Taiwan

Categories: Overview | Political | Economic | Social | Environmental | Rule of Law | Trade Policy | Money
Graphs:

Related: LinksView all categories for years from to | See Full Report | Print

Full Report: Taiwan

Overview

1910-1942: In the Treaty of Shimoneseki, signed at the end of the Sino-Japanese war in 1895, Japan wins control of the island of Taiwan in perpetuity. For the next 50 years Japan develops a strong infrastructure of transportation, education, and industry in Taiwan, while compelling citizens to adopt Japanese language and customs.

1943-1944: At the Cairo Conference, Chinese Nationalist leader Chiang Kai-shek lays claim to Taiwan in the postwar world. Allied powers assent to the plan, and the Cairo Declaration is signed without any input from the Taiwanese people.

1945: At war's end China and Japan sign an agreement allowing Chinese troops to "temporarily occupy Taiwan on behalf of the Allied forces." Mainlanders begin to pour into Taiwan. There is initial mistrust on both sides: Mainland Chinese seem poor and undisciplined, while the people in Taiwan dress, speak, and act like the Japanese.

1946-1947: Nationalist leaders from mainland China quickly and brutally take over Taiwan. Tensions erupt in the February 28 Incident of 1947, as leading students, lawyers, and doctors are rounded up and executed. Nearly 20,000 people are arrested, imprisoned, tortured, and killed. Thousands more will be rounded up and killed in the ensuing "White Terror," which lasts all year.

1948-1949: Nearly two million refugees from mainland China flood Taiwan, which becomes the base of Nationalist government. The Nationalists place the island under martial law while making plans to retake China in five years. Overpopulated, with few natural resources and a discredited government, many consider Taiwan an economic basket case.

1950-1953: With the onset of the Korean War, the survival of "Free China" becomes important to American strategic interests. The U.S. Navy arrives to patrol the Taiwan Strait. More than $4 billion in aid floods into Taiwan. Land-reform projects place land into the hands of those who till it, making the agricultural sector efficient and productive.

1954-1959: In 1954 China shells Quemoy and Matsu, two small islands near mainland China but held by Taiwan. Both sides prepare for war. The United States and Taiwan sign a Mutual Defense Treaty, in which America commits itself to the defense of Taiwan. Matador missiles are delivered in 1957. Intelligence agreements make Taiwan a major base for U.S. information-gathering on mainland China.

1960-1964: Factories are set up or expanded as Taiwan enters its industrial era. Key industries include textiles and sporting goods. An "economic miracle" is fueled by factors that include foreign capital and trade, strong business-government cooperation, low taxes, planners who believe in a free market economy, and a high savings rate. American aid ends in 1964.

1965-1969: To stem Taiwan's significant brain drain, six graduate research centers in the fields of mathematics, physics, engineering, chemistry, biology, and agriculture are established. Expatriate Taiwanese are recruited to staff these institutions.

1970-1975: Industrial focus shifts from textiles to high-technology products like electronics and telecommunications. President Chiang Kai-shek dies in 1975 and is succeeded by his son, Chiang Ching-kuo. The increasingly isolated government initiates the process of "Taiwanization," looking inward instead of outward for support.

1976-1979: Taiwan is the most industrialized nation in East Asia, second only to Japan. Many nations break diplomatic ties to recognize Beijing, but maintain economic ties. The U.S. transfers its embassy to China in 1979 and cancels the defense treaty of 1954. Heightened internal security leads to the Kaohsiung Incident, a brutal repression of human rights marches that sparks an underground opposition party.

1980-1985: As diplomatic ties with the United States end, economic and cultural ties increase. McDonald's restaurants open in 1984, followed closely by American music and baseball. Educational and cultural exchanges between the Taiwanese capital Taipei and Washington increase.

1986-1988: In September 1986 the Democratic Progressive Party, previously operating underground, is officially recognized. Martial law is lifted in July 1987, and the following January new political parties and a free press begin to operate. Chiang Ching-kuo dies in January 1988.

1989-1991: By 1991 the Nationalist claim to rule all of China is officially dropped. Aging Nationalist legislators, elected on the mainland in 1947, are finally sent into retirement. Taiwan invests heavily in projects to strengthen bilateral ties with the United States, such as the Taiwan Chinese Information and Culture Center in New York City.

1992-1995: Competing impulses govern Taiwan's self-image and its views of the world. Its wealth seems to assure it a place in the international community, but China's rising international influence keeps it vulnerable and uncertain about its future, even as Taiwan's economic ties with China increase.

1996: Taiwan holds its first-ever national elections. Nationalist Lee Teng-hui is elected to continue, the first native Taiwanese president. Beijing deploys 150,000 troops to a coastal area near Taiwan and begins a series of missile tests aimed at intimidating separatist movements. American aircraft carriers arrive and prevent further escalation of crisis.

1997-2003: Political and social life grow more open. When President Chen Shui-bian is sworn in to office in May 2000, it marks the end of the Nationalist Party's 50-year rule. The next year Taiwan joins the World Trade Organization, along with China. Trade ties between the two grow despite periodic political standoffs. The global economic slowdown hits export-dependent Taiwan with recession.

back to top

Political

1910-1945: Taiwan is a colony of Japan.

1946-1949: Taiwan is a province of China. All Japanese are withdrawn by August 1946. In 1949 the Nationalists from mainland China take over political, economic, and social control of Taiwan even though they are outnumbered by native Taiwanese three to one. Claiming they are the only legitimate government of China, the Nationalists stage massive military and political rallies and vow to retake the mainland.

1950-1959: The Nationalist government begins to win back popular support with their land-reform policies, which give landowners a share in government industries in exchange for their property.

1960-1969: Within Taiwan and around the world, people begin to question which is the "real" China. Several nations break relations with Taipei and recognize Beijing.

1970-1974: The United States funds covert efforts to recruit agents, provide cover for underground operations, and disseminate anticommunist propaganda from Taiwan, even as it begins talks to normalize relations with the People's Republic of China (PRC). The Taiwan delegation withdraws from the United Nations in anticipation of losing its seat to the PRC.

1975-1985: After three years of serious illness, Chiang Kai-shek dies. His son, Chiang Ching-kuo, takes over as president and will head the Nationalist Party until his own death in 1988.

1986-1989: New political parties and a free press are allowed. Upon Chiang Ching-kuo's death, Lee Teng-hui becomes the first native Taiwanese president. Pro-democracy demonstrations raise the issue of which is the "real" China. Nationalists declare for first time that there are two legitimate governments of China, each representing part of the country. Beijing responds with strong anti-separatist language.

1990-1995: Pro-democracy activities continue as Taiwan gears up for its first-ever presidential elections.

1996-2003: Nationalist leader and native Taiwanese Lee Teng-hui is elected president by a wide margin in the 1996 election. Chen Shui-bian's election in 2000 marks the end of Nationalist Party rule and the rise of the Democratic People's Party (DPP), but the Nationalist party remains strong in opposition and scores well in key municipal elections.

back to top

Economic

1910-1936: Agricultural production is dominant, as industry focuses mainly on processing agricultural products.

1937-1944: Japan uses Taiwan as a wartime supply base, developing munitions-related industries with astonishing speed. Modern industries such as steel, chemistry, textile, metal, and machinery are developed. By 1939 industrial production surpasses agricultural production and reaches its highest point in 1944, before a sharp decline at the end of the war.

1945-1950: Japan leaves Taiwan devastated, with railroads, roads, and harbors operating at half capacity and inflation completely out of control. Prices rise as much as 10,000 times between 1945 and '50. With the influx of nearly 1.6 million mainlanders by 1949, people begin to hoard supplies, which fuels even worse inflation. The government focuses on land reform to develop the agricultural sector.

1951-1953: The United States resumes aid to Taiwan during the Korean War and defends the Taiwan Strait. Over the next 15 years, U.S. aid will top $4 billion, accounting for 5 percent of Taiwan's gross national product and enabling it to invest in infrastructure. Agricultural production increases by 14 percent and provides much of the investment capital and labor needed for later industrialization.

1954-1959: Emphasis on agricultural production stimulates the economy, with sugar as Taiwan's main export. Inflation shrinks to 8.6 percent while international trade deficits are covered by American aid.

1960-1964: Agricultural production holds steady as industrial production and exports boom. Taiwan enters the Industrial Era as workers who were displaced from rural jobs find employment in labor-intensive export industries. Low-cost loans and low tariffs on imports needed to make exports bring an increase in foreign investors eager to capitalize on the island's cheap labor.

1965-1969: With U.S. aid to Taiwan ended, the government turns to Japan and receives a loan of 150 million U.S. dollars, to be repaid over a 15-to-20-year period. While not comparable with the United States's aid package, these loans result in close cooperation between the Taiwanese and Japanese economies.

1970-1979: By the '70s Taiwan is considered one of the four "mini-dragons" of Southeast Asia; the other three are Singapore, Hong Kong, and South Korea. Agricultural production remains steady, and industrial production and exports grow rapidly. Ten large construction projects expand Taiwan's industrial infrastructure. Oil crises in 1973 and 1979 do not seriously hurt the economy.

1980-1989: To maintain growth in the face of wage increases, labor shortages, oil supply problems, and industrial pollution, the government shifts emphasis from export processing to high-tech industries. An entrepreneurial class is encouraged, and research and development are funded. By the mid-1980s Taiwan invests more than $2 billion annually in Southeast Asia, even before it begins investing in China.

1990-1996: With the largest capital reserves in the region, Taiwan begins to invest heavily in Guangdong, Fujian, and Zhejiang. By 1993 its investment in China soars to $8.5 billion per year. With its vast trade surplus, foreign investment profile, and ties to overseas Chinese networks, Taiwan is a major regional economic and financial power.

1997-1999: Taiwan experiences a small recession as its gross domestic product falls from 6.8 percent in 1997 to 4.8 percent in 1998. This is mild in comparison to the shocks felt in other Asian countries during Asian financial crises.

2000-2003: Taiwan produces 30 percent of the world's high-tech computer equipment, and per capita income has risen to nearly $14,000. But export dependence makes Taiwan vulnerable to the global slowdown of 2001-02, and recession sets in. Resistance to a farm loan reform scheme forces a finance minister out of office. Seeking lower wages, Taiwan businesses have invested tens of billions in mainland China.

back to top

Social

1910-1945: Taiwan's citizens are forced to assimilate with Japan, taking Japanese names and learning the Japanese language. In fact, during World War II, 200,000 Taiwanese are drafted into the Japanese army; 40,000 die for Japan. The May 4 Movement on mainland in 1919 sparks demands for democracy in Taiwan. The construction of transportation and communication infrastructure improve the quality of life.

1946-1949: Disillusionment and resistance to Chinese Nationalist leadership comes to a head in the February 28 Incident of 1947. In response to popular protests, the new government terrorizes and kills 10,000 Taiwan natives.

1950-1959: Nationalists wage extensive propaganda campaigns with balloons, leaflets, and songs, encouraging people to join them in their push to take back mainland China from the Communists.

1960-1978: Popular dissent is brutally crushed and Taiwan remains under martial law, with no freedom of expression. With the Cultural Revolution raging on mainland China, Taiwan steps up efforts to present itself to the United States as a reasonable, democratic place. After the Shanghai Communique is signed in 1972, ad campaigns touting Taiwan in the American media increase.

1979-1986: When the United States revokes its recognition of Taiwan and cancels its security treaty, the Taiwanese government bolsters internal security. All criticism of the regime is crushed. Demonstrations for an end to martial law continue. A brain drain continues as talented scientists and technical experts flee Taiwan.

1987-1990: Martial law is lifted in 1987, as are restrictions on travel to mainland China. For the first time in 40 years, thousands of Chinese people return to visit their families and villages. By the end of 1988, the population of Taiwan is approximately 20 million. Pro-democracy movements sweep Taiwan, and the question of which is the "real" China is pushed into the open.

1991-2003: Following the lifting of martial law, Taiwan initially experiences social disorder and nostalgia for the stability of the martial-law era. Despite open questions about the wisdom of lifting martial law, Taiwan moves steadily towards democratic governance. The opposition victory in 2000 marks the entrenchment of pluralist politics and a significant social change.

back to top

Environmental

1910-1949: There is no readily available data on environmental conditions during this period.

1950-1959: The government's rice-fertilizer barter program and the overuse of pesticides create a dependence on agricultural chemicals.

1960-1969: Rapid industrialization and lack of government regulation lead to a major decline in Taiwan's air and water quality. Untreated industrial waste flows directly into the rivers. Drinking water is contaminated with heavy metals and chemical runoff from farms. Factory emissions and increasingly heavy traffic cause severe air pollution.

1970-1986: Failure to develop an adequate sewage system brings continued deterioration of water quality. Three nuclear power plants are built, and a fourth is planned. A plant fire, the Chernobyl disaster, and other incidents raise public fears. Concerns about storage of waste and radioactive emissions grow. A burgeoning environmental movement stages protests against nuclear power and factory building.

1987-1988: The Bureau of Environmental Protection is upgraded to Cabinet level and is renamed the Environmental Protection Agency. The Taiwan Environmental Protection Agency (EPA), a separate entity, is established by environmentalists to focus on nuclear power, the petrochemical industry, protection of forests, and land use.

1989-1997: Plans for a fourth nuclear power plant proceed. With nuclear-waste storage facilities a continuing problem, Taiwan seeks storage abroad. The Taiwan Environmental Protection Union (TEPU) organizes a 20,000-person demonstration, the largest in Taiwan's history, against the plant. Pedestrians and bicycle commuters don surgical masks to protect themselves against toxic fumes and particulate matter.

1998-2000: The National Council for Sustainable Development passes an environmental protection plan in 1998. Objectives include reduction of pollution, protection of natural resources, pursuit of sustainable development, and support of international environmental protection policies. In 2000 Democratic Progressive Party candidate Chen Shui-bian is elected president on a pro-environment platform.

2001-2003: Controversy continues to surround the construction of the Meinung Dam, the fourth nuclear power plant, and the Binnan Industrial Complex, which is slated to include a petrochemical plant and would threaten fisheries and displace wetlands. The government launches a campaign against street litter.

back to top

Rule of Law

1910-1945: Japan rules Taiwan under a constitutional monarchy, but as a colony the statutes enacted by the Japanese legislature do not apply to Taiwan. The major laws ruling Taiwan are administrative orders of governor-general. This changes somewhat in 1921, but the people of Taiwan never have equal legal status with the Japanese. After World War II, Japan resigns and forsakes governance of Taiwan.

1946: The Constitution of the Republic of China (ROC) is adopted. It guarantees human rights and freedoms and establishes a centralized government with five branches, or yuans: executive, legislative, judicial, examination, and control. The judicial system has three tiers: the Supreme Court, the High Courts, and the District Courts.

1947-1948: The ROC constitution is promulgated on mainland and applies to Taiwan as a territory of China. It protects human rights and provides independent judiciary and democratic legislation. But when the Nationalists lose China and retreat to Taiwan, they declare martial law. All rights are suspended, including the right to reelect legislature. Those in office retain their seats for the next 40 years.

1949-1986: Nationalists establish an authoritarian regime that tolerates no freedom of expression and association, and also controls legislature, administration, and the judiciary with party organization that penetrates all levels of state and society. A constitution exists, but in the name of "taking back the mainland," it is merely a skeleton, with no life in reality.

1987-1990: Martial law is lifted. The National Security Law is put in place.

1991-1996: The constitution, amended in 1991, '92, and '94 in preparation for 1996's direct elections, legalizes the formation of opposition parties and declares the "lifetime" member system unconstitutional. PRC rule of the mainland is recognized, and the constitution is restricted to Taiwan. With a reelected legislature, Taiwan finally enjoys the democracy and rule-of-law system the constitution mandates.

1997-2003: Constitutional amendments in 1997, 1999, and 2000 restructure the government and redefine the roles of every branch, effectively resulting in a new constitution. In March 2000, the Democratic Progressive Party victory marks an end to nearly a half century of Nationalist rule. The DPP introduces legislation to force parties to shed their business holdings, which targets the Nationalists.

back to top

Trade Policy

1910-1945: Japan's investment in infrastructure projects such as transportation and irrigation systems makes Taiwan an economically profitable colony. Sugar and rice production increase, and the trade deficit becomes a surplus. Exports increase by 980 percent, imports by 540 percent.

1946-1959: The vast majority of exports -- 86 percent in 1958 -- are agricultural products, primarily rice, sugar, and tea. An import substitution strategy encourages local manufacturers to produce goods that had previously been imported.

1960-1964: A series of reforms geared to stimulate exports are enacted. The first one is the Statute for the Encouragement of Investment, which provides generous tax incentives to businesses in the hope of attracting foreign capital to build factories that will create export products such as textiles, clothing, shoes, and other labor-intensive goods.

1965-1969: Laws are set up to manage new Export Processing Zones (EPZs), offering incentives for foreign enterprises which set up factories in Taiwan. The first EPZ is built in 1966 in Kaohsiung, and within two years it generates annual exports of 7.2 million U.S. dollars. Two more EPZs are built in Taichung. Foreign investment pours in, and exports increase exponentially.

1970-1979: Export-oriented strategy continues with spectacular success. Emphasis on labor-intensive production shifts to capital-intensive production. The 10 National Construction Projects develop heavy industries (steel, petrochemicals) to support growing infrastructure.

1980-1989: The '80s is a period of accelerated liberalization and tariff reduction. Import controls and restrictions on foreign investment are relaxed. Capital- and technology-intensive industries are developed as Taiwan competes for, and wins, a huge share of the world's information and electronics market. In 1988 the exchange rate is freed from the Central Bank's control and is determined by the market.

1990-1999: Liberalization and deregulation continue, as does an emphasis on high-tech industries. In 1992 the GATT Council appoints a working group to consider Taiwan's application for WTO membership. Taiwan's membership is contingent on China's admission. Regular surpluses, strong medium-sized enterprises, and lack of foreign debt allow Taiwan to emerge relatively unscathed from the Asian financial crisis.

2000-2003: Taiwan continues to be a leading exporter of computer hardware. The United States is Taiwan's largest trading partner, followed by Japan. In 2001 Taiwan is admitted to the World Trade Organization, along with China. Taiwan and China continue to gradually expand the scope of legal trade between them, but still shy away from full-fledged trade talks.

back to top

Money

1910-1948: When Japan takes over Taiwan, the main currency in circulation is a hard money called the Mexican Silver (Mexican dollar). In 1904 Taiwan bank notes are issued; to many Taiwanese, the circulation of paper money is like a currency revolution. The Bank of Taiwan establishes branch offices in Japan and throughout the region.

1949-1967: Currency relations between China and Taiwan are cut off in June, and the New Taiwan dollar is issued, exchanged at 1:40,000 old Taiwan dollars. This move isolates Taiwan from endless inflation in China and helps stabilize Taiwan's currency and economy.

1968-1979: In 1968 Taiwan invests $20 million in U.S. government securities and increases by $20 million its bank deposits in the United States. It also agrees to increase American holdings as its foreign exchange reserves grow.

1980-2003: A trade imbalance with the United States puts pressure on Taiwan to raise its currency rates. The exchange rate of the Taiwan yuan to the U.S. dollar rises, and foreign currency reserves increase rapidly, reaching US$76.748 billion in 1987, behind only Japan and Germany. In 1988 the exchange rate is freed from the Central Bank's control and is determined by the market.

back to top


Categories: Overview | Political | Economic | Social | Environmental | Rule of Law | Trade Policy | Money
Graphs:

Related: LinksView all categories for years from to | See Full Report | Print