Taiwan steps into the unknown

PUBLISHED : Saturday, 07 October, 1995, 12:00am
UPDATED : Saturday, 07 October, 1995, 12:00am

TAIWAN, which has less than total control of its destiny, is laying claim to be the embodiment of the future of one quarter of mankind. Herein lies the paradox - and challenge - of the quasi-island state.

As Taipei prepares to mark the Double Tenth festivities, the Kuomintang (KMT) leadership does have cause for celebration.

The island is gearing up for presidential ballots next March, officially billed as 'the first free presidential election in 5,000 years of Chinese history'.

Taiwan's foreign-exchange reserves of US$98.96 billion (about HK$762 billion) are second only to those of Japan.

At the cutting edge of technology, Taiwan manufacturers of items including computers and smart phones are chipping away at the domination of such titans as Japan and the United States.

President Lee Teng-hui can perhaps be forgiven his sense of drama when he talks of 'winning back the mainland' by exporting the 'experience of Great Taiwan [culture]' to 1.2 billion compatriots across the 150-kilometre Taiwan Strait.

Five years shy of the new century, however, the island stronghold of 21 million is at a crossroads.

The two recent missiles tests off the Taiwan Strait administered by the rival Chinese Communist Party administration have served to galvanise Taiwan's top minds into painful sessions of soul searching.

Taiwan's vulnerability has been laid bare. Billions of dollars worth of American weaponry notwithstanding, it lacks the wherewithal to check whether the People's Liberation Army (PLA) has fired the projectiles, let alone repel them.

The very survival of the proud Asian Dragon seems to hinge on the whims of what many KMT soldiers still call 'the communist bandits' and the somewhat haphazard protection of the United States Government.

The mainland's sabre rattling has wreaked havoc on the Taiwan bourse. The return-to-investments ratio for Taiwan stocks slumped 29.36 per cent this year, one of the worst performances anywhere in the world.

And Taiwan is at the mainland's mercy not just because of the PLA's fast-expanding muscle. The Taiwan economy has gradually become dependent on cheap mainland raw materials, which have contributed to the 100 per cent jump in imports this year.

As Chinese Defence Minister General Chi Haotian said in a classified paper, a drastic cut in China's supplies could cripple the Taiwan economy.

At the same time, domestic problems keep piling up. Taiwan's economy has been hit by a rash of scandals including the default of credit unions and 'agriculture co-op banks' that many have blamed on lax regulation and even official complicity.

Last month, more than 50 finance and supervision officials were given 'administrative punishments' for dereliction of duty.

While the Taiwan economy is expected to grow 6.77 per cent this year, the government has warned that 'the high-growth era' may be gone for good.

Socially, the get-rich-quick mentality has been compounded by a most un-Confucian moral callousness.

In the summer, Premier Lien Chan and his mother were fined NT$120,000 for being the proprietors of a property whose tenants included a sleazy KTV lounge that flouts safety regulations.

The Taiwan army, the pillar of law and order, has been hit by the mysterious deaths of soldiers that have totalled 471 in a year. Suspected causes include maltreatment by senior officers.

To ensure Taiwan's viability in the age of mega-competition, think-tank gurus and foreign analysts have suggested the following. A New Dialogue with China. President Lee has adopted a more pragmatic and restrained mainland policy that is aimed at defusing tension. The campaign to 're-enter' the United Nations has been toned down. The same goes for a round of military manoeuvres near Kaohsiung this week.

Instead of a war game with action and live ammunition, the authorities have settled for a 'static' display of the hardware.

In a roundabout fashion, Mr Lee has hinted at the possibility of senior Chinese cadres visiting the island. The official line, however, remains that leaders of both sides must meet in an international arena outside the mainland or Taiwan.

After his expected re-election next year, Mr Lee must hammer out a new policy towards China.

Foremost is a reshuffle of his advisers on China, who are notorious for their lack of a basic grasp of the communist mentality.

Taiwan officials have admitted that they failed to anticipate Beijing's reactions to Mr Lee's visit to the United States in June.

Mainland experts in Taiwan said Taipei should use its trump card - the contribution of Taiwan businesses to the mainland economy - to extract a pledge of non-aggression from Beijing.

Mr Lee, however, might have to make compromises including permission for direct investments as well as air and shipping links.

One of the reasons behind the KMT's refusal to speed up exchanges with the mainland is the fear that this would be interpreted by the Taiwanese public as a sign of either capitulation or sellout.

Should Mr Lee win a strong mandate from the people next March, however, his domestic position might be strengthened to the extent that he could afford to take bolder steps towards engaging the KMT's once-and-future nemesis. A New Political Order. In a speech to international political scientists at a recent seminar on 'Third-wave democracies', Mr Lee boasted about the KMT's ability to synthesise elements of 'Confucian democracy' with modern Western ideals.

While foreign commentators have applauded the fast pace of democratisation, there are aspects of the political culture that reeks of the worst kind of moneyed feudalism.

The growing inter-dependence between politics and big money is reminiscent of the excesses of Japan's Liberal Democratic Party.

There is some truth in the complaints of the opposition Democratic Progressive Party that KMT cadres are still using the party's hold over the government and the media to help with their election campaigns. Commendable as Mr Lee's attempts to raise the profile - and power - of native-Taiwanese politicians are, he has been less than successful in building bridges to the 15 per cent or so of the populace who are 'mainlanders'.

Since the summer, the tensions between native-Taiwanese and mainlanders have been exacerbated by the perception that several mainlander politicians, including leaders of the Non-Mainstream faction in the KMT, seem to be helping Beijing put pressure on Mr Lee. A New Economic Strategy. Ultimately, Taiwan's survival hinges on its economic prowess. Taipei must prove it has the leadership to make structural changes in the economy and to move towards high-tech niches at a time when expensive land and labour costs are choking off traditional industries (see story on Page 18).

Taipei has yet to consummate the liberalisation of its economic and financial systems, which includes privatising state companies and allowing foreign banks and security companies to play a larger role.

The KMT also owes it to the public to make its vast business empire more open and accountable.

Internationally, Taipei must wean itself away from an excessive dependence on so-called 'China bashers' in the American Congress.

Sentiments in US politics shift on short or no notice. Pro-Taiwan feelings in Congress, which made possible Mr Lee's class reunion at Cornell University, might change if the love-hate relationship between America and China enters a more friendly phase.

Taiwan has to convert its massive investments in such Asian countries as Malaysia, the Philippines, and Vietnam into diplomatic leverage that can be used to restrain the PLA's much-feared adventurous nature. With its coffers and talents, Taiwan is, of course, hardly a David. Nor is China, with its increasing domestic problems, much of a Goliath.

The challenge lies in persuading the post-Deng Xiaoping leadership to engage in what Taiwan politicians like to call a 'win win situation'.

In spite of the dark clouds over the Strait, vast vistas beckon for the Beautiful Island.

1997 should present fresh opportunities for the development of the Greater China common market as economic integration between Hong Kong and China runs its course.

Provided that China honours reassurances that Taiwan investments in the mainland and Hong Kong will not be affected by adverse political fallout, Taipei could be poised for a new cycle of growth.

What is needed is know-how, discipline, and a knack for breathing new life into the ancient art of 'using four taels [200 grams] to manipulate 1,000 jin [500 kilos]'.