Taiwan's Economic and Political Progress

Henry Srebrnik, [Summerside, PEI] Journal Pioneer

Taiwan is one of the “Asian Tigers,” the term that refers to the highly developed free-market economies of East Asia.

The island of 23.5 million people has a developed capitalist economy, one that eventually propelled this former Japanese colony, and later the remnant of non-Communist China, into a major industrial state and trading partner. Its gross domestic product (GDP) of $529.6 million ranks it 26th in the world.

The island runs a trade surplus and its foreign reserves are the world’s fifth largest, behind those of China, Japan, Saudi Arabia, and Switzerland.

Taiwan (officially, the Republic of China) was all that remained of Chiang Kai-shek’s former Nationalist regime on the Chinese mainland, following its defeat by the Communists in 1949. This led to the evacuation of the Kuomintang (KMT) government across the Taiwan Strait to the island, along with about two million refugees.

Chiang’s authoritarian regime dominated the country during its early years, and it was only saved from conquest from the Communists on the mainland by the protection provided by the United States.

Realizing the necessity to develop, the Nationalist regime on Taiwan instituted rapid and sustained economic development. Foreign trade has been the engine of Taiwan’s rapid growth during the past 40 years and has provided the primary impetus for industrialization.

By the 1980s, Taiwan had become economically successful. The island prospered and became one of East Asia’s economic “Tigers.” Its people now demanded greater freedoms, which would lead to an eventual transition to democracy.

The Chinese who had fled to Taiwan when the Communists took power on the mainland dominated island politics until the end of martial law in 1987. Though Chiang Kai-shek died in 1975, his son Chiang Ching-kuo had succeeded him.

A cautious policy of liberalization was instituted. Taiwanese make up 84 percent of the population, with mainland Chinese and their descendants 14 per cent, and indigenous peoples two per cent.

By 1986 new political parties, including the Democratic Progressive Party (DPP), were able to organize to oppose the KMT.

Chiang died in 1988, succeeded by Taiwan-born Lee Teng-hui. Free elections, in which Lee beat the DPP’s Peng Min-ming, were held in 1996.

In 2000, the country underwent its first peaceful transfer of power from the KMT to the DPP. Its candidate Chen Shui-bian was elected president, ending the KMT’s 50-year monopoly of power. He tried to strengthen a Taiwan-focused consciousness.

Taiwan since 2008 is again governed by the KMT, under current President Ma Ying-jeou, who won re-election in 2012, with 51.6 per cent of the vote, beating Tsai Ing-wen of the DPP, who received 45.6 per cent.

The 2012 parliamentary election for the 113-seat unicameral legislature gave the KMT 64 seats, the DPP 40, and minor parties nine seats.

Mainland China is determined to absorb Taiwan and is using soft power by increasing trade and tourism between the two states. China offers business deals to Taiwan in the expectation that the island will become enmeshed in its enormous economy.

In this they have found an ally in Ma, who is trying to create closer economic ties with China. Taiwan since 2009 has gradually loosened rules governing Chinese investment on the island and has also secured greater market access for its investors in the mainland.

A free trade deal was signed in 2010. Taiwanese exporters supported its passage despite opposition from Taiwanese distrustful of China’s political ambitions.

Two-way trade between Taiwan and the mainland passed $130 billion for the first time in 2014 and China is now Taiwan’s main trade partner.

In 2014, Taiwanese protestors, dubbed the Sunflower Movement, occupied parliament to express their concerns about their local identity.

Taiwan holds it next presidential election in January 2016, with Eric Chu, the KMT presidential candidate, facing Tsai Ing-wen for the DPP.

Beijing policymakers would much rather see victory for the China-friendly KMT than for the DPP, which takes a more cautious stance on relations with China and is more amenable to the idea of Taiwanese independence.

So while closer economic links with the mainland bring greater opportunities for Taiwan’s economy, they also pose new challenges as the island becomes more economically dependent on China at a time when political differences remain unresolved. China passed a law in 2005 approving the use of force if Taiwan formally declared independence.