, plastics, chemicals.


Machinery and electrical equipment (51 percent), minerals, precision equipment.


US$386 billion (purchasing power parity, 2000 est.).


Exports: US$148.38 billion (f.o.b., 2000). Imports: US$140.01 billion (c.i.f., 2000).

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Basic Data
Official Country Name: Taiwan, Province of China
Region: East & South Asia
Population: 22,191,087
Language(s): Mandarin Chinese, Taiwanese (Min), Hakka
Literacy Rate: 94%

History & Background

Taiwan, or the Republic of China (ROC), is an island nation located nearly 161 km (100 miles) off the southeast coast of mainland China. It is approximately 395 km (245 miles) long from north to south and 145 km (90 miles) across at its widest point. Since 1949, its largest city, Taipei, has been the seat of the Nationalist Chinese government, which is called the Guomindang (GMD) or Kuomintang (KMT); spellings differ because there is no direct translation from Chinese to English. In addition to controlling this main island, the Nationalist government also has jurisdiction over the 22 islands in the Taiwan group and the 64 islands to the immediate west in the Pescadores Archipelago, which is a total area of 36,179 sq km (13,969 sq miles). Taiwan is bounded by the East China Sea on the north, which separates it from the Ryukyu Islands, Okinawa, and Japan. To the east is the Pacific Ocean, and to the south, Taiwan lies the Bashi Channel, which separates it from the Philippines. Finally, on the west, the Taiwan (Formosa) Strait separates the island from mainland China.

The population in 2000 was estimated to be just over 22.3 million, of which slightly more than half was under the age of 30. During the first half of the twentieth century, the population of Taiwan tripled. However, from its peak at about mid-century, the rate of growth has steadily declined from about four percent to less than two percent per year. During this period, modern health measures decreased the death rate, while the birth rate temporarily increased due to increased rural employment opportunities and Nationalist land reform. More recently, however, in response to increasing urban opportunities, families have begun concentrating more resources on fewer children. In addition, the government has begun to actively promote family planning and birth control.

The population is divided into three main groups: Malayo-Polynesian aborigines, who are the island's original inhabitants (two percent of the population); those now called Taiwanese, who are descendants of the original immigrants from the mainland Chinese provinces of Fujian and Guangdong (83 percent of the population); and much more recent immigrant who were adherents to the former mainland Nationalist government (15 percent of the population). The aboriginal population is now organized into nine diverse ethnolinguistic groups. The largest of these groups are the Ami, Atayal, and Paiwan. Chinese immigrants largely displaced or assimilated the plains aborigines and carried on a protracted conflict with the mountain aborigines, who were subdued only by the Japanese in the early twentieth century. Nearly all of the aborigines now live in the foothills and highlands of the island. Although several aboriginal dialects and many tribal customs have been retained, the aborigines have increasingly become assimilatedlinguistically and culturallyinto modern Taiwanese society.

The Taiwanese, who comprise the majority of the population, consist of two major ethnolinguistic groups. The Hokkienor Southern Minare originally from southern Fujian and constitute the larger of these groups; their dialect of Chinese is often referred to as the Taiwanese dialect. The Hakka, originally from northern Guangdong, are also prominent, and they have their own distinct Hakka dialect. The most recent immigrants to Taiwan, who arrived from all parts of China in the late 1940s, speak mainly Mandarin. Because those recent immigrants have had a disproportionately prominent presence in the ruling Nationalist government, Mandarin has become Taiwan's principal language.

Soon after discovering Taiwan at the beginning of the seventh century C.E., the Chinese named the island Liuqiu and began settling it no later than the twelfth century. However, the first permanent settlementsactually, trading postswere established only as early as the late Ming period (1368-1644). At that time, settlers from the Fujian coastmainly Chinese and some Japanese fishermenbegan to land on and settle the western coast of Taiwan. The Portuguese arrived in 1590 and named the island Formosa (meaning "beautiful"); they also attempted to disrupt the preexisting trends in colonization. The Portuguese were displaced by the Dutch, who arrived in 1624 and established a colonial government at the southern end of the island near present-day Tainan. The Dutch had to reckon with a comparable foothold at the northern end of the island that was established by Spanish colonists, who occupied that land in the wake of the Portuguese. The Dutch succeeded in ousting the Spaniards in 1641 and conquered the entire island in 1642. However, within just two decades, the Dutch were defeated at the hands of the Chinese Ming loyalist renegade Zheng Chenggong (also called Koxinga or Coxinga), who expelled them from the island in 1661.

Zheng Chenggong's victory over and expulsion of the Dutch coincided with the consolidation of the newly established Qing dynasty (1644-1911) on the Chinese mainland, and those factors led to an acceleration in Chinese immigration to Taiwan. That surge in immigration continued even after Manchu forces arrived in 1683 to incorporate the island into the Chinese empire as part of the Fujian province. Chinese settlers soon appropriated Taiwan's fertile western plains and drove the aborigines who lived there into the mountains. Taiwan was made an independent province in 1886 and progressed rapidly toward modernization. However, in 1895, China abruptly ceded Taiwan to Japan as part of the treaty terms that concluded the humiliating Sino-Japanese War of 1894-1895.

During its five-month campaign to occupy Taiwan during that war, Japanese troops encountered staunch resistance from elements of the native populationboth aborigines and Chinesewho opposed the takeover out of fear and resentment. Japanese soldiers indiscriminately victimized and terrorized the general population because of their inability to distinguish members of the resistance from neutral citizens. Killing, burning, and looting was widespread, and, by antagonizing the population, the Japanese greatly incited the opposition tha was already aligned against them. For a span of three years that concluded in 1898), rebellious bands of Chinese residents defied the Japanese forces, and a defiant public refused all contact with the invaders.

Despite this troubled and turbulent beginning, during its half-century as a Japanese possession (1895 to 1945), Taiwan made its most important formative strides in the area of education. In fact, education was just as integral to the Japanese colonial enterprise as was military conquest, for it was viewed as an indispensable tool in pacifying any newly acquired foreign territory. At the time of the Japanese takeover, the first pieces of the traditional Chinese education system were already well-established in Taiwan. Since the mid-1600s, Confucian schools had been established and civil service examinations held at regular intervals. However, even after two centuries of existence, these institutions serviced only the tiny sprinkling of literati and affluent merchants who were among the droves of immigrants that had moved to the island; most colonists remained poor, illiterate, and unable to participate in the transplanted education system.

The Japanese primarily sought to impose the recently developed educational paradigm and principles of the Meiji Restoration era (1868-1912) upon Taiwan. This paradigm consisted of two main components. The first was a small number of secondary institutions and an even smaller number of postsecondary facilities. The second was a much larger and more widely dispersed number of elementary education institutions. It was the latter of these two componentsthe elementary institutionsthat served as the education model that the Japanese imposed on Taiwan beginning in 1895.

Thus, the initial Japanese contribution to education in Taiwan was taking the education system that had earlier been transferred from mainland Chinaone that the Japanese themselves regarded as "backward"and supplanting it with one that was more progressive and less elitist. This task was accomplished in many ways. During the first half of the twentieth century, the Japanese installed a democratized education system that extended primary education to ordinary Taiwanese in an effort to cultivate a loyal citizenry and produce literate workers for their colonial empire. The motivation behind this effort was of course highly imperialist, but the result was that individuals who would formerly have had no access to a primary education now received one. Nevertheless, throughout this period, the old, Chinese system continued to exist residually, and the Japanese continued to regard Chinese classical studies with suspicion because of their close association with Taiwan's past under Chinese rule. Confucian morality was meticulously divorced from its historical context: when classical tradition nurtured loyalty and deference to one's superiors, it was encouraged, but when it nurtured cultural identification with China, it was forbidden. The end result was that, under Japanese patronage and direction and by the standards of the time, Taiwan was on its way to becoming one of the best-educated populations in Asia, second only to Japan itself.

In 1945, with Japan's defeat in World War II, Taiwan was returned to China as an independent province under the conditions of the former 1886 arrangement. However, years of acculturation to Japanese rule made the population considerably resistant to the Chinese Nationalist government, or Guomindang. Beginning on February 28, 1947, the Nationalists brutally and harshly suppressed a series of uprisings by Taiwanese residents. Only in 1949 did the island come firmly under Nationalist control, and this only after the Chinese Communists drove the Nationalist governmentalong with nearly two million peopleoff the mainland, forcing it to relocate to Taipei, Taiwan.

Sustained in its early years by generous aid from the United States and defended by U.S. military power, the Nationalist regime oversaw noteworthy advances in Taiwan's economy. Those advances directly influenced the substance and direction of Taiwanese education. The most fundamental trend upon Taiwan's return to Chinese control was the adoption of a conciliatory stance toward the values and heritage associated with Confucian classical education. The general view that evolved was that the content of classical education could complement and coexist with the modern aspects of the Japanese education infrastructure and curriculum.

The Guomindang (GMD), beginning with president Chiang Kai-shek in the 1950s, has historically taken consistent steps to facilitate this hybrid form of education, a trend that continues to the present day. Moreover, even the opposition Democratic Progressive Party(DPP), which was founded in 1986 and was first successful in the elections of 1989, shares a perspective similar to that of the GMD concerning education. Consequently, the efforts to consistently adhere to the established education path have become concerted. The two most recent presidents of TaiwanLee Teng-hui and Chen Shuibianhave both promoted education and are highly successful examples of the benefits of the democratic trend in education that began under Japanese domination. Lee, who is a Hakka and was the first native-born president of Taiwan and the first winner of a direct popular election in 1996, attended both Kyoto University (in Japan) and National Taiwan University as an undergraduate; he completed his graduate studies in the United States. Chen, who is also native-born to a poor farming family, was the first member of the opposition party to win the presidency when he claimed 39.3 percent of the vote in 2000. He is a National Taiwan University law school graduate who served as the lead defense attorney for the accused democratic activists involved in the Kaohsiung Incident of 1979.

Constitutional & Legal Foundations

The Nationalist government's claim to rule Taiwan, which it considered a province, was originally predicated on its claim to rule all of China. However, the political reality is that the People's Republic of China (PRC) so strongly opposes Taiwan's independence that the 1947 Nationalist constitution has become more and more exclusively applied only to the island of Taiwan. Nevertheless, Chapter 10 of the constitution exhibits a federated flavor that extends autonomy in education administration from the national level down to the provincial, county, and municipal levels, and it seems that that autonomy is genuine. Chapter 13, Section 5 of the constitution affirms the right of every child to receive nine years of compulsory education, through the age of 15 (Articles 159 and 160); and it also mandates that the various levels of government administration reserve a prescribed percentage of their budget for educational, scientific, and cultural pursuits. These percentages are as follows: central government, 15 percent; provincial government, 25 percent; and county and municipal governments, 35 percent. In summary, the ROC constitution clearly stipulates that priority be given to funding education.

Educational SystemOverview

Compulsory Education: As mandated by the Compulsory Education Law of 1982 and its implementation guidelines of 1984, the basic structure of the educational system in Taiwan is based on a nine-year compulsory education program originally formulated in 1968 that is now referred to as the "Nine-year National Education Program." In order to emphasize its comprehensive scope, the former elementary and junior high school programs (called 6-3, which meant six years of primary school and three years of middle school) have become relegated to "stage" status in the national programstages one and two, to be precise. The consequence of this change has been that many customary terms related to this all-important compulsory education period are now used interchangeably or, as is the case with terms like elementary and primary education, have fallen into obsolescence. The term basic education has come into usage, with restricted reference only to the kindergarten and elementary portions of Taiwan's educational program. This overlap of terminology is further complicated by fundamental cultural differences in conceptualization: Americans, for example, distinguish between preschools (day-care centers) and kindergartens; in Taiwan, the distinction between the two is not nearly so firm, if it exists at all.

Preprimary or kindergarten education in Taiwan, which serves children the age of 4 to 6, is not compulsory, but its systematic development has been greatly aided by the passage of the 1981 Early Childhood Education Law. Also optional is education at the three-year senior secondary level, for which one must pass an entrance examination before entering either an academic or vocational track. University attendance requires both senior high graduation and the successful completion of an entrance examination. While the typical undergraduate study program lasts the standard four years, students may be required to commit to five to seven years of study before obtaining degrees from the departments of law, medicine, and dentistry. Thus, it is not uncommon for students in Taiwan to have already completed as much as 21 years of schooling before commencing graduate study. Supplementary schools for nontraditional students and special schools for the disabled complete the educational system as it currently exists in Taiwan.

The successful codification of Taiwan's compulsory education initiatives is supported by noteworthy statistical results. Figures on educational attainment for 1995 indicate that only 9.1 percent of the age 25 and over population has no formal schooling. Additionally, 6.9 percent have a less-than-complete primary education, and 23.9 percent received only a primary education. Statistics at the secondary level (for which the senior portion is not compulsory) are less impressive, as 26 percent of the population has an incomplete secondary education, while 20.5 percent have a complete secondary education. As for optional education levels, 8.2 percent have completed some college and 5.4 percent have completed an undergraduate education or higher. Moreover, literacy figures are just as impressive as the 1995 statistics regarding compulsory education. In 1995, those in the population age 15 and over deemed to be literate stood at 15,006,668 (93.7 percent), including 8,156,195 males (97.6 percent) and 7,149,455females (90.2 percent).

In 1999, it was found that 92 percent of those who completed the standard nine-year compulsory education chose to pursue higher studies. Also in 1999, the exceedingly powerful Ministry of Education (MOE) announced that the illiteracy rate was a mere 5.09 percent. Nonetheless, the MOE allocated the equivalent of US$9.18 million to a program aimed at reducing the illiteracy rate to less than two percent within the next five years. Finally, no statistics better indicate the effectiveness of the Taiwanese compulsory model of education than the percentages of enrolled students in the targeted age groups. The percentage of the population age 6 to 14 that was enrolled in school in 1997 was 79.26 percent; that same year, the figure for students age 6 to 14 was 98.38 percent.

In 1998, the total number of registered schools at all different levels in Taiwan was 7,657. The student-teacher ratio was 19.83:1 and the average number of students per class was 36.44. Finally, the compulsory nature of the initial stage of formal education in Taiwan has no doubt had some effect on enhancing the civic appreciation for education as a lifelong enterprise and thus fostered its voluntary pursuit. During the 1997-1998 academic year, 23.79 percent of the citizenry of Taiwan (or about 5.2 million people) attended an educational institution of some type; this contrasts with only 13.9 percent (or perhaps 1.2 million) in the early 1950s.

Academic Year: Although it is punctuated with important holidays, the academic year for all students is essentially the same as the calendar year. Classes begin on August 1 and end on July 31 of the following year. The academic year consists of two semestersthe first, from August 1 to January 31, and the second, from February 1 to July 31.

Language of Instruction: Mandarin Chinese remains the principal language of instruction in Taiwan's schools. Instruction in Mandarin remains an educational policy norm. However, recent national conversations concerning indigenous populations, multilingualism, and multiculturalism indicate that an increasing percentage of the population (about 45 percent, according to a 1998 ROC Mainland Affairs Council poll) embraces dual Chinese-Taiwanese identity. Shifts such as this have undermined the former Mandarin-only policy as exclusionary. Today, Taiwanese (as well as Hakka and certain aboriginal languages) is beginning to be taught at the elementary school level. However, for the present, the tacit instructional norm at the elementary level and certainly beyond it remains Mandarin.

Instructional Technology: With respect to technology, Taiwan's entire educational system has directly benefited from the nation's hugely successful economy, which specialiizes in information technolog manufacturing. In fact, Taiwan has emerged as a world leader in the manufacturing of high-technology products. In 2000, sales of personal computers and related information technology products exceeded US$2 billion, and Taiwan is already the world's largest supplier of motherboards, monitors, keyboards, scanners, mice, and power supply systems. The number of broadband Internet users in Taiwan is projected to reach 820,000 by the end of 2001, an increase of 228 percent from the previous year. Therefore, it is not surprising that Taiwan's educational system is also one of the world's most advanced in terms of information technology infrastructure and computer literacy.

CurriculumDevelopment: The MOE is empowered to set curriculum standards at all educational levels. First, the MOE commissions experts in a given field to act as an ad hoc advisory committee. That group examines the issues and submits its curriculum recommendations, after which any and all changes must be generated by the ministry itself. One indication of the extent to which the MOE is a direct extension of vested government interest in the educational process is the significance it places on the promotion of scientific and technical studies, often at the expense of the humanities. This emphasis on scientific, engineering, and mathematical studies clearly indicates the conviction that the interests of the nation should take precedence over the desires of individual students. But national and cultural loyalty is also an important aspect of Taiwan's educational curriculum at every level and, as a result, textbooks for moral education are also either designed or authorized by the MOE. Most textbooks and curriculum materials used throughout Taiwan are produced and distributed by the National Institute of Compilation and Translation, based on MOE guidelines.

An important staple of Taiwan's educational system is a unique type of civic and moral education. Since it was first proposed by the late president Chiang Kai-shek in 1953, civic and moral education has become the fixture of the educational system that has undergone the least change. Although many of its attendant activities are non-formal, civic and moral education is taught by accredited teachers through an established battery of formal courses. "Life and Ethics" is the first course in the compulsory curriculum, "Civics and Morality" is the second stage; and a class simply called "Civics" is offered at the senior secondary level. The goal of civic and moral education is to develop a citizenry that wholly subscribes to a set of principles for ethical living based on the teachings of Confucius. These principles include respect for parents, loyalty to the family and the state, and deference to authority. A concomitant goal of civic and moral education is to develop a patriotic citizenry that is vigilant in maintaining Taiwan's national defense.

Foreign Influences on Educational System: From its inception as a modern entity under the stewardship of Japan, Taiwan's educational system has conducted extensive academic exchanges with foreign institutions. Since 1945, the United States has overwhelmingly been the favorite destination of Taiwanese exchange students. In the 1998-1999 academic year, 31,043 Taiwan nationals were studying in the United States, which accounted for just over half of the total of 61,257 overseas students. However, during the 1999-2000 academic year, the number of Taiwanese students studying in the United States fell to 29,234, a drop of six percent. Moreover, this figure represents a drop of 22.2 percent from the peak year of 1993-1994, when 37,581 Taiwan students enrolled at 921 accredited colleges and universities across the United States. The MOE's Bureau of International Cultural and Education Relations attributes this decline directly to a combination of more students opting to pursue graduate studies in Taiwan and the growing popularity of studying in nations other than the United States. The leaders among this competition for Taiwanese students are Great Britain, Australia, Germany, and France, and this emerging trend of study abroad in countries other than the United States is expected to continue.

Preprimary & Primary Education

Preprimary Education: The government of Taiwan has vaguely recognized the desire for early childhood education since 1902, but it was not until 1981 that an Early Childhood Education Law was finally enacted to develop kindergarten programs. Until quite recently, preprimary or kindergarten education in Taiwan was predominantly part of the private school system. As recently as 1968, private kindergartens outnumbered public ones by a 3 to 1 ratio. But today there is near-parity between the number of private and public kindergarten facilities. In 1998, there were 2,849 registered preschools (or kindergartens), compared to only 28 in the early 1950s.

Primary Education: Primary, or elementary, education consists most specifically of the six-year course of study for students aged 6 to 12. However the new "stage one/stage two" model also includes the three-year course of study for students aged 12 to 15, which is provided by the government free of charge. In conformance with the Compulsory Education Law regarding access to schools, nearly all of the elementary and junior high schools in Taiwan are public schools (2,540 elementary and 719 junior highs in 1997). Also in 1997, approximately 1.9 million students attended elementary school, resulting in an average of just over 750 students per school, and nearly 1.1 million students attended junior high school, resulting in an average of nearly 1,495 students per school.

One of the government's major concerns regarding primary education has been the goal of upgrading the qualifications of elementary school teachers. Until 1960, most teachers in primary education were products of three-year normal school programs. In that year, the three-year programs were expanded to five-year programs, with the institutions becoming designated as junior teachers' colleges. Then, in 1987, all nine of Taiwan's junior teachers' colleges were elevated to the status of four-year teachers' colleges. As such, they became accountable for developing strategies for upgrading the qualifications of currently working teachers who were trained in the past. These newly designated colleges generally contain a core of at least four departments: elementary education; language and literature education; science and mathematics education; and social science education. Among the additional special departments that can be represented are music, arts and crafts, physical education, and special education.

Recent reforms at the elementary school level have led to the introduction of new teaching methods, curricula, and textbooks, as well as to more liberal standards. For example, since 1996, the MOE has permitted elementary school administrators to select their own textbooks. Also, general Chinese history has been de-emphasized in favor of Taiwanese history and culture, as well as world history topics.

Secondary Education

Although experimental programs such as "comprehensive" junior-senior high schools and "bilateral" high schools are becoming more commonplace, secondary education in Taiwan has customarily consisted of three main types: a senior academic high school, a senior vocational high school, and a five-year junior college. The normal ages for attending the first two are 15 to 18; for the junior college, 15 to 21. Although there are fewer vocational high schools than there are academic ones (204 as opposed to 228), 509,064 students attended vocational high school in 1997, as opposed to the 291,095 that attended academic high school during that year. Both academic and vocational high schools tend to be public schools. The five-year junior college program articulates with the junior high school in that it provides three years of secondary studies plus two years of college work. The last two years of this option closely approximate the structure of junior college programs found in the United States, and while it can lead to college, the five-year junior college is less effective than the academic high school in preparing students for the prerequisite college entrance examinations. Junior high school students must take an entrance examination to qualify to enter junior college; most of Taiwan's junior colleges are private.

The attendance of a senior vocational high school is not a presumed avenue to college entrance, and it is likely to be a student's final educational experience. On the other hand, the predominant preoccupation of students in senior academic high schools in Taiwan is preparing for the college entrance examinations. In July 2000, approximately 131,000 graduating high school students took the Joint University Entrance Examination (JUEE), which is also sometimes called the Joint College Entrance Examination (JCEE). The test is Taiwan's uniform national test for college admission. Initiated in 1954, the examination still looms as an unavoidable hurdle to be surmounted by all Taiwanese youth who aspire to a college education. However, in recent years, the JUEE has come under increasing criticism because of its emphasis on the rote memorization of texts, which is now seen as a major impediment to creative and independent thinking. As a result of this criticism and the broader call for educational reform, authorities have implemented a plan to replace the JUEE, which will be administered for the last time in July of 2002. The new test will be part of a more pluralistic system.

Under this new system, which is designed to reduce the importance of taking exams in the admissions process, graduating high school students in Taiwan will have at least three avenues to college entrance that can be deployed either separately or in combination. First, students will be able to secure college by qualifying for school recommendations on the basis of their performance. Second, they will be able to earn admission on the basis of results from the Scholastic Attainment Test of College-Bound Seniors (SAT), which a record 132,168 graduating high school students in Taiwan took in February 2001 (thus surpassing the number that took the JUEE in 2000). Finally, the old JUEE is to be replaced in 2003 by a new test called the Designated Subject Test (DST). All testing will be conducted by the College Entrance Examination Center (CEEC), a government foundation established especially for the purpose of better facilitating the admissions process by improving examination quality. The new system for university admission will require that almost all students take the Taiwanese version of the SAT, which is comprised of five subjects: Chinese, English, mathematics, natural science, and social science. However, although they may refer to test results as criteria for admittance, admissions officials will no longer be permitted to use such results to dictate a student's collegiate future, as was the case with the JUEE.

Higher Education

Institutions of higher education in Taiwan are conventionally classified by both type and the level of overseeing authority. In descending order of rank, there are four basic classifications: universities, including research institutes or graduate-level programs; colleges, which at the undergraduate level represent the major subdivisions in universities; junior colleges, including both two- and three-year schools, in addition to the five-year institutions already described; and schools. In descending order of prestige, there are four basic classifications of overseeing authority: national, provincial, private, and military and police. As in most other aspects of education in Taiwan, even the categorizing nomenclature that may be assigned to each type of institution is quite strictly regulated. For example, by law, an institution may be called a university only if it is multifaculty and contains at least three undergraduate colleges. During the 1996-1997 academic year, there were 78 colleges and universities in Taiwan, attended by 373,702 students. By far, the most prestigious of Taiwan's universities is Taipei's public National Taiwan University, founded in 1928 as Taihoku Imperial University when the island was under Japanese control.

Since 1945and especially for the past four decadesthe overwhelming favorite subjects in higher education in Taiwan have been engineering and business. For example, figures from the 1983-1984 academic year indicate that, whereas 17 percent of Japanese students and 26 percent of Korean students pursued engineering studies, nearly one-third of all students in Taiwan who were enrolled at the higher education level chose engineering. Moreover, during the same period, a significantly higher percentage of university students studied mathematics and computer science in Taiwan than was the case in either Japan or the Republic of Korea. These and other trends continue as Taiwan continues to invest more heavily in educational areas that emphasize modern technology than even its most technologically advanced neighbors.

There are also, however, many areas in which higher education in Taiwan has already changed rather strikingly, as well as areas of greatly anticipated change. One such change that has already occurred is in the level of women's participation in higher education. In the transitional years, 1964, 1973, and 1985, the proportion of women enrolled as students in higher education increased from 29, to 37, to 43 percent, respectively. That number is continuing to increase each year, and the average educational level of women in Taiwan much surpasses that of women in other rapidly developing Asian nations.

With regard to anticipated change, imminent reforms in university admissions procedures will greatly affect class composition and the interests of students enrolled in higher education in Taiwan in the future. Those reforms are likely to have an even further democratizing and diversifying effect than has occurred to date. Several higher education institutions have already begun, on a trial basis, to admit students who have not taken the JUEE, accepting them instead on the basis of their applications, recommendations, and SAT scores only. In the fall of 2001, a total of 756 departments at 57 universities enrolled 9,864 students via the two methods. Yet another forthcoming change is largely political in nature and is intended as an insurance against any potential onset of the "brain drain" phenomenon, which occurs when greater numbers of Taiwanese students pursue educational opportunities abroad and do not return to their homeland. Beginning in 1997 and culminating in 2000, the MOE has proposed the recognition of academic degrees from accredited colleges and universities on mainland China. This gestureshould it receive legislative supportis doubtless extended as a possible enticement to graduates of mainland institutions. In addition, there is a related proposal pending that will authorize private educators in Taiwan to establish branch schools on the mainland. Both proposals, should they become law, will be implemented gradually, with a mind toward preserving Taiwan's national security.

Administration, Finance, & Educational Research

Despite the victory by the DPP opposition party in the 2000 election, the GMD continued to hold a slender majority (52.2 percent) of seats in the legislative Yuan (the main parliamentary body of the government), which allowed it to assert its education agenda. During the 40-year period in which the GMD has been in power, that agenda has had the same primary goalsto produce a loyal and educated workforce. However, the number of reforms that were proposed at the start of the twenty-first century make it clear that those fairly narrow objectives are beginning to expand. The MOE is the division of the executive Yuan that is officially charged with oversight of all of Taiwan's educational programs. Among its departments are higher education, technological and vocational education, secondary education, elementary education, social education, physical education, general affairs, and international, cultural, and educational affairs. In 1994, the Yuan set up a Commission on Educational Reform that is reputedly independent of the MOE and is charged with deliberating on issues in the educational system and recommending reforms. In the fiscal year 1998, government spending on education, science, and culture exceeded US$13.24 billion, or about 4.8 percent of the gross national product.

Nonformal Education

Nonformal education in Taiwan has historically consisted of forms of social education that are designed to augment the levels of cultural education (for example, in fine arts, music, and dance) and vocational training (for example, cooking and traditional crafts). However, since the enactment of the remarkably inclusive Compulsory Education Law in 1982, almost all aspects of education in Taiwan have become highly formalized, so much so that nonformal educational options have been largely eclipsed. Within the formal system, the demand that parents present children for an education is absolute, with penalties (usually fines) administered for dropping out, chronic truancy, and disobedience. As might be expected, the comprehensive nature of such a system has necessarily obliged the government to be increasingly responsive to accommodating the needs of the disabled. Although the first Special Education Law was enacted only as recently as 1982, the incorporation of students who formerly had only nonformal options into the formal system is the area in which the educational system of Taiwan has made its greatest strides. Thanks to that law, the dispersal of appropriate services to the disabled has become both a reality and a matter of public record. Moreover, as Article 160 of the ROC constitution stipulates, anyone who can substantiate a failure to benefit from the system (for example, an older individual whose compulsory education was neglected or interrupted) must be legally redressed and compensated by having educational access and supplementary instruction made available free of charge.

Teaching Profession

As was the case in traditional China, teachers in modern Taiwan enjoy (even if only residually) a favored position as an elite class. In Taiwan, the term laoshi, (teacher) denotes a scholar who is entrusted with and responsible for the moral and instructional training of young people. One important symbolic indication of the respect that teachers continue to command in Taiwanese society is the fact that Teachers' Day (an official holiday every September 28) also commemorates the birthday of Confucius. Particularly during the last half-century, educators and theorists in Taiwan have wrestled with the conflicting desires of wanting to help usher in modernized techniques in pedagogy while simultaneously seeking to find ways of connecting new generations of students with the Confucian ethical past.

Since the installation of the nine-year compulsory program (with its free three years at the junior high or middle school level), Taiwan has experienced a critical shortage of teachers. Conventionally, teachers for the compulsory section of the educational programs were recruited through the junior college, normal college, and university systems, which meant the new teachers had to be certified. However, the shortages have at times been so extreme that college and university graduates have been solicited, with the result that certification has become less consistent. Ironically, the recent success of Taiwan's economy and an average unemployment rate of less than three percent per year for the last decade have also exacerbated the teacher shortage in Taiwan. Both may well be decisive factors in dissuading graduates from pursuing careers in education in favor of more lucrative finance, business, and industry careers. Guaranteed government retirement plans and insurance benefits have helped only marginally in recruiting teachers to help overcome this shortage. In short, as is the case in the industrialized West, the teaching profession in Taiwan has become increasingly regarded as a "thankless" one to be pursued as a last resort, especially because, in light of their educational attainment, teachers are not well paid.


Despite the many changes that either have occurred or are likely to occur, if there is a single overarching theme that can be said to characterize education in Taiwan, then it is probably centralization. Particularly in the last two decades, education has advanced at a pace on a par with Taiwan's burgeoning economy. But it has always done so in a manner that is prescriptive and congruent with precedents established in the middle of the previous century.

Educators in Taiwan today confront difficulties that are consistent with those confronting most of their rapidly developing Asian neighbors, and those difficulties seem to center on how to reduce the overall sense of disjunction between the present and the past. To their credit, those authorities have already moved to eradicate many of the most pressing difficulties. In Taiwan, where the pressures for academic success have been enormous and wholly dependent upon the single avenue of a university entrance examination, the move to diversify the criteria for admittance is a welcome one. This important reform will likely have some corrective effect on the persistent "brain drain" phenomenon, if only because it will encourage the admission of students into a system who feel that system is inherently more fair. The whole question of how Taiwan will continue to replenish its pool of qualified teachers in the future remains a problem of the first order. However, judging from the inherited ingenuity and increasing adaptability that has already been demonstrated, Taiwan's success in surmounting this educational hurdle is undoubtedly close at hand.


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Smith, Douglas C., ed. The Confucian Continuum: Educational Modernization in Taiwan. New York: Praeger, 1991.

Stevenson, Harold W., and James W. Stigler. The Learning Gap: Why Our Schools Are Failing and What We Can Learn from Japanese and Chinese Education. New York: Summit, 1992.

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Don J. Wyatt

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B asic D ata
Official Country Name: Taiwan, Province of China
Region (Map name): East & South Asia
Population: 22,370,461
Language(s): Mandarian Chinese,Taiwanese, Hakka
Literacy rate: 94.0%
Area: 35,980 sq km
Number of Daily Newspapers: 170
Total Newspaper Ad Receipts: 19,936 (New Taiwan $ millions)
As % of All Ad Expenditures: 32.00
Number of Television Stations: 29
Number of Television Sets: 8,800,000
Television Sets per 1,000: 393.4
Number of Satellite Subscribers: 30,000
Satellite Subscribers per 1,000: 1.3
Number of Radio Stations: 601
Number of Radio Receivers: 16,000,000
Radio Receivers per 1,000: 715.2
Number of Individuals with Computers: 4,964,000
Computers per 1,000: 221.9
Number of Individuals with Internet Access: 6,260,000
Internet Access per 1,000: 279.8

Background & General Characteristics

Few were aware of Taiwan until 1949, when the victorious Communists on mainland China pushed the Nationalist Government of China across the Strait to Taiwan. Chiang Kai-shek, the well-known Kuomintang (KMT) leader, led nearly two million civilians and military personnel there. For nearly four decades until the liberalization beginning 1987, the government of Taiwan remained a semidictatorship, governing the people under a martial law and the Emergency Decree. It denied them most freedoms including the freedom of expression, to write and read what they liked. Beginning in 1949, the Taiwaneseor The Republic of China (ROC), as it calls itselfhelped bring about economic prosperity and greatly improved the education system, but in an environment that often suppresses individual freedoms. However, between 1987 and 1992, restrictions were gradually lifted, and in 1996 and 2000, free and direct elections were held at all levels, including president. The new-found freedom also manifested itself in the nation's press, its media, and in the widespread use of the Internet.

Historical Traditions

Taiwan was settled by Malayo-Polynesians before Chinese settlers from the mainland began arriving there in the twelfth century A.D. Classified as Aborigines, the descendants of the Malayo-Polynesians numbered about 414,000 in June 2000. More than 70 percent of them are Christian, while the Chinese are predominantly Buddhist or Taoist. The Constitution of Taiwan was amended in 1991 and 1997 to upgrade the status of the Aborigines and protect their civil and political rights. The ROC allocates funds and operates a host of social welfare programs to facilitate the assimilation of the Aborigines into the dominant community. At the same time, to preserve their ethnic identity, the Ministry of Education has introduced some Aborigine-language classes in primary schools and funded special programs at the university level to preserve their culture, history, and language. In order to promote their economic development, the state subsidizes Aborigines' university education and requires that government contracts involving at least 100 employees must include at least 2 percent Aborigines or persons with disabilities.

The Chinese came to the island in large numbers in the seventeenth century, principally from Fujian and Guangdong. Among the Europeans, the Portuguese were the first to arrive in the sixteenth century. They named the island Ilha Formosa (beautiful island), which is how it was known in the West until well into the twentieth century. In 1622, the Dutch East Indies Company established a military base on the Pescadores Islands. In the following year, when pressured by the Chinese, the Dutch moved to the main island of Formosa and ruled it for the next 38 years. During that period, Taiwan became a transshipment center for goods from Japan, China, Java, and the Netherlands. Most of this sector's trade was very profitable to the Dutch Company, accounting for 26 percent of the Company's worldwide profits in 1649.

It was during the Dutch rule that a large-scale immigration of Chinese from the mainland took place because of the Manchu invasion of China and the subsequent disruptions, particularly in the coastal and southern regions. An estimated 100,000 people from Fujian and Guangdong migrated across the Taiwan Strait between 1624 and 1644, by which time the Ch'ing (Manchu) dynasty had replaced the Ming dynasty on the mainland. Among those Ming loyalists who fled southwardwhere they opposed the Manchu's for 20 yearswas Cheng Ch'engkung, who was known as Koxinga. Using Taiwan as his base, Koxinga attempted to restore the Ming dynasty; he expelled the Dutch in 1662 and established his own capital at Anping (the present-day Tainan). Koxinga's son and grandson ruled Taiwan for 20 years until, in 1683, the Ch'ing rulers of mainland China took over.

In 1858, following the Treaty of Tianjan, four Taiwanese ports were forcibly opened for Western trade. A quarter century later in 1895, a militarily strong Japan invaded and annexed Taiwan. During their 50-year rule, the Japanese developed the island, first for agricultural products, then as a market for Japanese manufacturers. After World War I, Japan attempted to transform Taiwan into a stepping stone to launch its southward aggression. It also forced Japanese education and cultural assimilation on the local population. This included adopting Japanese names and a Japanese style of dress, eating Japanese cuisine, and observing Japanese religious rites. During the period, Japan built some 2,500 miles of highway, 2,857 miles of railroad, and modernized the ports.

Following World War II, the Japanese were forced to return the island to China in 1945. The Taiwanese Chinese, acculturated under the Japanese rule, did not like their new Chinese leaders, who worked for China's Nationalist government. Uprisings against Nationalist rule brought a swift and brutal reaction. In 1949, after the Chinese Communists forced nearly two million followers of Chaing Kai-shek to to flee the mainland to Taiwan, the Taiwanese Chinese surrendered. With the outbreak of the Korean War, the United States ordered its Seventh Fleet to protect the ROC against possible attacks by the mainland People's Republic of China (PRC). The United States also provided the ROC with considerable economic and military assistance. The close relationship between the United States and the Republic of China suffered the first in a series of major setbacks when the ROC lost its membership in the United Nations, including the Security Council, on October 25, 1971. Then came President Nixon's visit to the PRC in February 1972, which upset ROC leaders. On January 1, 1979, the United States formally recognized the PRC and severed its ties with the ROC; the termination of the Mutual Defense Treaty between the United States and Taiwan followed at the end of the year. Despite all these events, the U.S.-ROC relationship has remained close, thanks to continued military and economic ties.

The United States established even closer ties to the PRC after the latter liberalized its economy beginning in 1979. At the same time, it occasionally warned the PRC against any military aggression toward Taiwan. Until 1987, Taiwan was ruled under martial law, proclaimed by the ruling KMT, which held a monopoly over political and military power and did not permit any other political party to function. In 1987, President Chiang Ching-kuo ended the martial law by lifting the Emergency Decree and allowed individual freedoms, including the establishment of political parties. Nongovernmental civilian contacts between Taiwan and mainland China were allowed. Economic prosperity and widespread education in Taiwan had led to an insistent demand for political liberalization. Within a decade, Taiwan boasted 84 political parties, of which three claimed to be national parties: the Democratic Progressive Party (DPP), the New Party (NP) and the KMT. Paralleling the process was the sure transition from authoritarian to a democratic rule. Gradually, the ROC reconciled to holding authority only over Taiwan and the surrounding islands, giving up its claim to the mainland. Beijing, however, continued to regard Taiwan as a renegade province, allowing, however, exchanges with it in the fields of trade, tourism and culture.


In the 1950s, in the wake of the KMT's occupation of the island, there was not much industrial growth; most of Taiwan was agricultural, and residents had very little purchasing power. The government restricted the size of newspapers to only 8 pages, ostensibly as an economic measure but in reality to restrict freedom of expression. Despite the increased industrialization of Taiwan, the newspaper industry lagged behind; by the mid-1980s, the size of newspapers was allowed to expand only up to 12 pages.

A major landmark in the history of Taiwanese newspaper publishing occurred in January 1988 when newspaper licensing and publishing were liberalized and the newspapers took advantage of the changes to expand to 32 to 40 pages. Television had been a major source of competition with the newspapers since the 1960s, but it was nothing compared to the Internet revolution in the 1990s, which has seriously affected the newspaper industry. Since the mid-1990s, many newspapers have gone online and many have merged with other industries. At the same time, the quality of newspapers and magazines has improved dramatically thanks to the increasing use of color and graphics; Taiwanese papers have even won prestigious awards from the International Society for News Design. Such award winners have included the Liberty Times,Power News and the Taipei Times. There are three important general interest morning newspapers in the Chinese language: The China Times, the United Daily News, and the Liberty Times. Two other recent entrants, The Great News and Power News, both focus on younger readers. The Great News puts out two special morning editionsone on entertainment and lifestyle, the other on sports and recreation. The Power News employs graphics and attractive layouts aimed at urban consumers of all kinds of technical and electronic goods. Four dailies dominate the evening newspaper market: The Independence Evening Post, the China Times Express,United Evening News, and Power News, which began publishing in 1999. The evening papers focus more on entertainment and the stock market. There are new specialized dailies, such as the 16-page Taipei Express, published by the Independence-Post group and distributed free at the mass rapid transit station in Taipei. Newspapers serving special needs are: Merit News, the first Buddhist newspaper, the Mandarin Daily News, and the Children's News; the latter two carry fictional stories for elementary school students along with mandarin phonetic symbols that serve as pronunciation guides for Chinese characters. The English-language newspaper market was dominated for a long time by the China Post and the China News, which changed its name to the Taiwan Times. In 1999, the Taipei Times was launched and experienced great success in a very short time. The Asian Wall Street Journal and The International Herald Tribune issue Taiwanese editions. While these are prized by the foreign population, the Taiwanese readers of the English-language papers patronize them both for the local news and for the excellent learning tools they provide for students of the English language.

Almost all the main newspapers come out of the capital city of Taipei. They have correspondents in the main towns and cities on the island, as well as in many important countries. Their news coverage is professional and in-depth, and they specialize in several different areas. Among the dailies with regional interest, those based in Kaohsiung have established an identity with people in the southern region by emphasizing the news of the region as well as local culture and cuisine, literature and history, sports, and business. Among them are the Commons Daily, the Taiwan Times and the Taiwan Shin Wen Daily News, which are also known for wider usage of expressions peculiar to the Taiwanese dialect.


There has been a phenomenal growth of nonpolitical magazines in Taiwan. On the other hand, the political magazines have suffered because of the Internet and cable television. The Global Views Monthly and the China Times Weekly have managed to hold their subscriptions at a profitable level. The weeklies and biweeklies have declined, giving way to monthlies, bimonthlies, and quarterlies. Many of the new magazines such as TVBS Weekly,Cashbox, and Tanhsing are aimed at the younger audience between the ages of 15 and 24. The Reader's Digest, which translates the original English stories into Chinese and supplements the offerings with original Chinese-language articles of general interest. The new magazines that have experienced success are in the areas of finance and management, computer science and technology, women's issues, and health. Thus, PC Home, started in February 1996, has registered a spectacular growth. Others in the field are: The Third Wave, published by the Acer Group; PC Magazine; and Amazing Computer Entertainment, which is a Chinese-language affiliate of the U.S. magazine PC Gamer that carries a free CD-ROM in every to introduce new computer games to its younger readership. Evergreen, Common Health, and Health World, all in Chinese, as well as the Chinese editions of Harper's Bazaar,Cosmopolitan, and Vogue, dominate the health and fitness magazines. An older yet still very popular magazine is the Chinese-language Commonwealth (started in 1981), which has an attractive layout and graphics, well-written financial stories, and more recently, excellent articles on macroeconomic trends and modern management concepts. It has a wide readership among Chinese communities in Southeast Asia and throughout the entire Chinese world through the Internet. Another magazine, Wealth, is regarded a "must read" both by politicians and business leaders because of its perceptive articlesdespite the fact that it looks more like a thick paperback than a magazine.

Economic Framework

During the decades following the KMT takeover of Taiwan in 1949 and more particularly after 1962, the economy witnessed an exponential growth at an annual rate averaging nearly 10 percent between 1962 and 1985. The island was transformed from a reliance on agricultural exports in the 1960s and 1970s to high technology and chemical products in the 1980s and 1990s. By 2000, technology-intensive products comprised more than 50 percent of all exports. With the lifting of the Emergency Decree in 1987 and the subsequent contacts between the people of Taiwan and mainland China, the Taiwanese business community began investing on the mainland. By 1998, such investments exceeded US$13 billion. Exports to China increased phenomenally in the 1990s, reducing Taiwan's dependence on the U.S. market but increasing concerns over its dependence on the mainland market. The Taiwanese government acknowledges that much of its economic progress is due to the rapid expansion of and improvements in education. Illiteracy on the island dropped from 34.6 percent for those six years and older in 1951, to 15.3 in 1969, to less than 6 percent in 2000, with much of that gain coming in the elderly population. The number of high school students increased from about 34,000 in the early 1950s to more than 400,000 in the 1990s. In the four decades since 1950, the number of university students increased ninety-fold. By 1997, there were 48,619 students in the nation's 766 graduate programs with 10,013 students pursuing doctoral programs. Thousands of additional graduate students were enrolled in universities in the United States, Canada, Australia, and Western Europe. The exponential increase in education had a direct effect on the number of publications on the islandnewspapers, magazines, and books all increasedand since the mid-1990s, it has also led to a large number of Internet users.

Concentration of Ownership

Many prominent Taiwanese newspapers and magazines are owned by three important chains. The China Times belongs to the same chain that publishes the Commercial Times, the China Times Express, the China Times Weekly, the Taiwan edition of the French magazine Marie Claire, and Art China. In September 1995, the China Times Web site began making news available through the Internet to Chinese readers all over the world. The United Daily News be-longs to the same chain that publishes Economic Daily News,Min Sheng Daily,United Evening News,Star, the literary monthly Unitas, and Historical Monthly. It also publishes the World Journal in New York, the Europe Journal in Paris and the Universal Daily News in Bangkok. The third major newspaper publishing house publishes The Taipei Times in English and the Liberty Times in Taiwan and a U.S. edition in Los Angeles. The adverse economic situation has affected newspapers in general and even more so those owned by the government, the armed forces, and the major political parties. Journalists and allied newspaper staff have suffered considerably, with hundreds receiving severance packages or salary cuts.

Press Laws

The constitution of the ROC, drawn up in 1947, applied to Taiwan and mainland China, as Taiwanese leaders in the past always assumed the two nations would one day become one again. In 1987, the ROC finally realized that a reconciliation was unlikely and resigned itself to being the government of just Taiwan and the neighboring islands of Matsu, Quemoy, and Pescadores. The constitution provides for five yuans, or governing bodies: legislative, executive, judicial, control, and examination, with the executive being responsible to the legislature. Beginning in 1950, the people directly elected all representative bodies below the provincial level. In 1951, sixteen county and five city governments and councils were established. In 1959, the first Taiwanese provincial assembly was established, marking the participation of the people in the political process from the county to the provincial level.

Full democratization of Taiwan's politics began after Chiang Ching-kuo, the son of Chiang Kai-shek, was elected President in 1978. (Chiang Kai-shek died in 1975 and was succeeded by Yen Chia-kan for three years.) In 1986, the first major opposition party, the Democratic Progressive Party (DPP) was formally recognized. The most important measure occurred in the following year when the President announced the end of martial law and the Emergency Decree. Although Chiang Ching-kuo died in 1988, his successor, President Lee Teng-hui, continued with the reforms, allowing trade unions, legalizing strikes and demonstrations, and removing restrictions on newspapers. His government guaranteed the freedom of the press. The result was an explosion of growth of newspapers and electronic media in Taiwan on an unprecedented scale. The constitutional amendments of 1997 provide the legislative yuan with the authority to dismiss the Cabinet with a no-confidence vote. The judicial yuan was made constitutionally independent of the other branches of the political system. By and large, the government respects the independence of the judiciary. In 1991 and 1992, the first elections to the National Assembly and the legislative yuan were held. A constitutional amendment in 1992 transformed the control yuan into a semijudicial body. On March 23, 1996, the first direct election of the president or head of state was held. Four years later, on March 18, 2000, the second direct presidential election took place, bringing the DPP to power with Chen Shuibian as president. The multiparty elections held at various levels promoted discussion and often boisterous debates, with the press and the media promoting them and in the process registering the largest number of readers and viewers.


There is no official censorship in Taiwan. After the martial law and the Emergency Decree were ended in 1987, the free atmosphere needed for the healthy functioning of the press and the media returned. Multiple political parties were allowed, yet the KMT party remained dominant at the national level until 2000, when the opposition Democratic Progressive Party replaced it.

The DPP took measures to safeguard the constitutionally sanctioned civil rights of Taiwan's citizens. A major setback to such a movement came immediately after Chen's inauguration on May 20, 2000, with the shocking news that a military court had sentenced Major Liu Chih-chung to nine years in prison for allegedly leaking military secrets to the press. The news rocked Taiwan, and the case attained tremendous sensitivity because the secrets involved Taiwan's security in relation to mainland China, which has for the last half a century regarded Taiwan as a "renegade province" and desired its integration. In fact, Liu's disclosure that three warships from mainland China had entered the Taiwan Strait was more an embarrassment to the defense establishment than an actual security threat to the country. The sentence was condemned by several legislators, prompting the newly elected President Chen to appeal to a gathering of journalists to exercise a balance between the needs of reporting and remaining "alert to disasters, risks and Beijing's hostility." In November 2000, almost six months after the DPP attained power, a new policy was instituted allowing mainland journalists to be based on the island. The first two correspondents arrived on February 8, 2002. The bonhomie between the mainland press and Taiwan did not last long; reticence set in soon with Taipei's allegations that the official mainland news agency, Xinhua, had published "incorrect reports" about Taiwanese politics. Beijing, in turn, complained that its journalists were allowed only month-long visits and that Taipei had refused to renew their permits under "false pretexts."

Under the new dispensation (as the New York-based Committee to Protect the Journalists (CPJ) highlighted in its 2001 report), Taiwan's press has remained independent and lively, providing a bedrock for Taiwan's democratic society; of course, debates over just how much freedom the press should have still continue. In January, 2001, Vice-President Annette Lu filed a lawsuit against a popular weekly news magazine, The Journalist. The latter had reported that Lu had telephoned the magazine's editor disclosing President Chen's romantic involvement with an aide. Lu denied the telephone call and demanded an apology from the editor. Instead of suing the magazine and invoking Taiwan's legal provisions for criminal penalties for libel, defamation, and insult, Lu opted to pursue the case as a civil matter.

State-Press Relations

On March 20, 2002, the public prosecutor's office of the Taiwan High Court raided the offices and printing facilities of Taiwan Next magazine on grounds that it had endangered the nation's security by leaking state secrets. The raid occurred after 20,000 issues (out of a total print run of 180,000) of the March 21 issue of the magazine had already entered the distribution chain, notably the capital's convenience stores. The weekly magazine tabloid owned by Hong Kong media tycoon Jimmy Lai was been known for its risqué coverage of scandals involving celebrities and politicians. It had, in the past, attracted attacks by baseball bat-wielding thugs in August 2001.This time it had committed a double sinventuring into the forbidden territory of state security and implying political corruption.

Taiwan Next was not the only one to question corruption in the state security apparatus. Both China Times and Next magazine reported that during the KMT's Tenghui administration, the National Security Bureau (NSB) had funded espionage through two secret bank accounts worth about US$100 million that were used to pay spies in mainland China and middlemen who would help in getting various countries to maintain diplomatic relations with Taiwan. The magazine's editor, Pei Wei, defended his action on grounds that "the two secret funds have nothing to do with national secrets, so the search is a violation of press freedom." The entire operation was beyond legislative oversight. The government's reaction was twofold: to tighten the agencies against future leaks and to devise ways by which the intelligence agencies could be brought under better legislative supervision.

Human rights activists condemned the prosecutor's action, alleging a gross violation of Article 19 of the United Nations International Human Rights Declaration, which states that "every individual has the right to say what he or she wants to say, as well as to communicate with others by whatever media he or she chooses." They pointed out that while President Chen had promised to sign the Declaration, his Minister of Justice, Chen Dingnan, "totally broke that Declaration."

Broadcast Media


Broadcasting in the first decade of the KMT rule in Taiwan in the 1950s focused on family entertainment and covered mostly cultural, educational, and children's programs. The next decade witnessed the arrival of television, which revolutionized viewer demands. The 1980s saw big changes in the radio market, as many stations began targeting special audiences interested in news, light music, traffic news, the stock market and finance, or agriculture and weather. Since the 1990s, public interest has focused on radio call-in programs, where the listeners get to express their views on national and international issues, or to question government officials on diverse policies that affect the public. The regular broadcasting in Taiwan includes medium-wave AM and VHF FM stations, medium-and short-wave broadcasts to mainland China, and some specialized programming using short-wave to transmit to Chinese communities in other countries.

The national broadcasting is governed by the Central Broadcasting System Establishment Statute of January 1998, which established the present Central Broadcasting System (CBS). The predecessor of the CBS was the Broadcasting Corporation of China (BCC), founded in 1947. Historians point out that the parent of the BCC was the venerable Central Broadcasting Station, founded in Nanking in 1928. After the advent of the KMT in Taiwan, the BCC had begun transmitting as the Voice of Free China over short-wave channels. The BCC started the first FM station in Taiwan in 1968, and stereo broadcasts over AM channels in 1987. The CBS operates a variety network and a news network in Mandarin Chinese and a dialect network that transmits in seven dialects, including Southern Fujianese, Cantonese, Hakka, Mongolian, and Tibetan. The Radio Taipei International broadcasts in 11 foreign languages, and its Voice of Asia broadcasts in English, Mandarin, Thai, and Bahasa Indonesia. Being the national station, the CBS is used for publicizing the government's policies affecting business and taxation, education and culture, and domestic and foreign politics. The government-run Public Radio System (PRS) operates three networks: a national traffic network giving traffic conditions on the nation's highways and freeways, a regional traffic network, and a local traffic network comprising five FM and two AM stations; it also covers weather conditions across the island nation. The PRS also has an "evergreen network" covering health and medicine, travel and leisure, and government policies toward social services for the senior citizens, women, and children.

The Voice of Han Broadcasting Station operates six stations in Taipei and fifteen transmission sites around Taiwan. It uses its AM and FM channels in Taiwan and has regular broadcasting beamed at mainland China. The UFO Network, established in 1996, suddenly became popular with its seven FM frequencies. Two years later, its broadcasts were known overseas, notably in the United States, Australia, and New Zealand. It allocates 30 percent of its time to news, 50 percent to music, and 20 percent to variety, catering to all age groups and all professions. News98 is an FM station, the only station broadcasting news around the clock with updates every quarter of the hour. The news covers domestic and international politics; finance, medicine, and health; and literary developments. Finally, there is the International Community Radio Taipei (ICRT), which is owned by the International Community Cultural Foundation. It is the most important all-English radio station and is indispensable for the international community in Taiwan and for those who like Western music, English-language talk shows, and international news. ICRT is also available on Internet audio.

Radio broadcasting showed spectacular growth between February 1993 and October 2000 when the government released ten batches of frequencies, enabling the rise in radio broadcasting companies from 33 in 1993 to 137 in September 2000. The ninth batch of frequencies released in May 1999 included 42 frequencies for regional stations and 30 for community stations that cater to the needs of various ethnic groups in the island's different regions.


Public television has undergone a major reorganization since July 1, 1998, with the establishment of the Public Television Service (PTS) under the provisions of the Public Television law of May 1997. The PTS is an independent, nonprofit station whose aim is "to serve the interests of the public, raise the standards of Taiwan's broadcast culture, safeguard the public's freedom of expression and access to knowledge, and enhance national education and culture." Under the 1997 legislation, the PTS received a government subsidy of NT$1.2 billion (US$37.2 million), which will be reduced by 10 percent every year until it falls to half of the first year subsidy. Since its inception, the PTS has been able to raise its own funds through program sponsorship from business and industry, donations from individuals and corporations, sale of videotaped programs, and the leasing of its studios.

The PTS has established an excellent reputation for the wide range and high standards of its programs, suitable for all age groups, minorities, and those with hearing impairment. Its repertoire includes music, dance, and theatrical performances; folk dances; and traditional local operas. Besides news and commentaries on current events, it has special programs on the environment and ecology, history and culture, social and economic change, domestic politics, and foreign policy. It also shows movies and children's programs. Its programming includes "in-house productions as well as culturally diverse international programs that promote cultural exchange" and expand the horizons of the Taiwanese people.

The growth of commercial television has paralleled that of public television beginning in 1962. That same year the Taiwan Television Enterprise (TTV) was born, soon followed by China Television Company (CTV) in 1969 and Chinese Television System (CTS) in 1971. In the 1990s, television in Taiwan took giant strides with increased satellite broadcasting and digital television. The popular Formosa Television (FTV) affiliated with the Democratic Progressive Party was born in 1997 as a part of the liberalization of electronic media.

Much like in the United States, Taiwan's over-theair broadcast television industry suffered greatly at the end of the 1990s at the hands of the cable television industry, which cut into its number of viewers and advertising revenues. Until August 1993, when the Cable Television Law was passed, the illegal cable systems were taking some advertising away from broadcast television, but it would have to be regarded as totally insignificant compared to the substantial and unacceptable losses since the mid-1990s. Cable television is preferred because of the quality of reception in the hilly areas and because of the wide selection of programming.

Electronic News Media

Taiwan is also involved in the construction of its ADSL (Asymmetrical Digital Subscriber Line) network, which will increase high-speed data communications for Internet access, video conferencing, and multimedia applications. Two of Taiwan's major cable TV facilities have been using high-speed (1.5 Mbps) broadband network services in 1999 through ADSL modems. According to Chunghwa Telecom, almost all of the country's 10 million-plus local telephone subscribers were on high-speed broadbands by 2000. By that time, all of Taiwan's 3,272 elementary and junior high schools were connected to TANet (Taiwan Academic Net) by broadband network, with the schools on the main island using the high-speed ADSL system and those on off-shore islands and in mountainous areas using the fiber optic or microwave systems. This level of sophistication placed Taiwan at number three in the worldafter Sweden and Canada for its Internet penetration rate in the schools, which stood at 63 percent in 2000.

By mid-2000, Taiwan had 5.57 million active Internet users, a 16 percent increase over the figure for 1999. Its online penetration rate was 25 percent. Between December 1999 and June 2000, the number of cable and ADSL subscribers increased 200 percent and 170 percent, respectively. In January 2000, Taiwan ranked seventh in the world and second (after Japan) in Asia for the number of Internet hosts; its nearly 850,000 hosts was an increase of 25 percent over the July 1999 figure. Taiwan is a member of the Internet Corporation for Assigned Names and Numbers (ICANN), a nonprofit international organization established in November 1998 to oversee IP address allocation.


In March 2002, the Ministry of Justice published a draft legislation that sought to regulate access to government information. It prohibited the publication of information that would hinder criminal investigations or violate individual privacy, professional secrets, business operations, and business records of state-owned enterprises. The New York-based Committee to Protect Journalists (CPJ) wrote to President Chen its concern that the legislation would severely restrict freedom of the press. Chen's response alluded to his own past when he was "a prisoner of conscience" in 1984 after publishing a magazine article critical of the government. Critics of the raid accused the ruling Democratic Progressive Party (DPP) of resorting to the same tactics that Taiwan's former ruling party KMT used against its opponents, including President Chen. If Chen meant what he said in a public address of March 25, 2002, Taiwan's press should have no grounds for future complaints. In his reply to CPJ's letter, Chen discussed the dilemma he faced in protecting the nation's security while also ensuring the freedom of press:

Our resolve is unwavering as we work to disencumber our government infrastructure from the problems we have inherited from the past and to begin to fill the voids by building legal intelligence oversight mechanisms based on the principle of democracy. Such mechanisms include the legislation of our Government Classified Information Protection Act and Government Information Disclosure Act. The essence of democracy should never be quelled under the pretext of national security, nor should the flag of national security be used as a cover for undermining freedom of press. As a democratically elected president, it is my duty to listen carefully to what the media [have] to say.

Therein lies a major change in the attitude of the Taiwan government, which may hold promise of continued freedom of the press and the healthy growth of all media in that country.


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Damodar R. SarDesai

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Republic of China

Major Cities:
T'aipei, Kaohsiung, T'aichung, T'ainan

Other Cities:
Chiai, Chungli, Hsinchu, Hualien, Keelung, T'aitung


The island nation of TAIWAN is a dynamic, vibrant country. Since its creation in 1949, Taiwan has transformed itself from an underdeveloped, agricultural island to an economic power that is a leading producer of high-technology goods. Taiwan has moved from being a recipient of U.S. aid in the 1950s and early 1960s to an aid donor and major foreign investor, especially in Asia. Today, Taiwan has one of the largest capitalist economies in the world. Taiwan is the world's 13th largest trading power and its population enjoys the highest standard of living in Asia after Japan and Singapore.

Taiwan is a popular tourist destination. Visitors from all over the world come to Taiwan to experience the country's well-preserved Chinese art, culture, beautiful natural scenery, and pleasant subtropical climate.

In recent years, Taiwan has cultivated better cultural and political relations with its giant neighbor, the People's Republic of China. The Taiwanese hope to ease years of hostility between the two countries and bring economic reform and development to the Chinese mainland.



With a metropolitan population of nearly 2.9 million, T'aipei is Taiwan's capital and largest city. T'aipei is located in extreme northern Taiwan in a basin crossed by the Hsintien, Keelung, and Tamsui rivers. The city's climate is characterized by a short, mild winter and a long warm-to-hot summer. Temperatures in T'aipei reach an average high of 96°F (36°C) in July and an average low of 52°F (10°C) in February.

T'aipei was first settled in the 17th century and had developed into a prosperous trading center by the mid-19th century. A wall was erected around the city in 1882. Taiwan was occupied by the Japanese in 1895 and T'aipei was chosen as the colonial capital. The city grew rapidly in size and population. By 1932, T'aipei had over 300,000 residents. The Japanese were forced from Taiwan in 1945. Chiang Kaishek and his Nationalist Army fled to Taiwan from China in 1949 after being defeated by Mao Tse-tung's Communist forces during mainland China's civil war. T'aipei was designated as the capital of the new Republic of China.

Today, T'aipei is Taiwan's political, commercial, and cultural center. The city has also developed many thriving industries. T'aipei's industries produce a wide array of products including canned goods, handicrafts, machinery and household appliances, and electronic equipment. T'aipei is the transportation center for northern Taiwan. Excellent roads, railways, and air links connect T'aipei with other cities throughout the island. Most of Taiwan's institutions of higher learning are also located in T'aipei. These include the National Chengchi University, the National Taiwan Normal University, and the National Taiwan University.


T'aipei is a bustling city that offers wonderful recreational activities. The city has many beautiful museums and temples that are of interest to visitors. The most popular museum in T'aipei is the National Palace Museum, which houses the largest collection of priceless Chinese art treasures in the world. Paintings, calligraphy, and beautiful artifacts of porcelain, jade, and bronze spanning several centuries are located in the museum. Another museum, the T'aipei Fine Arts Museum, contains many wonderful examples of contemporary Chinese art. The T'aipei Fine Arts Museum sponsors cultural exchanges between Chinese artists and artists from all over the world. Other interesting museums in T'aipei include the Taiwan Provincial Museum, which offers exhibits chronicling the history of Taiwan's aboriginal tribes, and the National Museum of History.

Most Taiwanese are adherents of the Buddhist and Taoist religions. As a result, there are thousands of temples located throughout Taiwan. In T'aipei, there are three major temples. The Lungshan (Dragon Mountain) Temple is a Buddhist temple dedicated to Kuan Yin, the goddess of mercy. Many visitors will enjoy viewing this impressive structure, which is considered one of the most striking examples of Chinese temple architecture in Taiwan. The Confucian Temple, located in the heart of T'aipei, is an oasis of calm in the midst of hectic urban life. This temple, with its gorgeous formal gardens, offers T'aipei residents a quiet place to pray and reflect. Another beautiful structure, the Hsingtien (Soar to Heaven) Temple, is the largest Taoist temple in T'aipei.

T'aipei offers many sight-seeing opportunities. The Grand Hotel, one of T'aipei's largest hotels, is a favorite stop for tourists. The lobby of the hotel, with its fourteen-yard wide marble staircase, forty-two red pillars, and huge gold-loom carpet, is the largest in the world. Sightseers can walk through downtown T'aipei and view the gates of a wall that once encircled the city.

Also in downtown T'aipei is the impressive Chiang Kai-shek Memorial Hall. Constructed in 1980, this building exhibits classical Chinese architecture. The Chiang Kai-shek Memorial Hall is part of a large park and cultural complex that includes the National Concert Hall and National Theater.

The Presidential Office, a red-brick structure with tall spires, is also an impressive structure. In the plaza in front of the Presidential Office, the Taiwanese flag is raised in the morning and lowered at nightfall during daily ceremonies. Visitors may enjoy viewing this event.

Another important tourist destination is the Sun Yat-sen Memorial Hall. This hall contains a fine art gallery of modern art, an auditorium, and a large library containing over 140,000 volumes. Animal lovers will enjoy visiting the T'aipei City Zoo, which is among the largest in Asia. The zoo has over 3,000 animals from 300 different species, in addition to a butterfly aviary.

On the outskirts of T'aipei, the Yangmingshan National Park attracts many residents and tourists alike. Situated on Yangming Mountain, the park has beautiful azalea and cherry trees which, when blooming, draw thousands of visitors.


Entertainment opportunities, such as concerts, shopping, and fine dining, are plentiful in T'aipei. Classical music performances by international artists and T'aipei's own City Symphony Orchestra are offered nightly at the National Concert Hall. Several dance troupes perform traditional Chinese folk dances frequently at the National Theater. The National Theater also hosts Chinese operas and dramatic plays which are of interest to visitors.

Shopping opportunities for gifts and souvenirs are plentiful throughout T'aipei and prices are generally reasonable. Shops along Can Ya Tsai and Chungshan North Road offer excellent coral, coral jewelry, curios, rare coins, jewels, and porcelain items. Jade can also be purchased in T'aipei, but it is very expensive. For the adventurous, a large flea market opens every Saturday and Sunday, under the city's Kuanghua Bridge. Jade and gems, among many other items, are available for sale. Trading at the flea market is done at a hectic pace and tourists should have some knowledge of appropriate prices before attempting to make a purchase. Tourists can find wonderful gift and souvenir items at the National Palace Museum store. This store offers excellent reproductions of calligraphy and paintings found inside the museum and sells them at reasonable prices.

Opportunities for dining, from luxurious to simple cuisine, are readily available in T'aipei. Taiwan is noted for its fine Chinese dishes and over 1,000 excellent restaurants are available throughout the city.


Kaohsiung is Taiwan's principal international port and a major industrial city. Located in southwestern Taiwan, Kaohsiung has a population of approximately 1.5 million people and covers an area of 59 square miles making it the country's second largest city. Kaohsiung has a pleasant climate, with warm, mild winters and long summers. Yearly temperatures in the city average between 75°F (24°C) and 90°F (32°C).

Kaohsiung is the world's third largest container port after Hong Kong and Rotterdam (the Netherlands). The city is a major export center for the rice, sugar, groundnuts, bananas, and citrus fruits grown in southern Taiwan's fertile agricultural regions. Kaohsiung is home to several thriving industries. These industries produce aluminum, textiles, petrochemicals, refined sugar, paper, bricks and tile, fertilizers, and cement. A large industrial complex, the 5,500-acre Linhai Industrial Park, is located near Kaohsiung's excellent port facilities. This thriving industrial park contains many industries, including a steel mill and a large petrochemical facility. The city has several large fisheries and a thriving fish canning industry. Kaohsiung is also an educational center, with three universities, and four junior colleges.


Kaohsiung offers ample sight-seeing opportunities. Shou Shan (Long Life Mountain) is located in the city and offers visitors excellent views of Kaohsiung. One of the most popular tourist destinations in Kaohsiung is Lotus Lake. This resort area contains several beautiful, distinctive structures such as the Dragon and Tiger Pagodas, the Spring and Autumn Pavilions, and a large Confucian temple. For those who enjoy sun and surf, Kaohsiung's Hsi Tzu Bay beach offers visitors beautiful sand and clear waters.

Many tourist attractions are located outside of Kaohsiung proper. South of the city is a large mountain known as Fo Kuang Shan (Buddha Torch Mountain). This mountain contains a massive Buddha statue measuring 82 feet tall and is surrounded by nearly 500 other Buddhist figurines. Fo Kuang Shan is not only a noted tourist site, but an important pilgrimage destination for Buddhists from Taiwan and all of Southeast Asia.

Perhaps the largest and most popular tourist resort south of Kaohsiung is the Cheng Ching Lake Resort. Located only a few minutes from the city, Cheng Ching offers wonderful sight-seeing opportunities. The resort, which is spread out over several miles, contains several beautiful pavilions, a distinctive zigzag-shaped bridge, a large aquarium, a recreational center, and an avenue filled with orchids that is perfect for a relaxing late-afternoon stroll. The Chung Hsing Pagoda, which is one of Taiwan's most famous monuments, is also located at the resort. Below the Chung Hsing Pagoda, an 18-hole golf course, owned by the Kaohsiung Golf and Country Club, allows visitors to play a game amid beautiful rolling hills.


Taiwan's third largest city, T'aichung, has a population of approximately 800,000. Located in west-central Taiwan, T'aichung was founded by a group of Chinese settlers in 1721 and given the name Tatun. The city received its current name in 1895 when the Japanese took control of Taiwan. The Japanese embarked on major construction projects in T'aichung and, by 1945, had transformed it into a modern city. From 1948 until 1977, T'aichung's population nearly tripled and today the city occupies an area of over 60 square miles. T'aichung is located in a rich agricultural region and is central Taiwan's principal trading center for bananas, sugar, and rice. T'aichung is linked by rail and roadway with T'aipei and other Taiwanese cities.

Recreation and Entertainment

T'aichung's major tourist attraction is the Happy Buddha of T'aichung, which, at 88 feet, is Taiwan's largest statue. Most recreational activities are located outside of the city, however. Souvenir shoppers will thoroughly enjoy visiting the Taiwan Provincial Government's Handicraft Exhibition Hall. Situated 12 miles south of T'aichung in the town of Tsaotun, this hall offers opportunities to buy lanterns, tableware, jewelry, jewel boxes, toys, and other handicrafts created by Taiwanese artisans.

For those who enjoy outdoor recreation, the Chitou Forest Recreation Area and Sun Moon Lake are two important destinations. The Chitou Forest Recreation Area, located 50 miles south of T'aichung, covers over 6,000 acres of land and is the site of Taiwan's largest bamboo forest. One notable attraction is a cypress tree that is nearly 3,000 years old and 151 feet tall. The interior of the tree is hollow and visitors are allowed to peer upward from an observation platform at the base of the tree. Approximately 50 miles southeast of T'aichung, the Sun Moon Lake is a popular resort area that offers ample sight-seeing opportunities. Among the notable structures at Sun Moon Lake are the Hsuan Chuang Temple, the Wen-Wu Temple, and the Tzu En Pagoda which, at 150 feet, is the tallest pagoda in Taiwan.


Situated in southwestern Taiwan, T'ainan is the country's oldest city. From 1684 to 1887, T'ainan served as the capital of Taiwan. Today, with a population of approximately 695,000, T'ainan is Taiwan's fourth largest city. The city is nestled in a highly productive agricultural region and serves as southwestern Taiwan's trading center for peanuts, sugarcane, rice, and fruits. Several major industries are located in T'ainan. These industries produce a wide variety of products, including rubber goods, chemicals, textiles, refined sugar, plastics, processed foods, and electrical appliances. T'ainan's location near the Formosa Strait, the body of water separating Taiwan from the Chinese mainland, has led to the development of several large fisheries. The city has many artisans known for their gold and silver handicrafts.

Recreation and Entertainment

T'ainan is known as a city of temples, with over 200 temples in and around the city. Many tourists enjoy visiting these beautiful temples. T'ainan is the home of one of the country's oldest Buddhist temples, the Kaiyuan Temple. Another temple worth seeing is the Confucian Temple. Constructed in 1665, it is the oldest Confucian temple in Taiwan and is viewed by many experts as Taiwan's most beautiful example of Confucian temple architecture.

Two other tourist attractions are located a short drive from T'ainan. Located approximately 20 miles from T'ainan is Coral Lake. This lake is part of a 23.2 square mile resort complex that is popular among both tourists and native Taiwanese. This lake, which contains over one hundred islets, is a favorite boating spot for tourists, while the forested areas around Coral Lake are ideal for camping and hiking. Coral Lake is fed by the Tsengwen Reservoir, which is located 37 miles northeast of T'ainan and is also considered an interesting place to visit.

The Tsengwen Reservoir was created when a large hydroelectric dam was constructed on the Tsengwen River in 1973. With an area of nearly seven miles, the Tsengwen Reservoir is Taiwan's largest lake. Cruising the Tsengwen Reservoir in rented motorboats is a popular tourist activity.


The western city of CHIAI is located in a fertile agricultural region. Chiai has developed over the years into a trading center for rice and sugar grown near the city. The hills surrounding Chiai are heavily forested, which has led to the development of a thriving lumbering industry. Several industries are located in Chiai. These industries produce paper, plywood, cement, and tires. Chiai is linked by rail and roadway with T'aipei and Kaohsiung. In 1987, Chiai had a population of approximately 265,000.

CHUNGLI is situated on the Hsin Chien River in northwestern Taiwan. It is one of northwestern Taiwan's principal industrial cities. Factories in Chungli produce textiles and milled rice. Sweet potatoes, rice, and tea are grown near the city. A major freeway and railway connects Chungli with T'aipei, which is located approximately 20 miles northeast of Chungli. Chungli had a population of 314,000 in 1998. Current population figures are unavailable.

HSINCHU is an industrial city in northwestern Taiwan. Industries within the city produce textiles, glass, cement, and fertilizers. Hsinchu is the site of Taiwan's largest oil field and, since 1980, has developed into a center for technology and research. The land surrounding Hsinchu is extremely fertile and supports the growth of citrus fruits, tea, and rice. The city had a population of just over 356,000 in 1998.

A major international port, HUALIEN is eastern Taiwan's largest city. Situated on the Pacific Coast, the city is connected to the western town of T'aichung by the East-West Cross-Island Highway. Hualien is the primary eastern departure point for tours to T'aichung via this scenic highway. Economic activity around Hualien is centered around agriculture, particularly the growth of camphor, sugarcane, jute, and rice. Hualien is located in an area that is prone to severe earthquakes. The city was heavily damaged by an earthquake in 1951, but has been completely rebuilt. Hualien has an estimated population of over 360,000.

The northern city of KEELUNG , located approximately 16 miles northeast of T'aipei, is one of the country's major ports. Many imported products destined for T'aipei enter the country through Keelung's port facilities. The city's location near the East China Sea has led to the development of large shipbuilding and fishing industries. Other industries in the city produce cement and fertilizers. Keelung is connected with T'aipei and other Taiwanese cities via railway and several modern highways. The city receives a heavy amount of rainfall throughout the year, particularly from March through October. Keelung's primary tourist attraction is a 74 foot tall marble statue of the Buddhist goddess of mercy, Kuan Yin, which is situated on a hill above the city. Keelung has a population of approximately 385,000.

T'AITUNG is situated on the Peinan River in southeastern Taiwan. The city, which is located in a fertile agricultural region, has developed into a trading center for rice, peanuts, and sugarcane. T'aitung is home to several industries which produced milled sugar, and processed timber and jute. The city has excellent road, rail, and air links with Kaohsiung and T'aipei. T'aitung had an estimated population of over 109,000.


Geography and Climate

The island nation of Taiwan, formerly Formosa, lies approximately 100 miles southeast of the Chinese mainland. It is situated between the East and South China Seas. Taiwan also controls the Pescadores Islands on the western coast of Taiwan as well as twenty small islands off the coast of mainland China. Taiwan, the Pescadores and other island territories comprise a total area of 13,885 square miles, roughly the size of Connecticut and New Hampshire combined.

A mountain chain runs the entire length of Taiwan from north to south. The eastern sections of Taiwan are also very mountainous and covered with forests. However, the western side of the island contains numerous rivers, gentle slopes and fertile soil. Most of Taiwan's cities and agricultural production are located on the western side of the island.

Taiwan has a tropical climate. Summers are hot and humid with very heavy rainfall. The period between November and March is somewhat cooler and drier. The island periodically experiences damaging earthquakes and typhoons.


In 2000, Taiwan had an estimated population of 22.3 million people. More than 84% of the population are native Taiwanese descendants of Chinese immigrants from crowded coastal regions of mainland China. Refugees who fled after the Communist takeover of the mainland comprise 14% of the population. A small minority of aborigines, mostly of Malayo-Polynesian descent, reside in mountainous regions of the island.

A vast majority of Taiwanese speak Mandarin Chinese. However, other Chinese dialects are spoken also. As a result of Japan's fifty-year control of Taiwan, many elderly Taiwanese speak Japanese.

Taoism and Buddhism are the predominant religions of Taiwan. Confucianism is widely practiced. A handful of Chinese Muslims also inhabit the island. Christian missionaries have been active in Taiwan for many years. As a result, a Christian minority of 600,000 live in Taiwan. Most of these Christians are Protestant. Estimated life expectancy in 2001 was 74 years for males, 80 years for females.


The Chinese are believed to have traveled to Taiwan as early as 500 A.D. However, the island was sparsely populated until 1624. In that year, the Dutch began to use Taiwan as a trading post for their burgeoning commercial markets in Japan and China. Dutch colonists administered the island until 1661. During the years of Dutch administration, many Chinese began to emigrate to Taiwan to escape political turmoil on the mainland. Manchu China ruled Taiwan until it was declared a Chinese province in 1886. In 1895, after a disastrous war with Japan, China was forced to relinquish control of Taiwan to the Japanese.

Under Japanese administration, Taiwan developed efficient transportation networks and farming techniques. The Japanese created an advanced educational system and a thriving market economy. Following the defeat of Japan in World War II, Taiwan was administered by General Chiang Kai-shek and his Nationalist Chinese forces.

When the Communist government of Mao Tse-tung seized control of the Chinese mainland in 1949, Chiang Kai-shek and nearly 500,000 Nationalist troops were forced to flee to Taiwan. They were soon followed by two million other refugees. In 1950, Chiang Kai-shek announced the creation of the Republic of China with T'aipei as the capital. The United States established diplomatic relations and provided massive amounts of military and financial aid to the new nation. The Republic of China lost its United Nations membership in 1971 when the General Assembly voted to recognize the People's Republic of China as the sole legitimate representative of China. Taiwan suffered a severe blow when the United States broke off diplomatic relations with Taiwan in 1979 and established diplomatic ties with the People's Republic of China. However, commercial ties between Taiwan and the United States remain strong.


For many years, Taiwan's government was a one-party system dominated by Chiang Kai-shek's Nationalist (Kuomintang) party.

Chiang established the office of president in 1950 and served in that capacity until his death in 1975. He was succeeded by his son Chiang Ching-kuo, who governed Taiwan until his death in 1988. In March 1989, opposition political parties were legalized and Taiwan became a multi-party democracy. Lee Tenghui was elected president in 1988 and re-elected to a six-year term in 1990. In 1996 he was reelected to a four-year term by popular vote in Taiwan's first direct election for president. In March 2000, Democratic Progressive Party 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.

According to the 1947 constitution, the president and vice-president are elected by the National Assembly. The National Assembly is an elected body that had 334 delegates in 1997. It has the power to amend the constitution and the powers of initiative and referendum.

Taiwan's government consists of five administrative branches, or yuan. The Executive Yuan is responsible for policy and administration. It is elected by the president, with the consent of the Legislative Yuan. The 164-member Legislative Yuan is Taiwan's primary lawmaking body and the highest legislative organ in the state. In 1997, the Nationalist (Kuomintang) Party held 83 seats. The Nationalist Party's closest rival, the Democratic Progressive Party, has 54 seats.

The Control Yuan is an elected body which investigates political corruption and the efficiency of public service. The Judicial Yuan is the highest judicial body in Taiwan and is responsible for judging all criminal, civil and administrative cases. It includes a 17-member Council of Grand Justices who interpret the constitution. Also, the Judicial Yuan controls cases concerning disciplinary measures against public officials. The Examination Yuan supervises examinations for entry into public offices and deals with personal questions of the civil service.

Martial law, which had been in effect for 38 years, was lifted in July 1987. The Taiwan government also ended its formal state of war with the People's Republic of China in May 1991. In December 1991, the terms of any remaining original "indefinite" deputies expired (Taiwan's original delegates of 1947 held their seats in perpetuity).

The flag of Taiwan consists of a red field with a blue rectangle in the upper-left corner. The blue rectangle contains Taiwan's national emblem, a twelve-point white sun.

Arts, Science, Education

Since 1968, a nine-year compulsory education system has been provided at government expense. In that year, the curriculum was revised to put more emphasis on science while maintaining Chinese cultural tradition. Six years of elementary school and three of junior high school are required of all students. In order to attend high school, junior high schoolers must pass examinations. Vocational schools offer three-year programs that stress industrial and commercial training, agriculture and fishing.

Taiwan has a highly developed system for college study. As of 1997, there are over 100 institutions of higher learning in Taiwan. Opportunities for graduate education are also increasing. An extensive series of examinations are conducted in order to select students for higher education.

In the 1980s, the Taiwanese government relaxed many restrictions that prevented students from studying abroad. Increasing numbers of students attend college in Japan, Europe and the United States. Taiwanese college and graduate students are particularly interested in engineering, computer science, natural science and business management programs.

There is also a system of education for adults. This is designed to improve the general knowledge of adults and increase the literacy rate. Courses in language, arithmetic, music and vocational skills are offered.

Taiwan has one of the world's highest literacy rates (91%).

Commerce and Industry

Since the 1960s, Taiwan's economy has experienced tremendous changes. Large amounts of foreign investment from Japan, Western Europe and the United States has transformed Taiwan from an agricultural to an industrial country. Taiwan is also intensively striving to develop its high-technology industries.

Foreign trade has been the backbone of Taiwan's economy for three decades. Taiwan's largest trading partner is the United States. Taiwan imports American farm products, raw materials and capital equipment while exporting textiles, clothing, electronic goods and light industrial products to the United States. The United States and Japan account for more than half of Taiwan's foreign trade. Other trading partners include Hong Kong, Germany, Great Britain, Kuwait, Indonesia, Saudi Arabia and Australia.

Taiwan's agricultural sector is highly productive. Although Taiwan is a small island, her arable land is extensively developed. Taiwan is self-sufficient in rice production, but imports other grains from the United States. Primary agricultural exports include rice, bananas, pineapples, sugarcane, sweet potatoes, peanuts, tea and asparagus. Also, Taiwan has a well-equipped fishing fleet and is one of the world's largest exporters of fresh fish.

Taiwan has few mineral deposits. Small reserves of coal, limestone, natural gas and marble are available. To fuel continued industrial growth, Taiwan imports large amounts of oil, chemicals and machinery.

In 2000, Taiwan had a gross domestic product (GDP) of $386 billion dollars. Exports amounted to $148.4 billion that year. Because of this heavy reliance on exports, Taiwan's economy is vulnerable to economic downturns in its principal markets.

The currency of Taiwan is the New Taiwan dollar.


In 1995, Taiwan had an estimated 12,450 miles of roadway, of which 85% were paved. There are two modern expressways on the island. The North-South Freeway was completed in 1978 and links Taiwan's major cities. In July 1987, construction began on the Northern Taiwan Second Freeway. It opened to traffic in late 1992. There were approximately 4.1 million passenger cars and 850,000 commercial vehicles in use in 1995.

Domestic and international flights to Taiwan are readily available. Taiwan's largest airline is China Airlines (CAL). In addition to domestic flights, China Airlines supplies international service to the United States, Japan, the Philippines, Malaysia, Singapore, United Arab Emirates, South Korea, Indonesia, Thailand, Saudi Arabia and the Netherlands. Taiwan has two modern international airports. Chiang Kai-shek Airport, opened in 1979, is located at Taoyuan near T'aipei. Kaohsiung Airport is located on the southwestern corner of the island and offers daily flights to Hong Kong.

Taiwan has a well-developed shipping industry with four international ports at Kaohsiung, Hualien, Keelung and T'aichung.


Taiwan had an estimated 8.6 million radios and 6.7 million televisions in 1993. There were approximately 186 broadcasting stations in 1993. The main radio broadcasting service is the Broadcasting Corporation of China (BCC). BCC operates nine domestic stations and offers foreign services on shortwave frequencies. English transmissions can be heard on the Voice of Free China.

English newspapers and periodicals are available in T'aipei. These include: China News, China Post, Free China Review, Free China Journal, Issues and Studies, National Palace Museum Bulletin, and Sinorama.

Taiwan has excellent telephone and telegraph services. However, international calls made from Taiwan can be expensive.


Jan. 1 Founding of the Republic of China

Jan. 1& 2 New Year's Day

Feb. Chinese New Year*

Feb. Lantern Festival*

Mar. 12 Arbor Day

Mar. 29 Youth and Martyrs' Day

Apr. Ching Ming Festival*

Apr/May Matsu Festival*

May 1 Labor Day

June Dragon Boat Festival*

July 1 Bank Holiday

Aug/Sept Chung Yuan Festival*

Sept. 28 Teacher's Day (Birthday of Confucius)

Sept/Oct. Mid-autumn Moon festival*

October 10 National Day (Double Tenth Day)

October 25 Taiwan Restoration Day (Retrocession Day)

October 31 Birthday of President Chiang Kai-shek

November 12 Birthday of Dr. Sun Yat-sen

December 25 Constitution Day



Passage, Customs & Duties

A passport is required. Travelers can obtain a visa prior to arrival in Taiwan at a Taipei Economic and Cultural Office (TECO) in the U.S. (maximum 60 day stay), apply for a landing visa upon arrival (maximum 30 day stay), or apply for entry under the Visa Waiver Program (14 day stay). Taiwan previously required that U.S. visitors to Taiwan hold passports valid for at least six months from the date of expected departure. In some instances, this is no longer the case: Taiwan now considers U.S. passports valid for return to the United States for six months beyond the expiration date of the passport. If the passport contains a Taiwan visa issued abroad, the traveler may be admitted for up to sixty days even if the passport will expire during the period of stay. If the traveler applies for a landing visa upon arrival, he or she will be admitted for 30 days or up to the day the passport expires, whichever comes first. A traveler who applies for entry under the Visa Waiver Program must have a passport valid for six months after the planned departure date.

No extension of stay or change of status is allowed if the traveler enters on the Visa Waiver Program.

Unofficial relations with the people of Taiwan are conducted through the American Institute in Taiwan (AIT), whose offices are authorized by law to perform American citizen services. U.S. citizens are encouraged to register at AIT Taipei or AIT Kaohsiung, and to obtain updated information on travel and security. Registration can be done on-line by visiting the AIT web-site at The American Institute in Taiwan does not issue U.S. passports, but it accepts passport applications and forwards them to the Passport Agency in Honolulu for processing. Processing time takes three to four weeks. In an emergency, the American Institute in Taiwan can issue a travel letter to permit a U.S. citizen who has lost a passport to return to the United States or to travel to Hong Kong where he or she may apply for a passport at the U.S. Consulate General.

For assistance, U.S. citizen travelers may contact the American Institute in Taiwan at No.7 Lane 134, Hsin Yi Road Section 3, Taipei, Taiwan, telephone (886-2) 2709-2000; fax (886-2) 2709-0908; or the American Institute in Taiwan branch office at No. 2 Chung Cheng 3rd Road, 5th Floor, Kaohsiung, Taiwan, telephone (886-7) 238-7744; fax (886-7) 238-5237. AIT's citizens services section can also be contacted by e-mail at In case of emergencies after working hours, the duty officer at the American Institute in Taiwan at Taipei may be contacted at telephone (886-2) 2709-2013.


The New Taiwan dollar (TWD) has an exchange rate of about 33.08TWD=US$1 (2000).

Disaster Preparedness

Taiwan is subject to strong earthquakes that can occur anywhere on the island. Taiwan is also hit by typhoons, usually from July to October. Travelers planning a trip to Taiwan can obtain general information about natural disaster preparedness on the Internet from the U.S. Federal Emergency Management Agency (FEMA) at Additional information about currently active typhoons can be obtained on the University of Hawaii tropical storm page at The Central Weather Bureau of Taiwan also maintains a web site that provides information about typhoons and earthquakes. Its Internet address is

The International Community Radio Taipei (ICRT) provides all of Taiwan with English-language programming 24 hours a day. In the event of an emergency or an approaching typhoon, travelers should tune their radios to FM 100.7.


The following titles are provided as a general indication of the material published on this country:

Copper, John Franklin. Taiwan: Nation-State or Province? Boulder, CO: Westview Press, 1990.

Feldman, Harvey J., ed. Constitutional Reform & the Future of the Republic of China. Armonk, NY: M.E. Sharpe, 1991.

Gates, Hill. Chinese Working-Class Lives: Getting by in Taiwan. Ithaca, NY: Cornell University Press, 1987.

Hwang, Y. Dolly. The Rise of a New World Economic Power: Postwar Taiwan. Westport, CT: Greenwood Publishing Group, 1991.

Kaplan, David E. Fires of the Dragon: Politics, Murder, the Kuomintang. New York: Macmillan Publishing, 1992.

Kaplan, Frederic M. Four Dragons Guidebook: Thailand, Hong Kong, Taiwan, Singapore. New York: Harper Collins Publications, 1991.

Lasater, Martin L. U.S. Interests in the New Taiwan. Boulder, CO: Westview Press, 1992.

Li, Kuo-ting. Economic Transformation of Taiwan, ROC. London: Shepheard-Walwyn Publishers, 1989.

Long, Simon. Taiwan: China's Last Frontier. New York: St. Martin's Press, 1991.

Metraux, Daniel. Taiwan's Political & Economic Growth in the Late Twentieth Century. Lewiston, NY: Edwin Mellen Press, 1991.

Myers, Ramon H., ed. Two Societies in Opposition: The Republic of China and the People's Republic of China after Forty Years. Stanford, CA: Hoover Institution Press, Stanford University Press, 1991.

Ranis, Gustav, ed. Taiwan: From Developing to Mature Economy. Boulder, CO: Westview Press, 1992.

Robinson, Thomas W., ed. Democracy and Development in East Asia: Taiwan, South Korea, and the Philippines. Washington, DC: AEI Press, 1990.

Simon, Denis F., and Michael Y. Kau, eds. Taiwan: Beyond the Economic Miracle. Armonk, NY: M.E. Sharpe, 1992.

Sutter, Robert G. Taiwan: Entering the Twenty-First Century. Lanham, MD: University Press of America, 1989.

Tien, Hung-mao. The Great Transition: Political and Social Change in the Republic of China. Stanford, CA: Hoover Institution Press, Stanford University, 1989.

Tun-jen, Cheng, and Stephen Haggard, eds. Political Change in Taiwan. Boulder, CO: Lynne Rienner, 1991.

Wang, Yu San. Foreign Policy of the Republic of China on Taiwan: An Unorthodox Approach. New York: Praeger, 1990.

Yu, Ling. A Family in Taiwan. Minneapolis, MN: Lerner Publications, 1990.

. Taiwan in Pictures. Minneapolis, MN: Lerner Publications, 1989.

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Taiwan (tī´wän´), Portuguese Formosa, officially Republic of China, island nation (2005 est. pop. 22,894,000), 13,885 sq mi (35,961 sq km), in the Pacific Ocean, separated from the mainland of S China by the 100-mi-wide (161-km) Taiwan Strait. Together with many nearby islets, including the Pescadores and the island groups of Quemoy and Matsu, it forms the seat of the Republic of China. The provisional capital is Taipei; Nanjing, on mainland China, is regarded as the official capital of the republic.

Land and People

The heavily forested hills and mountains of central and E Taiwan reach their summit at Yu Shan (13,113 ft/3,997 m high); there are about 70 peaks exceeding 10,000 ft (3,048 m). This mountainous area produces some minerals, chiefly gold, silver, copper, and coal, but its main resources are forest products, including valuable hardwoods and natural camphor. Petroleum and natural gas have also been found. The broad coastal plain in the west supports most of the island's population and is the chief agricultural zone. Typhoons are common. Taiwan has a semitropical climate and rainfall ranging from moderate to heavy. In addition to Taipei, other major cities include Kaohsiung, Tainan, Taichung, and Chilung.

The overwhelming majority of the people are Chinese; they generally speak the Mandarin, Fujian (Amoy), or Hakka dialects. There are also a small number of Kiaoshan (Malayan) aborigines living in the mountainous interior. Most Taiwanese practice a traditional mixture of Buddhism and Taoism; there is a small Christian minority.


The island produces abundant food crops, although in recent years agricultural production has decreased due to rising costs and increased competition. Rice is the chief crop, followed by sugarcane, corn, fruits and vegetables, tea, and sweet potatoes, Pigs, chickens, and cows are raised and the island has a sizable fishing fleet. Industry, once concerned mainly with rice and sugar milling, has diversified to include a variety of light and heavy manufactures, significant telecommunications and other high-technology businesses, and an important service sector. Manufacturing accounts for 25% of Taiwan's gross domestic product, with service industries generating much of the rest.

There is food processing, petroleum refining, and the manufacture of electronics, armaments, chemicals, textiles, iron and steel, machinery, vehicles, consumer products, and pharmaceuticals. Most industries are privately run, but the government operates those considered essential to national defense, such as steel and electricity. Railroad and bus lines are also government operated. Taiwan trades chiefly with China, Japan, the United States, and Hong Kong. Major exports are computers, electrical and electronic equipment, metals, textiles, plastic and rubber products, and chemicals; imports include machinery, electrical equipment, minerals, and precision instruments.


Taiwan's national government is based on the constitution of 1946 (effective 1947, amended numerous times), which was drawn up to govern the whole of China; when the Nationalist government moved to Taiwan in 1949, most countries still recognized it as the government of all China, and it technically continues to adhere to that claim.

The president is the head of state; the president is popularly elected for a five-year term and is eligible for a second term. The government is made up of five branches; the office of the president is separate from these branches. The Executive Yuan is similar to a cabinet and is headed by the premier (who is the president of the Executive Yuan); the premier is appointed by Taiwan's president. The 113 members of the Legislative Yuan are elected (73 directly, 34 proportionally, and 6 by aboriginal inhabitants) for three-year terms. The Judicial Yuan is appointed by the president and serves as the highest judicial authority; the Control Yuan is in charge of censorship and such political matters as censure and impeachment; and the Examination Yuan supervises examinations for government positions. The dominant political party was long the conservative Kuomintang (KMT; the Nationalist party); the Democratic Progressive party, formed in 1986, is the other main party. Administratively, Taiwan is divided into 18 counties, five municipalities, and two special municipalities (Taipei and Kaohsiung).

Theoretically separate from the national government is the government of Taiwan province, which includes all of Taiwan except for the cities of Taipei and Kaohsing and a few islands off the mainland coast. The province is administered by a governor, which in 1994 became an elective post, and a 79-member provincial assembly.


Early History through World War II

There is evidence of inhabitation dating back roughly 20,000 years, possibly by now-extinct Negritos (see Pygmy). The origins of Taiwan's Austronesian aborigines, who may have arrived c.8,000 years ago, are a matter of debate. Some believe that these early inhabitants migrated from the Malay Archipelago, while others assert that they came from what is now SE China. The earliest Chinese settlements on Taiwan began in the 7th cent., chiefly from the mainland provinces of Fujian and Guangdong. The island was reached in 1590 by the Portuguese, who named it Formosa [=beautiful]. In 1624 the Dutch founded forts in the south at present Tainan, while the Spanish established bases in the north. The Dutch, however, succeeded in expelling the Spaniards in 1641 and assumed control of the entire island. They in turn were forced to abandon Taiwan in 1662, when Koxinga, a general of the Ming dynasty of China who had to flee from the Manchus, seized the island and established an independent kingdom. However, the island fell to the Manchus in 1683. Chinese immigration increased, and the aboriginal population was gradually pushed into the interior.

Japan, attracted by the island's strategic and economic importance, acquired Taiwan by the Treaty of Shimonoseki (1895) after the First Sino-Japanese War. Japan exploited the island for the benefit of the Japanese home economy and tried to establish Japanese as the language of the island. The island was scarcely used, however, for Japanese colonization. Under Japan, Taiwan's economy was modernized and industrialized, railroads were built, and the large cities expanded. During World War II, Taiwan was heavily bombed by U.S. planes. In accordance with the Cairo declaration of 1943 and the Potsdam Conference of 1945, Taiwan was returned to China as a province after the war.

Nationalist Rule

In 1949, as the Chinese Communists gained complete control of the mainland, the Nationalist government of Chiang Kai-shek and the remnants of his army took refuge on the island. The Chinese Communists planned an invasion of Taiwan in 1950, but it was thwarted when President Truman ordered the U.S. 7th Fleet to patrol Taiwan Strait. Japan renounced all claims to Taiwan and the Pescadores in the peace treaty of 1951, but Taiwan's territorial status remained a major issue among the great powers. In 1953, President Eisenhower announced the lifting of the blockade of Taiwan by the U.S. navy. In 1955, following repeated attacks by the People's Republic of China against the Nationalist-held islands of Quemoy and Matsu, the United States entered into a mutual security treaty with the Nationalists in which the U.S. promised to defend Taiwan from outside attack.

In 1958 there was continuous, intensive shelling of Quemoy and Matsu, and an invasion was again threatened. China reiterated its demands to the island, but the United States reasserted its determination to defend Taiwan, although it stressed that there was no commitment to help the Nationalist government return to the mainland. By the spring of 1959 bombardment of the islands had diminished, but no agreement had been reached. At that time, the Nationalist army was trained and equipped by the United States and there was also a sizable navy and modern air force. In support of Chiang's repeated declaration to free China from the Communists, Taiwan long served as a base for espionage and guerrilla forays into the Chinese mainland and for reconnaissance flights over China.

Internally, the Nationalist government implemented land reforms, which improved the lot of the peasants by allowing tenants to purchase their own land; much of it was bought by the government from big landlords and sold to tenant farmers under lenient terms. With U.S. economic aid, Taiwan enjoyed spectacular economic growth after 1950. The aid program was so successful that it became superfluous and was terminated after 1965. Chiang Kai-shek, elected to his fifth six-year term as president in 1972, was criticized for dictatorial methods. Between a native Taiwanese movement for independence and the continuing threat from China, the position of the Nationalist government was far from secure in the 1960s and 70s. Chiang died in 1975 and was replaced as president in 1978 by his son, Chiang Ching-kuo.

China's seat in the United Nations was taken away from the Republic of China and given to the People's Republic in 1971. Taiwan's international position continued to weaken in the early 1970s as the United States sought to improve relations with the People's Republic of China and as more large countries, such as Canada and Japan, moved to recognize the mainland government. The United States established formal diplomatic relations with the People's Republic of China on Jan. 1, 1979, which necessitated the cutting of its defense ties with Taiwan. To compensate, the United States passed (1979) the Taiwan Relations Act, which allows for the sale of defensive arms to Taiwan. Taiwan was also expelled (1980) from the International Monetary Fund and the World Bank in favor of the People's Republic of China. (the country does, however, belong to the World Trade Organization and the Asia-Pacific Economic Cooperation). Official social and economic contact is maintained with the United States through the American Institute on Taiwan and the Coordination Council for North American Affairs.

Contemporary Taiwan

The process of liberalization and democratization increased in Taiwan throughout the 1980s. The government's new openness included the recognition of some of its past actions, such as the Nationalist government's massacre of thousands of native Taiwanese in 1947. Although friction has lessened between the island Chinese, who make up about 85% of the population, and those who came from the mainland, it has remained a problem. Martial law, in effect since 1949, was lifted in 1987 and many jailed political dissidents were released. Opposition parties were legalized in Jan., 1989. Relations with mainland China were eased somewhat during the 1980s so that Taiwanese were allowed to visit after 1987, but the crackdown at Tiananmen Square in 1989 fanned Taiwanese mistrust of the mainland.

Chiang Ching-kuo died in 1988 and was replaced by Lee Teng-hui, a Taiwan native, who was reelected by the national assembly in 1990. In 1991, Lee ended emergency rule, and all the members of the national assembly, many of whom were mainland delegates originally elected in 1947, stepped down. In elections for a new national assembly, the ruling Kuomintang (KMT), which continued to promise unification with the mainland, held on to a majority, but the Democratic Progressive party, strongly advocating an independent "Republic of Taiwan," won nearly a third of the seats; the KMT retained its hold on the legislature throughout the 1990s.

In 1995 and 1996, Beijing conducted missile tests and ultimately military exercises near Taiwan in an effort to inhibit Taiwanese moves toward democracy and independence. In 1996, President Lee, who was opposed by the Beijing government, won a landslide victory in Taiwan's first-ever direct elections for president. A major earthquake hit central Taiwan in Sept., 1999, killing more than 2,000 people and causing massive infrastructure damage.

In the 2000 Taiwanese presidential election, a KMT split resulted in the election of the opposition candidate, Chen Shui-bian of the Democratic Progressive party (DPP); the KMT retained control of the legislature. Chen did not move officially to alter Taiwan's status. In Oct., 2000, Chen cancelled a half-built nuclear power plant, creating a political crisis with the KMT-dominated legislature, which accused him of exceeding his powers; the crisis ended when Chen reversed himself in Feb., 2001. Limited direct travel and trade with China was permitted by Taiwan from Matsu and Quemoy beginning in Jan., 2001, and in November restrictions on Taiwanese investment in China were lifted. In the December legislative elections the DPP won the largest bloc of seats for the first time, but a bare majority of the seats were won by KMT and its offshoot, the People First party.

In late 2003 Taiwan passed a law permitting the holding of referendums; the move was stridently criticized by China, which believed the law would be used to obtain a vote for independence, and also criticized by the United States, which regarded such a vote as unnecessarily provocative. Chen won reelection in Mar., 2004, narrowly defeating KMT candidate Lien Chan in a two-person race. In the last days of the campaign Chen was wounded in an apparent assassination attempt; the opposition accused him of staging the shooting in an effort to win votes. The narrow victory also led to opposition calls for a recount, but the election was ultimately upheld after challenges in the courts.

Chen's victory led to DPP hopes for gains in the legislative elections in Dec., 2004, but the party failed to win a majority. The vote was seen as a defeat for Chen, who resigned as DPP chairman. China's adoption (Mar., 2005) of an antisecession law, which called for the use of force if peaceful means failed to achieve reunification with Taiwan, sparked protests in Taiwan.

In April and May China hosted Taiwanese opposition leaders in an attempt to undermine President Chen, but elections for a constitutional assembly in mid-May resulted in a plurality for the DPP. In Dec., 2005, however, the DPP did poorly in local elections. Chen's announcement in Feb., 2006, that the National Unification Council, a largely symbolic body on unification with the mainland, would cease to function brought a sharp response from China, which regarded the action as a possible move toward independence.

Revelations in May that the president's son-in-law was under investigation for insider trading—he was indicted for insider trading in July and convicted in December—led Chen to cede control of the cabinet to the prime minister. It also resulted in a recall move (June) against the president in the legislature, but the opposition measure failed to win the required two-thirds majority. In September there were a series of demonstrations against the president and in support of a second recall move; the move failed in October. In Nov., 2006, prosecutors charged Chen's wife with corruption over the handling of secret state funds and said that Chen himself would have been indicted but was protected by his presidential immunity. Chen denied the charges, but it led the opposition to mount a third recall move in the legislature, which also failed (Nov., 2006).

In the local elections in Dec., 2006, the DPP did better than expected, as its supporters did not abandon the party despite the scandals involving Chen. A major undersea earthquake S of Taiwan during the same month damaged a number of telecommunications cables and disrupted international communications among a number of E and SE Asian nations. The Jan., 2008, legislative elections resulted in a landslide victory for the KMT, which won more than two thirds of the seats, and the KMT candidate for president, Ma Ying-jeou, subsequently (March) easily defeated the DPP candidate.

The vice president–elect met in April with China's president; the highest level official contact between Taiwan and China since 1949, it was seen as sign of better relations between the two. In Nov., 2008, Taiwan and China signed agreements that led to improved trade and transportation between them; additional accords have since been agreed, with a landmark bilateral trade pact that removed tariffs on many products signed in June, 2010. Former President Chen and his wife, among others, were indicted on corruption charges in Dec., 2008; they were convicted in 2009 and on other charges in 2010 and 2011.

In Aug., 2009, a typhoon caused significant destruction in S Taiwan and killed more than 600 persons; the government's poor handling of the disaster led to the resignation of the prime minister. Ma was reelected in Jan., 2012; in the legislative elections, the KMT retained a sizably reduced majority of the seats. In Feb., 2014, Taiwan and China held their highest level government talks since 1949, but the following Taiwanese students protesting against the pending ratification of a 2013 trade deal with China occupied the parliament building. KMT losses in the Nov., 2014, local elections were generally regarded as a rejection of Ma's push for closer ties with China.


See G. W. Barclay, Colonial Development and Population in Taiwan (1954, repr. 1972); H. Chiu, ed., China and the Question of Taiwan (1973); R. Storey, Taiwan (1987); K. T. Li, The Evolution of Policy Behind Taiwan's Development Success (1988); J. W. Davidson, The Island of Formosa: Past and Present (1989); W. B. Bader and J. T. Bergner, ed., The Taiwan Relations Act: A Decade of Implementation (1989).

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Official name: Republic of China

Area: 35,980 square kilometers (13,892 square miles) (including offshore islands)

Highest point on mainland: Yü Shan (3,997 meters/13,114 feet)

Lowest point on land: Sea level

Hemispheres: Northern and Eastern

Time zone: 8 p.m. = noon GMT

Longest distances: 394 kilometers (245 miles) from north-northeast to south-southwest; 144 kilometers (89 miles) from east-southeast to west-northwest

Land boundaries: None

Coastline: 1,566 kilometers (973 miles)

Territorial sea limits: 22 kilometers (12 nautical miles)


Taiwan is an island in the Pacific Ocean, approximately 161 kilometers (100 miles) from the southeastern coast of China. It lies to the north of the Philippines and southeast of the Ryukyu Islands of Japan. At 35,980 square kilometers (13,892 square miles), its area is slightly larger than the combined areas of Delaware and Maryland.

Taiwan's government, which has eluded control by China's Communist Party since 1947, claims to be the only legitimate government in all of China. Since the 1970s, however, the international community has recognized mainland China and the island of Taiwan as two separate nations.


Taiwan has no territories or dependencies.


Pacific Ocean breezes moderate Taiwan's subtropical climate, warm in the south and cool in the north. Average temperature readings for January are 16°C (61°F) in the north and 20°C (68°F) in the south, while the average July temperature in both regions is 28°C (82°F). Rainfall in Taiwan is generally heavy, averaging about 250 centimeters (100 inches) annually and much more in some regions. The northeast, or winter, monsoon brings heavy rains to the northern part of the island between October and March, while the southwest, or summer, monsoon brings rain to the south between May and September. The summer months also bring dangerous typhoons and cyclones.


High, rugged mountains and foothills occupy about two-thirds of the island, extending from north to south from its northern tip to its southern extremity. On the eastern coast, most of the mountains drop precipitously to the Pacific Ocean. Near the center of the coast, however, a narrow rift valley separates the central range from a lower, but also steep, coastal range. In the west, the high mountains descend to foothills that gradually give way to flat alluvial plains.

The Pescadores Islands are relatively flat coral reefs that support some agriculture. The main island of the Quemoy group is rocky and boulder-strewn, but still partially arable. MatSu consists of masses of igneous rocks.


Taiwan borders the Pacific Ocean to the east, the East China Sea to the north, and the South China Sea to the southeast.

Sea Inlets and Straits

Taiwan borders the Taiwan Strait to the west and the Bashi Channel of the Philippine Sea to the south.

Islands and Archipelagos

The Pescadores (Penghu Archipelago), Taiwan's major island group, comprise sixty-four islands located roughly 40 kilometers (25 miles) west of the main island, in the Taiwan Strait. The Quemoy (or Kinmen) and Mat-Su island groups are both located less than 3 kilometers (2 miles) from the Chinese mainland. Taiwan's other islands include Lan-yü, or Orchid Island, and Lü Tao (Green Island), both of which are southeast of the main island; Ch'iMei Yü to the west; and Hsiao Liu-Chiu Yü to the southwest.

Coastal Features

The coast is fairly smooth, except for deep indentations at the mouths of the Kao-p'ing River in the south and the Tanshui River in the north, as well as several river deltas in the southwest. The major deepwater ports are located at Keelung in the north and Kaohsiung, in the Haochiung Bay, in the south. The Central Range plunges abruptly to the sea along the eastern coast, except for an area north of T'ai-tung, where the T'ai-tung Rift Valley and a short coastal ridge farther to the east are located.


Two of Taiwan's major lakes are Coral Lake in the southwest and Sun Moon Lake near the center of the island. The latter is said to have once been two separate lakes, called Sun Lake and Moon Lake.


Taiwan's rivers flow across the long, narrow island, rising in the Central Range and descending to the coasts, so they are all short. Two of the major rivers depart from this pattern: the Tanshui drains northward toward Taipei, and the Kao-p'ing drains southward toward the southeastern coast. The third major river is the Choshui, which drains westward across the mountains and through the coastal plain.


There are no deserts on Taiwan.


The foothills of the Central Range, which lie mostly to the west, have average elevations of 1,219 to 1,524 meters (4,000 to 5,000 feet). In addition, there are a number of separate hills averaging about 1,524 meters (5,000 feet). On the western side of the island, coastal plains of varying heights meet the sea in a band of swamps and tidal flats.


The Central Range, Taiwan's dominant geographical feature, spans the length of the island along a north-south axis. It has more than sixty peaks with elevations of over 3,048 meters (10,000 feet). The highest is Yü Shan, near the center of the island. In the far north, detached from the main mountain system, a short volcanic range called Tatun Shan rises to over 1,219 meters (4,000 feet).


Dragon Cave on the northeast coast and the surrounding sandstone cliffs constitute one of the most scenic parts of Taiwan's coast and the island's most popular rock-climbing locale.


The hills that border the Central Range on the west descend to a rolling, terraced plateau with average elevations of 101 to 500 kilometers (330 to 1,640 feet).


The Shih Men Reservoir on the Tahan River, southwest of Taipei, is Taiwan's largest lake.


Taipei's stormy, humid climate has given rise to the saying "The weather in Taipei is like a stepmother's temper."



Fetherling, Doug. The Other China: Journeys around Taiwan. Vancouver: Arsenal Pulp Press, 1995.

Kemenade, Willem van. China, Hong Kong, Taiwan, Inc.: The Dynamics to a New Empire. New York: Vintage Books, 1998.

Rubinstein, Murray A., ed. Taiwan: A New History. Armonk, NY: M. E. Sharpe, 1999.

Storey, Robert. Taiwan. Hawthorn, Australia, Lonely Planet, 1998.

Web Sites

Government Information Office, The Republic of China (Taiwan). (accessed June 19, 2003).

Lonely Planet: Destination Taiwan. (accessed April 21, 2003). . (accessed April 21, 2003).

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Taiwan Strait Crises

Taiwan Strait Crises (1955; 1958).Several small, obscure island groups in the 100‐mile‐wide Taiwan Strait, which separates the Chinese mainland from Taiwan Island (also known as Formosa), twice became the center of world attention in the 1950s when conflicts between the Chinese Communists and the Chinese Nationalists threatened to draw the United States and other countries into wide‐scale military conflict, including the use of nuclear weapons. The U.S. handling of the crises also became an important issue in domestic politics, particularly during the 1960 presidential contest between John F. Kennedy and Vice President Richard M. Nixon.

After the triumph of the Communists over the Nationalists in 1949 on the mainland, the Chinese civil war continued in the offshore islands. The Nationalist forces of Chiang Kai‐shek, in addition to holding Taiwan and Pescadores Island, also controlled several smaller islands, many just off the China coast, of which the most important were Quemoy and Matsu. The contending Chinese forces regularly fought for these small bits of territory, which were sparsely populated, economically unimportant, and of questionable military value.

During and after the Korean War, the Nationalists used the islands as staging areas for harassment of the mainland and Communist shipping lanes. U.S. policy under both Truman and Eisenhower supported the Nationalists' retention of all territory under their control. Washington wanted no further territory to fall to the Communists. Elements of the U.S. Seventh Fleet had patrolled the strait since 1950 and U.S. military advisers were stationed on the islands.

The first major crisis began in September 1954, when Communist shore batteries heavily shelled Quemoy. The Nationalists retaliated with punishing air raids against the mainland and strengthened their island fortifications. Communist pressure on the islands continued, and top‐level officials in President Dwight D. Eisenhower's ad ministration began to believe that the Communists were preparing to assault all the offshore islands and possibly even Taiwan itself. Washington strengthened its commitment to Chiang Kai‐shek with a mutual defense treaty and congressional passage of the “Formosa Resolution,” which allowed the president to commit U.S. forces to Taiwan's defense.

The crisis came in April 1955, when the United States threatened to use nuclear weapons in the event of a Communist assault on Quemoy and Matsu. Simultaneously, Chinese premier Zhou Enlai signaled Beijing's willingness to negotiate with the United States. Tensions rapidly dissipated and direct talks between the two sides began in Warsaw. It does not appear, however, that the Communists were actually deterred by the nuclear threat.

In August 1958, during an international crisis in the Middle East, another U.S.‐China confrontation broke out over Quemoy and Matsu, after the Communists again bombarded the islands from onshore batteries. This confrontation was shorter but more intense than the first one. For several weeks, it again appeared that the United States, which sent several carrier groups to the region, might be drawn into a war with China, and possibly with the Soviet Union, which publicly supported Beijing's “Liberate Taiwan” campaign. But like the first crisis, tensions broke as Washington and Beijing resumed negotiations and Beijing backed away from an assault.

Over the years, Beijing seized most of the offshore islands, except Quemoy and Matsu, which remain in Nationalist hands.
[See also China, U.S. Military Involvement in; Chinese Civil War, U.S. Military Involvement in the; Cold War: External Course; Middle East, U.S. Military Involvement in the.]


Alexander L. George and and Richard Smoke , Deterrence in American Foreign Policy: Theory and Practice, 1974.
Gordon H. Chang , Friends and Enemies: The United States, China and the Soviet Union, 1948–1972, 1990.

Gordon H. Chang

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Taiwan (officially the Republic of China) Pacific island, separated from the se coast of the Chinese mainland by the 160km (100mi) Taiwan Strait.

Land and climate

The republic comprises the main island of Taiwan, several islets, and the Pescadores group. The terrain is mostly mountainous and forested, and the highest peak is Yu Shan at 3997m (13,113ft). The climate is semi-tropical and subject to typhoons.


The Portuguese visited the island in 1590, and named it Formosa (‘beautiful’), but in 1641 the Dutch assumed full control. They, in turn, were forced to relinquish control to the Chinese Ming dynasty. In 1683, the Qing dynasty captured Taiwan and immigration increased. It was ceded (1895) to Japan after the first Sino-Japanese War. Following the 1949 mainland victory of the Chinese Communist Party, the vanquished Nationalist Kuomintang government (led by Chiang Kai-shek) and 500,000 troops fled to Taiwan. The new Chinese regime claimed sovereignty over the island, and in 1950 a Chinese invasion was prevented by the US Navy. The Nationalists, with continued US military and financial support, remained resolute. By 1965, the economic success of Taiwan had removed the need for US aid. In 1975, Chiang Kai-shek died and was succeeded by his son, Chiang Ching-Kuo. In 1979, the USA switched diplomatic recognition from Taipei to Beijing. In 1987, martial law was lifted. In 1988, Lee Teng-hui became president. He accelerated the pace of liberalization. In 1996, China despatched missiles close to the Taiwanese coast, reminding the world community of its territorial claims. Lee won the first democratic presidential elections in March 1996, but stood down before the 2000 elections, which were won by Chen Shui-bian of the pro-independence Democratic Progressive Party, ending 50 years of Kuomintang rule.EconomyAgriculture, fishing and forestry are important economic activities, and rice is the principal crop. Spectacular economic growth from the mid-1950s was achieved primarily through low-cost, export-led manufacture of textiles, electrical goods, machinery and transport equipment (2000 GDP per capita, US$12,000).

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Physical map

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Culture Name

Taiwanese; Formosan

Alternative Name

Republic of China


Identification. Over four-fifths of the people are descendants of Han Chinese settlers who came to the island in the seventeenth through nineteenth centuries from southeastern China. They were joined in 1949 by remnants of the Nationalist party and army that left China after their defeat in the Chinese Civil War (19271949). The island's original inhabitants (Yuanzhumin ), who are related to Malayo-Polynesian peoples of Southeast Asia, have lived on the island for thousands of years. The culture is a blend of aboriginal cultures, Taiwanese folk cultures, Chinese classical culture, and Western-influenced modern culture. The Nationalists have failed to impose a Chinese national culture on the island, and the potential for a Taiwanese national culture is held in check by both the Nationalists and the People's Republic of China (PRC) as they contest the country's sovereignty.

Location and Geography. Taiwan lies between Japan and Philippines, off the southeastern coast of China. The total area is 13,800 square miles, (32,260 square kilometers). A massive mountain range covers two-thirds of the island and includes East Asia's highest peak, Yü Shan. The subtropical climate is affected by two weather patterns: a continental monsoon that brings cool, wet weather to the northern half of the island between October and March and an ocean monsoon that brings rain to the southern half between April and September. The monsoons can bring devastating typhoons. Most mainlanders live in the north, Taiwanese live along the western coast, and aborigines live in the mountains and on the eastern coast.

Demography. With an estimated population of 22,113,250 in 1999, Taiwan is the second most densely populated country in the world. Seventy percent of the population is Hokkien, 14 percent is Hakka, 14 percent is Mainlander, and two percent is aboriginal. The population is 56 percent urban.

Linguistic Affiliation. Mandarin Chinese is the national language and the language of education, government, and culture. Taiwanese speak Taiyu, a southern Min dialect (nanminhua ), or Hakka. There are seven distinct aboriginal languages, which are grouped into three language families. Most Taiwanese and aborigines speak both a local language and the national language. Mainlanders are monolingual, although some second-generation mainlanders speak Taiwanese.

Symbolism. The symbols of the national culture are conspicuous on the Double Ten (10 October), a national holiday that commemorates the founding of the Republic of China (ROC) in 1911. In Taipei, the Presidential Office Building is lit up and covered with a colossal portrait of Sun Yat-sen, the ROC's founding father. The highlight of the parade is a city-block-long dragon, a symbol of imperial China and the ROC's recently abandoned claim to be the legitimate government of all of China and the preserver of the Chinese cultural heritage. A large military presence reminds onlookers of the government's determination to defend the homeland against communist aggression. High school marching bands in brightly colored uniforms are symbols of the modern educational system and modernity in general. Students from the eastern coast dress in aboriginal costumes to symbolize the government's paternalistic benevolence. Missing from the parade are aborigines who advocate self-determination and the Taiwanese goddess and protector Mazu, who is a potent symbol of popular culture, a local variant of China's Little Tradition that resists the inculcation of an elite Chinese national culture.

History and Ethnic Relations

Emergence of the Nation. The earliest record of human habitation on Taiwan dates back ten thousand to twenty thousand years. The origin of the first inhabitants is open to debate. Linguistically, the aborigines are related to the Austronesian language family, which points to a southern origin in Southeast Asia. Early stone tool and ceramic styles have been placed in the same traditions as those of Fujian and other mainland sites and suggest a northern origin. A third theory proposes that Taiwan is the homeland of Austronesian culture and language and the source of migrations throughout the region. These theories have become politically charged, with aborigines and opposition party members favoring either the southern origin or homeland theory, and mainlanders favoring the northern origin theory.

Most of the Han settlers came from southern Fujian Province and eastern Guangdong Province, beginning in the seventeenth century. The pioneer era can be divided into three stages marked by different agendas and ethnic tensions. In the early stage (16831787), settlers reclaimed land and established farming communities. This period was relatively peaceful except for conflict between Han settlers and the aborigines. The second historical period (17881862) saw growth in agricultural production and markets, and leaders representing dominant surname groups competed for control of agricultural production and the lucrative market in grain and sugar. This was a violent period, with numerous uprisings and rebellions that pitted groups identifying with different homelands against one another. This fighting fortified ethnic identities and divisions as refugees sought protection within larger ethnic enclaves. The Lin Shuangwen Rebellion in 1786 engulfed the island and took two years to suppress. A few families rose out of the struggles of this intermediate period to form an island-wide elite that controlled the trade in the major export commodities. The third stage (18631895) was marked by the growth of cities and the conflict between occupational groups.

Various incidents between China and foreign powers, including Japan, raised concerns about Taiwan's sovereignty. The imperial court granted the island provincial status in 1886, and strenuous efforts were made to develop the infrastructure and defensive capabilities. Taiwan was ceded to Japan after China's defeat in the Sino-Japanese War in 1895. Communication with the mainland was cut off, and Taiwan was incorporated into the Japanese Empire as a supplier of grain and sugar and a consumer of manufactured goods. Japan brought order and peace to the island at the cost of political and economic subjugation. While rice yields outpaced population growth, per capita consumption of rice decreased. Taiwan became a nation of sweet potato eaters, and the sweet potato became a symbol of the hardships the people suffered under colonial rule.

Japan's defeat in World War II led to the return of Taiwan to China. The Taiwanese were hopeful about the new political relationship but soon were disappointed. After losing in the Chinese Civil War, the Nationalists (Guomindang [KMT]) were concerned about the security of their future island refuge and imposed severe restrictions on the population. An incident in 1947 erupted into an islandwide demonstration against Nationalist rule. The Nationalists killed thousands and wiped out the Taiwanese leadership. Forty years of martial law and authoritarian rule followed. The repressive regimes of Japan and China helped forge a common identity from multiple identities based on homeland, religious sect, and surname group.

The Korean War (19501953) made clear to the United States the significant role of Taiwan as a model of capitalist development and a military bulwark against socialist expansion. The country experienced a forty-year period of phenomenal economic growth based on the production and exportation of light consumer goods, but this came at the cost of political oppression, including unlawful detentions, torture, and murder.

In 1975, Chiang Kai-shek died and Taiwan lost its seat in the United Nations. In 1977, an antigovernment riot in Chungli sent a message to the KMT that it had to relax its control of society. In 1978, the KMT's dream of retaking the mainland was shattered when the United States recognized the PRC and closed its embassy in Taipei. Other countries followed suit, leaving Taiwan in international limbo. In that year, President Chiang Ching-Kuo, Chiang Kai-shek's son, set in motion a series of reforms that resulted in the lifting of martial law in 1987 and emergency rule in 1991. The reforms also included the Taiwanization of the KMT. Lee Tenghui won the first national presidential election in 1996. Lee has played the independence card to the chagrin of the mainland and KMT stalwarts, who broke away from the KMT to form their own party (New Party).

A three-party race in the 2000 presidential elections resulted in the election of the main opposition party's (the Democratic Progressive PartyDPP) candidate and former mayor of Taipei, Chen Shuibian. Elected with only 39 percent of the vote, Chen and the DPP must carry on the difficult role of governing and negotiating with the PRC. Chen Shuibian's election symbolizes the determination of the people to control their own destiny.

National Identity. The DPP rise to power has signaled an end to the KMT's futile effort to forge a common Chinese national identity through its control of government, education, and the media. The project was doomed from the start as long as China remained divided and Taiwanese were free to participate in the postwar economic boom that fueled a revival of their own culture and identity. Taiwan's national identity remains an open question.

Ethnic Relations. In spite of their cultural and linguistic differences, aborigines have found a common cause in their struggle for land rights and self-determination. The Alliance of Taiwan Aborigines (ATA) was founded in 1985. In 1988, the ATA issued a Manifesto of the Rights of the Taiwan Aborigines, and in 1991, it established the Taiwan Aboriginal Autonomous Area Assembly, a failed attempt at self-government. In 1994, President Lee Teng-hui met with aboriginal leaders to discuss their demands but rejected self-government. In 1996, the Legislative Yuan established an Aboriginal Affairs Commission chaired by a Paiwan leader from the National Assembly. The aborigines continue to press for self-government in their struggle for recognition and a place in society. Mainlander-Taiwanese tensions continue to exist but have been ameliorated by a broad dispersal of economic and political power as democracy takes root.

Today little animosity exists among Hokkien Taiwanese, but Hakka-speaking Taiwanese, who are originally from eastern Guangdong Province, have maintained a separate identity and political voice.

Urbanism, Architecture, and the Use of Space

According to tradition, the landscape includes imaginary flows of cosmic energy (qi ). The divination practice of fengshui taps into pools of qi that are concentrated at points (xue ) in the landscape. The proper location and orientation of a house or grave can bring a family good fortune. Charms strategically placed in the house also achieve this end, as do the characters for longevity, happiness, and prosperity that are carved into wood screens and windows or painted on paper to adorn interior walls.

Good fortune also is tied to the moral order of the family, and the building plan of the traditional country house reflects and reinforces that order. The relative statuses of the different generations are evident in the floor plan and dimensions of a building and its rooms. At the center of a home is the all-purpose main hall where the family rests, eats, and receives guests, and that contains the family altars, ancestral tablets, and god. On both sides of the main hall are bedrooms. The parents occupy the room immediately to the left, and the oldest son and his wife the one to the right. Unmarried children sleep in the outermost rooms on each side, usually separated by sex. After the marriage of the second son, wings are built perpendicular to the main house, creating the U shape found not only in domestic architecture but also in palace and temple construction.

Towns and cities have the yanglou, a foreign-style town house in which hierarchical elements are arranged vertically instead of horizontally; stories instead of wings are added as the family expands. On commercial streets, the ground floor is the family shop and the domestic quarters are upstairs. During the heyday of rural industry in the 1980s, family-operated workshops were located on the ground floor and whole streets became production lines.

Urban architecture, especially in Taipei, is a mix of the classical, modern, and postmodern. There are walled single-story residences and temples, such as the Lungshan and Hsingtien temples, in the city's older quarters. A Western-Japanese hybrid architecture from the Japanese colonial period is found in the Presidential Office Building and National Taiwan University. The cantilevered concrete boxes and plate glass windows of the Taipei Fine Arts Museum and the corporate modernism of the Taipei World Trade Center express varying forms of modernity. The steel, concrete, and glass edifices that face Tunhwa Road are typical of the world's major metropolitan centers. The new Taipei Railway Station is a postmodern mix of classic and modern forms, a geometric concrete structure covered by a massive ceramic-tiled roof.

The KMT has inscribed its political ideology on the urban landscape. Every city has a Sun Yat-sen memorial and a Chungshan Road. The names of major avenues echo the philosophy of Confucius and Sun Yat-Sen, with names such as Jenai Lu (Benevolence Road) and Hoping Lu (Peace Road). As the claimant to China's political and cultural heritage, the KMT has built in a grandiose classical style. The Ming-style Chiang Kai-shek Memorial with its distinctive blue-tiled roof and the new opera and concert halls occupy a common plaza in downtown Taipei that rivals Beijing's Forbidden City in scale.

Food and Economy

Food in Daily Life. Food brings people together, and the eating and exchange of food define social groups. The family is identified as people who eat together, and dinner is a secular ritual that reinforces family relationships. Sharing food in the home signifies equality, and people of higher rank are never invited to dine in one's home. Larger groups of kin, neighbors, and temple members come together less frequently to share meals and reinforce their social connections.

Taiwan is a country of fish eaters. Food is cooked slowly in soups and stews or quickly by deep frying. Favorite dishes include oysters with black bean sauce, prawns wrapped in seaweed, abalone, cucumber crab rolls, and clam and winter melon soup. Small restaurants display fresh produce on the street so that customers can choose their evening meal. Fruit drinks are prepared in special beverage shops. Prosperity has produced a business culture that stresses entertaining, which supports restaurants that offer food from all the culinary regions of China. Western influences are found in bakeries and coffee shops in towns and cities. Buddhist food restrictions have produced a vegetarian cuisine in which bean curd, wheat gluten, and mushrooms are transformed into renditions of standard cuisine, sometimes being molded into the shape of ducks, chickens, and fish.

Taiwan is famous for tea, especially the lightly roasted oolong tea. Teahouses exist in almost every town, and most households have a tea cart to serve guests. Tea is brewed in a small pot and served in one-ounce cups. It is considered stimulating, conducive to conversation, and beneficial to health.

Food Customs at Ceremonial Occasions. Food is served as offerings to gods, ancestors, and ghosts. A cup of tea or wine is placed on the family altar for the ancestors and gods, along with incense. More elaborate offerings are made on special days, including New Year's, gods' birthdays, and the Ghost Festival. Food offerings to ancestors are made in the form of a family dinner with seasoned dishes and rice. The altar table is set with chopsticks, bowls, soup spoons, soy sauce, vinegar, and condiments. The gods are offered cooked but not seasoned or sliced meats. Ghosts are offered cooked meals, but outside the house, where one would feed beggars.

Basic Economy. The Taiwanese have long been traders. Before the first Han settlers arrived, aborigines traded dried deer meat and hides with Chinese and Japanese merchants. When the Dutch arrived at the beginning of the seventeenth century, they developed markets in grain and sugar. In the second half of the nineteenth century, camphor and tea became major exports. The Japanese developed the island's economic infrastructure and agricultural capacity, making Taiwan a major producer and exporter of sugar. During World War II, the Japanese began to industrialize Taiwan, but this initiative was cut short by the bombing that destroyed a large portion of the island's industry and transportation infrastructure. Significant amounts of U.S. aid were received in the postwar years. The government used that money to develop key industries, especially petrochemicals, which produced human-made raw materials such as plastic. When U.S. aid was phased out in the early 1960s, the government was forced to find other sources of revenue. After a brief period of import substitution that allowed the building of industries, the government encouraged export production, which could utilize the cheap and educated labor force. Japan's large trading companies provided second hand machinery to manufacturers. The Cold War sharply divided world markets, and both Japan and Taiwan benefitted from their close connection to the U.S. market. Real growth in the gross domestic product (GDP) averaged over 9 percent per year between 1952 and 1980. In that period, Taiwan transformed itself from an agrarian economy in which farming constituted 35 percent of GDP in 1952 to an industrial economy in which industry accounted for by 35 percent of GDP and agriculture. Taiwan's 1997 GDP made it the twentieth largest economy in the world. The real motor of expansion has been accounted for by small and mediums size companies, which in 1998 made up over 98 percent of all companies, 75-80 percent of employment, and was responsible for 47 percent of economic production.

Land Tenure and Property. The country's indigenous people hunted and gathered for food and cultivated slash-and-burn plots. Neither practice encouraged permanent forms of property. Chinese immigrant farmers regarded fallow plots as unproductive wasteland and worked out arrangements for their use with aboriginal leaders, to whom they paid a nominal fee. Land tenure evolved into a three-tier system of patent holder, landowner, and tenant. The patent holder held the subsurface rights, or "bones," of the field in "perpetuity"; the landowner owned the surface rights, or "skin," of the field; and the tenant worked the field. One of the first programs instituted by the Japanese was land reform that made the landowner the sole owner. The Nationalists reduced taxes and returned land to the tiller. Today, full rights to private property are protected by the constitution.

Commercial Activities. Taiwan has a modern market economy with a large service sector, which comprises two-thirds of GDP. In July 2000, the Taipei Stock Exchange Corporation listed 473 companies with a total capitalization of NT $910 billion (U.S. $30.33 billion). The exchange rate for the New Taiwanese dollar (NT$) on 23 February 2001 was NT $33 to U.S. $1.00 (NT $1.00 = U.S. $0.031).

Major Industries. The major agricultural products are pork, rice, betel nuts, sugarcane, poultry, shrimp, and eel. The major industries are electronics, textiles, chemicals, clothing, food processing, plywood, sugar milling, cement, shipbuilding, and petroleum refining.

Trade. In 1997, the major exports were electronics and computer products, textile products, basic metals, and plastic and rubber products. The United States, Hong Kong (including indirect trade with the PRC), and Japan account for 60 percent of exports, and the United States and Japan provide over half the imports. The country also exports capital to Southeast Asian countries such as Thailand, Indonesia, the Philippines, Malaysia, and Vietnam. Taiwan has become a major investor in China. In the year 2000, 250,000 Taiwanese worked on the mainland in forty-thousand companies owned or partly owned by Taiwanese, representing an investment of $40 billion (U.S.) and accounting for 12 percent of China's export earnings.

Division of Labor. In 1991, the seven major urban occupational classifications were (1) Professional, technical, and administrative (32 percent), such as teachers, physicians, engineers, architects, artists, actors, accountants, reporters, managers, and government officials; (2) large business owners (20 percent) and private business firms employing ten or more people; (3) lower white-collar clerical employees (12 percent) such as clerks, secretaries, sales personnel, and bookkeepers; (4) small business owners (24 percent) of firms employing fewer than ten workers; (5) skilled blue-collar workers (6 percent) such as carpenters, auto mechanics, electricians, lathe operators, printers, shoemakers, tailors, ironworkers, textile workers, and drivers; (6) farmers (1 percent); and (7) semi skilled and unskilled blue-collar workers (7 percent) such as a bricklayers, cooks, factory workers, construction workers, railroad firemen, janitors, laborers, street cleaners, temple keepers, barbers, security guards, police officers, and masseurs.

Social Stratification

Classes and Castes. The class system includes the chronically unemployed poor, beggars, and the underworld; the upper and lower bourgeoisie; and the working and middle classes. The upper bourgeoisie constitutes 5 percent of the population and include high-ranking government officials, officials who run large state-owned companies, and the owners of companies that employ more than two hundred people. The petty bourgeoisie makes up half the population and includes farmers, small businesspeople, and artisans. The working class makes up a fifth of the population, and the middle class another fifth. The middle class is composed of more educated persons who engaged in nonmanual work in government, education, the military, and large companies. In the past, class coincided with ethnic group. Mainlanders constituted the bulk of the upper bourgeoisie and the middle class, and Taiwanese and aborigines accounted for most of the chronically poor, the working class, and the lower bourgeoisie. However, Taiwan's economic miracle and the Taiwanization of the government have lifted many residents into the upper bourgeoisie and the middle class.

Symbols of Social Stratification. Taiwan is a modern consumer society in which status is measured by wealth and marked by the commodities one can afford to buy, such as automobiles, clothes, and homes, as well as one's lifestyle. A person can live very cheaply in the countryside in a modest apartment, buying produce from an outdoor market, eating at street stands, and transporting a family of five on a scooter. One also can own a large condominium on a prestigious avenue in Taipei, eat in expensive restaurants, wear Western brand-name clothes, and ride in cabs or a chauffeured Mercedes.

Political Life

Government. The territory of the ROC includes the islands of Taiwan, Kinmen, Matsu, and the Penghus (Pescadores), along with several smaller islands. Taiwan and the Penghu Islands are administered together as the Province of Taiwan. Kinmen, Matsu, and the smaller nearby islands are administered by the government as counties of Fujian Province. The seat of the provincial government is in central Taiwan. The two largest cities, Taipei and Kaohsiung, are centrally administered municipalities. In 1998, the legislative Yuan eliminated the position of governor and many other administrative functions of the Taiwan Provincial Government.

From 1949 to 1991, the ROC on Taiwan claimed to be the sole legitimate government of all of China, and the Nationalists (KMT) reestablished on the island the full state apparatus that had existed on the mainland. The first National Assembly was elected on the mainland in 1947. Because elections were no longer possible on the mainland, representatives of mainland constituencies held their seats for nearly forty-five years. In 1991, the Council of Grand Justices mandated the retirement of all members of the National Assembly who had been elected in 1947 and 1948.

The second National Assembly, which was elected in 1991, amended the constitution to allow for the direct election of the president and vice president. The president is both the political leader and the commander in chief of the armed forces and presides over the five administrative branches, or Yuan: executive, legislative, control, judicial, and examination. The legislative Yuan is the main lawmaking body; its members are elected directly by the people and serve three-year terms. The control Yuan oversees public servants and investigates corruption. The twenty-nine control Yuan members are appointed by the president and approved by the National Assembly; they serve six-year terms. The judicial Yuan administers the court system and includes a sixteen-member Council of Grand Justices that interprets the constitution. Grand justices are appointed by the president with the consent of the National Assembly and serve nine-year terms. The examination Yuan recruits and manages the civil service through the Ministry of Examination and the Ministry of Personnel.

Leadership and Political Officials. Before 1987, Taiwan had a one-party system with the KMT firmly in control. Although "outside the party" candidates sometimes won local elections, opposition parties were banned. Mainlanders dominated the government at the upper level and controlled the lower level of local Taiwanese leaders through a patronage system. To ensure that no leader or faction became too strong, the KMT supported rivalries between local leaders and factions. Vote buying was prevalent.

In the 1998 elections, the DPP won 31 percent of the 176 seats and the KMT won 55 percent. In other elections, the DPP won twelve of the twenty-three county magistrate and city mayor contests compared to the KMT's eight. Aboriginal representatives hold six reserved seats in the National Assembly and the legislative Yuan. The chairman of the Aboriginal Affairs Commission is an aborigine, as is the magistrate of Taitung County. An increasing number of women are involved in politics, and some hold key positions. Women sit in the cabinet and head several agencies and commissions, and three women are members of the KMT's Central Standing Committee. A fifth of legislative Yuan and National Assembly members and two of twenty-nine control Yuan members are women.

Social Problems and Control. In 1990, the most serious social problems were juvenile delinquency, transportation, public security, environmental pollution, vice and prostitution, bribery, speculation, the poor-rich discrepancy, rising prices, and gambling. Juvenile crime tripled between 1980 and 1995. In 1995, over a third of drug-related offenses were committed by youth, prompting the government to declare a war on drugs. The rise in juvenile delinquency has been attributed to the deterioration of the family system and the competitive education system. Fathers spend more time away from the home, and single-parent homes have increased. Many fifteen-year-olds have nowhere to go after finishing their nine years of compulsory education. Petty crime, drug dependency and suicides have risen dramatically in this age group.

Affluence has transformed Taiwan from a country of scooters to one of automobiles, creating traffic congestion and air pollution in the cities and a high death toll on the highways.

Murder, rape, robbery, and other violent crimes have doubled in the last ten years. Organized crime is involved in extortion, kidnaping, murder, fixing bids for public works, and gunrunning. The 1997 slaying of a prominent opposition feminist underscored the fact that 54 percent of the victims of violent crime that year were women. In 1992, 225,500 women were engaged in prostitution, including 61,400 teenagers.

Authoritarian rule in the past led to many human rights abuses. A 1997 reform has strengthened human rights protections in several ways. Prosecutors and police officers must release suspects within twenty-four hours unless a warrant is obtained from a court. Also, suspects must be informed of their right to remain silent, lawyers may be present during interrogation, and overnight interrogation is prohibited. The Council of Grand Justices has eliminated restrictions on freedom of association.

The judicial system has three levels: district courts, high courts, and the supreme court. District courts hear civil and criminal cases, high courts hear appeals, and the supreme court reviews judgments by lower courts. Criminal cases that involve rebellion, treason, and offenses against friendly relations with foreign states are handled by the high court.

Many social problems stem from lax enforcement of strict legal code. Business licenses are difficult to obtain, but once they are gotten, there is little monitoring of business. Companies, both legal and illegal, easily skirt tax, labor, environmental protection, and zoning laws. Thousands of businesses operate underground in an informal economy that may account for 25-50 percent of the GDP. Social order is maintained through personal connections and informal relationships in which the sanctions of face apply. However, this "Confucian" order requires enforcement, and businesses rely on gangsters to collect debts and enforce agreements.

Military Activity. Throughout the Chiang years (19491988), the KMT was fixated on retaking the mainland and maintaining its large military force that was partly sponsored by the United States. In 1979, Taiwan and the United States signed the Taiwan Relations Act, which defined the country's military mission as primarily a defensive one against the PRC and banned the sale of offensive weapons such as submarines, missiles, and bombers to Taiwan. The country maintains a large military force of 376,000 active and 1,657,000 reserve personnel. The People's Liberation Army (PLA) of China has deployed hundreds of short-range ballistic missiles on the mainland opposite Taiwan and in 1996, during the presidential election campaign, "test" fired several missiles outside the harbors of the two largest ports. This demonstration produced the intended effect on Taiwan's export-dependent economy as the stock market fell and large sums of money left the island. The latest PLA threat is electronic and informational warfare, which is aimed at over-loading and jamming the country's communications systems.

Social Welfare and Change Programs

The family has long provided welfare services to its older members. Letting the elderly live by themselves was considered unconscionable, and brothers often looked after their aging parents on a rotating basis. Older family members provided useful services such as looking after children and house sitting. While families continue to be responsible for the aged, there are holes in the system. In 1997, one third of the population sixty-five years old and above did not receive assistance from their children, 10 percent lived alone, and one-quarter experienced economic difficulties. Benevolent homes provide care for people over seventy years old. The state also provides some home care and day care services. Since 1950, labor laws have mandated that companies provide labor insurance, but this applies only to companies that employ more than fifteen workers, leaving a majority of workers unprotected.

Nongovernmental Organizations and Other Associations

Taiwan participates in few international nongovernmental organizations (NGOs), but the recent change in government has opened the way for more involvement. The government views working with NGOs as an alternative to being a member of the United Nations or having full diplomatic relations with most countries. Eighty-one Taiwanese NGOS aid children, teenagers, women, the handicapped, and aboriginal organizations. Human rights NGOs include the Taipei Women's Resource Foundation, the Garden of Hope Foundation, and the Taiwanese Foundation for Human Rights. After a devastating earthquake in 1999, the country received aid from several world relief agencies. Taiwanese disaster relief organizations include the Overseas Aid Council of Taiwan, World Vision Taiwan, the Tzu-chi Compassion Relief Foundation (Buddhist), the Red Cross of ROC, and the Eden Social Welfare Foundation (Christian).

Gender Roles and Statuses

Division of Labor by Gender. A universal educational system and a modern industrial economy have not changed the nation's patriarchal culture. Although women work in every industry, they tend to have poorly paid menial jobs. In the office, they occupy the lower tier of managerial jobs. Women's wages and salaries are generally lower than men's and women earn only 72 percent of men's income for equivalent work. In the heyday of rural industry, factories accommodated young mothers by bringing work to their homes. Some women run their own businesses and occupy positions of power in the government.

The Relative Status of Women and Men. Filial piety, fraternal loyalty, lineage solidarity, and family are the pillars of this patriarchal society. Although women were vital to the reproduction of the patrilineage, that role translated into few rights for women. However, the domestic notions of prosperity, happiness, and peace constituted a parallel set of values that was tied to household productivity and well-being. Insofar as women's hard work and organizing skills contributed to a household's prosperity, women gained respect in the home. Women's organizing skills and adeptness at relationship building have to been important assets in small-scale industries, in which many successful women manage businesses and supervise workers in small factories and workshops. The network building required in the rural and export industries has favored relationships with relatives on both sides of the family, increasing the importance of women. Women have gone to college and joined professional ranks, and some have entered politics. Recent trends reflect an increase in women's power and status, such as delayed marriages, higher divorce rates, fewer children, and higher educational attainment among women. A growing feminist movement actively promotes women's rights. Legislation has been enacted that recognizes women's rights to child custody and inheritance of property. However, men continue to hold most material wealth and political power and strongly resist the women's movement. Women leaders have been vilified and jailed.

Marriage, Family, and Kinship

Marriage. Historically, there were three ways to marry. Major marriage was the standard and most common form. It was an arrangement between families involving the use of a matchmaker. Often, the bride and groom met for the first time on the day of the wedding. Each family would sponsor its own wedding feasts on different days. Both a brideprice and a dowry were exchanged. The wife left her natal family to take up residence in her father-in-law's household. The second most common form of marriage was called sim pua. It involved adopting an infant girl and raising her as daughter and future daughter-in-law. Although this form was affordable for poorer families, it was also the choice of mothers because it allowed them exercise authority over their daughters and daughter-in-law from an early age. Often this meant that the adopted daughter was treated very poorly. Minor marriages were the type of marriage most likely to end in divorce. The third form of marriage was uxorilocal marriage, which involved a man marrying into his wife's family. The groom entered into to this form because he had no property, and the bride because her family had no male heir. Sim pua and uxorilocal marriages are far less common today. Young men and women now have more of a say about who they want to marry but still need their parents' blessings and the mediation of a matchmaker.

Domestic Unit. The ideal family type is the grand or joint family, a multigenerational family that includes a father, a mother, single children, and married brothers and their families living together under one roof. However, for this form of family to succeed, it must be wealthy and have a strong patriarch, diverse business interests, compliant daughters-in-law, and lineage support. The most common family unit is the stem family, consisting of the parents and a married son, a daughter-in-law, and their children. In a modern society, increased opportunities for employment outside the family and village, larger incomes, and universal education have favored smaller households. Nuclear families have become more common as the role of the family as a productive unit has diminished.

Inheritance. In spite of amendments to the constitution that guarantee equal rights of inheritance for women, men inherit most property, especially land. In this patrilineal society, property is a male birthright. Traditionally, the property a woman inherited was obtained at her marriage, in the form of a dowry, when she left her family. Also, at that time women inherited pocket money that was theirs to spend.

Kin Groups. After the family, the most important kin group used to be the surname group. Historically, in a frontier society, the surname group was an important source of security and protection. Many surname groups were made up of the broken remnants of lineages that were casualties of clan wars on the mainland. Members of surname groups might not have been able to demonstrate a genealogical connection, but they shared a name and could point to a common place of origin on the mainland; this constituted sufficient criteria to claim a blood tie. Most surname groups worshiped a common god and centered their collective activities at temples. The modern state has replaced many of the functions of the surname group.


Infant Care. Infants and small children sleep with their mothers and are fed on demand. They are carried and entertained by adults and older children. Weaning is done abruptly at about age two. Little is expected of young children, who are seldom punished. By the time they begin primary school, children start doing chores. Girls help care for younger siblings and do household tasks, and boys run errands. Children are expected to be obedient, avoid fighting, and work hard. Threats and scolding are used to discipline children, but physical punishment is rare. Rewards also are used to motivate children. The mother is primarily responsible for child care, and the mother-child relationship is usually close. Fathers play with younger children and punish children for misbehavior; their aloofness often causes children to fear their fathers. Girls generally are treated more strictly than boys, but fathers often are more affectionate toward their daughters.

Child Rearing and Education. The Japanese instituted a system of universal primary education for grades one through six. The Nationalists extended the educational system to the ninth grade in 1968 and made it compulsory in 1982. In 1993, they extended free education to the twelfth grade. In 1997, about 90 percent of junior high graduates continued their studies in a senior high school or a vocational school. Children enter kindergarten at age six. After junior high school (grade nine), students take a competitive examination to determine the school they will attend. There are three routes: an academic high school, a secondary vocational school, or a vocational junior college.

Higher Education. The academic route leads to the best colleges and universities, of which National Taiwan University is the most prestigious. There are over one hundred institutions of higher learning, which admit sixty thousand students a year. For graduate education, many students go abroad, including thirteen thousand who study in the United States each year. The premier research institution is the Academia Sinica.


Because social relationships and the cultivation of social relationships are considered important, Taiwanese people are friendly and courteous. Social relationships derive importance from the belief that one cannot do anything alone and everyone requires the help and cooperation of others. The exchange of cigarettes, business cards, or small gifts is a quick and easy way to overcome initial shyness in forming a personal connection. Introductions are important in initiating a relationship. One's name and reputation have currency, as is demonstrated by the exchanging of business cards. Initial friendliness is only an overture to friendship and can quickly turn cold if one's intentions are suspected. As cordial as Taiwanese can be in a personal setting, on the street with strangers, it is a free-for-all; one fights for every inch of space on the streets of Taipei, and holding one's place in a line is a contest. It takes time to build relationships of trust. Teahouses, restaurants, and homes are places where people cultivate relationships. The object of these encounters is to relax, let down one's guard, and connect in a genuine and open way. Although people are interested in friendship, they understand that friendship has utilitarian benefits, as friends are expected do each other favors and help each other get things done. In spite of their openness and friendly demeanor, people pay close attention to status and authority as defined by age, education, occupation, and gender. Although it is difficult for people of different statuses to be friends, they still can form a relationship of mutual benefit (guanxi ). Much of the work of government and business gets done through these relationships.


Religious Beliefs. Most of the people are followers of China's three religious traditions; Confucianism, Taoism, and Buddhism, collectively referred to as the "three teachings," or sanjiao. Each religion has a long history and its own temples, priests, and sacred texts. Although the elite make distinctions between the sanjiao, most people practice a syncretic blend referred to as popular or folk religion. Popular religion includes elements of these three sets of teachings, along with beliefs in ancestors, ghosts, magic, and the efficacy of religious mediums. Popular religion is based on localized cults of nearly two hundred gods. The cults are centered in thousands of temples throughout the island. Many of the gods were originally historical figures who founded communities in Fujian during the Song Dynasty and were brought to Taiwan by Han immigrants. The gods were a source of magical power, or ling, which could be tapped through ritual. They were also the focal point of the community, bringing people together to form new social groupings. If families left to form a new community, they brought a newly carved statue of their god with them. In a ritual called dividing incense (fenxiang, ) they formed a new temple, which remained linked to the mother temple. On a god's birthday, pilgrims pay their respects to the temples from which their own temples are descended. Through their travel, they retrace their region's history and reconfirm their subethnic ties. Rural industrialization brought prosperity to many communities, which rebuilt their temples or constructed new ones. The gods continue to play a role in mediating community and regional relationships in an industrial society.

Two percent of the population is Protestant. The Canadian Presbyterian missionary George Leslie MacKay came to the country in the 1870s and established sixty churches and trained native missionaries until the Japanese undid much of his work. Protestantism has remained strong among the aborigines and Hakka. In the postwar period, Taiwanese Protestant leaders played a leading role in the opposition movement for human rights and democracy and suffered the consequences of defying the government's authority with detention, prison, and self-exile.

Rapid modernization has spawned many new religions, which have their roots in popular religion but address the social and psychological dislocations caused by modernity. One popular new religion, Yiguandao, states that the Maitreya Buddha has returned to the world to spread the Tao and save the world from destruction.

Religious Practitioners. Each of the three great religions has priests who are responsible for observing the religious calendar and carrying out the prescribed rituals. The most colorful are the spirit mediums tongqi. Gods possess a tongqi and through him or her communicate to cult followers verbally or in the form of "spirit writing." The tongqi also dispenses charms in response to personal requests for aid, holding office hours certain days of the week.

Rituals and Holy Places. The gods are honored on their birthdays in a public demonstration of popular religion. The gods are brought out of their temples and paraded down the streets in elaborately carved palanquins rolled along by four men. Two men carry a litter on which the god's spirit descends violently, shaking and rocking the chair. The procession is led by the tongqi who falls into a trance while possessed by the god's spirit and practices self-mortification, by piercing his cheek with a skewer, slashing his chest with a sword, or banging his forehead with a ball of nails. The entourage visits each follower's household, which displays an offering of food on a table outside the front gate. Afterward, tables are set up in the street and a banquet is held for all temple members. The more faithful go on a pilgrimage that includes visits to other temples dedicated to their god and eventually arrive at the god's home temple, which usually is in the south, where the first immigrants arrived. The birthday of Mazu, Taiwan's most popular god, is celebrated on 23 May.

The main ritual honoring ancestors occurs during the Qingming festival on 5 and 6 April. Family members gather and visit the graves of their ancestors to burn offerings of paper money and incense. The offerings are preceded by a flurry of activity to clear the overgrown gravesite. The Ghost Festival on 15 July is a three-day affair in which ghosts of all stripes are propitiated. The 15 August Mid-Autumn Festival rounds out the ceremonial calendar as families worship the moon god and ask for protection, fortune, and family unity.

Death and Afterlife. Taiwanese believe in the Buddhist heaven and hell and reincarnation. A good life is rewarded in heaven, and a bad life in hell, before reincarnation. A person's fate is determined by past lives. One can improve one's fortunes after death by performing good deeds while one is alive. Through special prayers and offerings, the living can improve the afterworld conditions of the deceased and their chances in the afterlife.

Medicine and Health Care

Taiwan has a legacy of both Western and Chinese medicine. The missionary George MacKay opened a clinic in the northern port of Tan-shui in 1880, treating patients and training indigenous practitioners in Western medical science. In the colonial period, the Japanese implemented an islandwide program of public health and sanitation, that brought under control infectious diseases such as cholera, smallpox, and bubonic plague. They also built a Western hospital and medical college in Taipei and charity hospitals and treatment centers around the island. Medicine became one of the only professional occupations open to the Taiwanese. Today the National Health Insurance program covers all citizens and provides free medical care for children up to four years old and people over seventy.

Chinese medicine also is practiced. It is a system of health care based on ancient Chinese philosophy and thousands of years of clinical practice. Traditional doctors understand the body in terms of dynamic forces and consider each patient's illness unique. Examination of the patient's pulse and tongue is the principal diagnostic tool. Doctors also consider weather conditions and the patient's emotional state. Sickness is regarded as the result of a disturbance in the polarity of one or more of the body's systems that affects the flow of qi, or life force. Doctors prescribe a concoction of herbs and other natural pharmaceuticals to reset the polarity or use acupuncture to adjust the flow of qi.

Secular Celebrations

Traditional Chinese festivals mark an agricultural cycle based on the lunar calendar. The first day of Chinese New Year, called the Spring Festival (Chunjie ), is the most important festival. Families whose members are dispersed throughout the island usually come home to celebrate it. The night before New Year's Day is devoted to feasting. Parents give their children red envelopes with money inside. On New Year's Day, the family pays its respect to ancestors, gods, and elders. It visits the local temple to worship and burn incense, followed by visit to friends. The fifteenth and last day of the New Year celebrations is the Lantern Festival (yuanxiaojie ). Children carry lanterns to the temple, watch fireworks, and eat round dumplings (yuanxiao ), a symbol of unity. The Dragon Boat Festival (7 May), or Poets' Festival, commemorates the poet Ch'u Yuan, who threw himself into a river after an altercation with the emperor. Glutinous rice cakes are thrown into the water to prevent sea creatures from eating the poet's body.

The Arts and Humanities

Support for the Arts. The arts have not received general support in this poor and politically oppressed country, and some of the most prominent painters and writers have been imprisoned and killed. During the Japanese era (18951945), Taiwanese painters studied at the Tokyo Fine Arts Institute and showed their work at annual exhibitions in Taipei. In the postwar period, the U.S. Information Service provided one of the first public spaces for fine arts, to promote Western-style modern art. A National Arts Academy was established in 1982, and a year later the Taipei Fine Arts Museum, the country's first museum of modern art, opened. At that time, the Ministry of Culture and the Council for Cultural Planning and Development began to sponsor native and international exhibitions. The 1980s witnessed a surge in art collecting and a proliferation of art galleries. Literary magazines have been a source of support for writers and were a forum for lively debates throughout the Japanese and Nationalist periods. In the mid-1970s, newspapers began to sponsor annual fiction contests.

Literature. Living in Japan in the 1920s, the first generation of modern Taiwanese writers wrote in Japanese, embraced modernity, and denounced China's cultural heritage. This generation of authors included Lai He (18941943), the father of the Taiwanese New Culture Movement and the founder of the magazine Taiwanese New Literature. The next decade saw the younger generation of writers react against modernism, which had become identified with Japanese colonialism. The chief spokesman in the Nativist Literary debate was Huang Shih-hui, who advocated a class-oriented perspective and the of vernacular language to express a national consciousness. Beginning in the 1930s, the Nativist movement suffered under the general crackdown on leftists by the Japanese and later the Nationalists. The 1960s modernist fiction writers Pai Hsienyung and Wang Wen-hsing wrote about the conflict between bourgeois individualism and filial piety. Ch'en Ying-chen wrote about the lives of native Taiwanese and the hardships they experienced under the Japanese and the KMT, presaging the modernist-nativist literary debates that raged in the 1970s. Interest in modernist and nativist writers declined in the late 1970s and 1980s as the new urban middle class found their work too formal or too political. Writers in the 1980s and 1990s experimented with postmodern literary forms and more eclectic subject matter, including sexual liberation, political complacency, and corporate life.

Graphic Arts. During the Japanese era, painters were influenced by Impressionism and painted native scenes in oils. After World War II, the Nationalists revived classic Chinese ink painting and persecuted nativist painters, including Taiwan's best known painter at the time, Chen Cheng-po. Li Chung-sheng was a pioneer of abstract painting in the 1950s. Other modernist movements, such as surrealism, dadaism, pop art, minimalism, and op art, influenced artists in the 1960s and 1970s. A new nativist movement (xiangtu ) emerged in the late 1960s with the work of Hsi Te-chin, who painted local scenery and architecture and experimented with folk art. The lifting of martial law in 1987 generated a second wave of nativist consciousness (bentu ), this time with an urban and modernist outlook. In the 1990s, postmodern artists explored the symbolism of the body and the tensions between individual existence and collective values.

Performance Arts. Liu Feng-hsueh introduced modern dance to Taiwan in 1967 after studying in Germany. Her work combines structured modern choreography with the movement styles of Chinese opera, martial arts, and more recently aboriginal folk dance. Lin Hwai-min was a student of Martha Graham and the founder of the Cloud Gate Dance Theater, the country's premier dance company. His dances explore Chinese and Taiwanese identity, combining modern dance techniques and Chinese opera movements. Students of Lin Hwai-min have opened their own studios, performing dances that incorporate modern dance technique with Chinese and Taiwanese narratives. The Taipei Folk Dance Theatre and the Formosan Aboriginal Song and Dance Troupe are among several new dance companies that have formed to reconstruct and preserve traditional dances.

The State of the Physical and Social Sciences

Continued economic prosperity is dependent on progress in telecommunications, computer, and electronic technologies. Sizable amounts of public and private resources have been mobilized toward this effort. The National Science Council is funding scientific research for fiscal year 2000. The Industrial Technology Research Institute (ITRI), the largest nonprofit research institute, was founded in 1973 by the Ministry of Economic Affairs and helps develop industrial technologies and transfer them to domestic private enterprises to improve their competitive position in international markets. The social sciences constitute major university departments, research institutes, associations, and organizations, including anthropology, archaeology, business and management, economics, law, political science, sociology, and women's studies.


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Ian Skoggard

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