Overview
In 1945, Taiwan was restored to Chinese rule after 50 years as a Japanese colony. In 1949, Chiang Kai-Shek's Nationalist army retreated to Taiwan and the Nationalist (KMT) party ruled the island until 2000.
The defining characteristic of Taiwan's international relationships is its lack of diplomatic ties with most nations of the world. The authorities on Taiwan call their administration the "Republic of China," and for many years claimed to be the legitimate government of all China. Foreign nations wishing to establish diplomatic relations with a government of China could recognize the "Republic of China" or recognize the People's Republic of China (PRC), but not both. Most chose to recognize the PRC. The PRC was admitted to -- and Taiwan left -- the United Nations and most related organizations in the early seventies. The U.S. switched diplomatic recognition to the PRC in 1979.
The Taiwan authorities several years ago changed policies and now no longer insist that they are the sole legitimate rulers of all of China. While still admitting that Taiwan is part of China, they now seek recognition as one of two "legitimate political entities" in China, the other being the PRC. Under this policy, the Taiwan authorities are seeking to join various international organizations, including the United Nations. Taiwan has been able to join the Asia-Pacific Economic Cooperation (APEC) dialogue as an "economy" and is applying to join the World Trade Organization (WTO) as a "customs territory." Twenty eight countries currently maintain diplomatic relations with Taiwan.
Although the United States does not have diplomatic relations with Taiwan, the American Institute in Taiwan (AIT), a private, non-profit institution, was established in 1979 to maintain the unofficial relations between the peoples of the United States and Taiwan. More than thirty other countries, including most major European and Asian nations, also maintain unofficial representation
Taiwan's relationship with the Peoples Republic of China remains problematic. Despite their long-standing enmity, commercial ties between the two sides of the Taiwan straits have grown rapidly since the late 1980s. Taiwan is a major investor in China, and China recently passed the United States as Taiwan's largest export market. Taiwan enjoys a huge trade surplus with China. Its role in the China market could well continue to increase. Taiwan wants to establish itself as a regional operation center for third country businesses aiming at the greater China market. Taiwan is also an important trading and investment partner for Southeast Asian countries.
Until the mid-1980s the KMT maintained a single-party rule. Martial law, which had been in force since the 1940's, was lifted in 1987. Beginning in the mid-1980's and accelerating in the first half of the nineties, however, the political system has been transformed into a democracy. During Legislative Yuan (LY) elections in 1995, the ruling KMT emerged with only a single seat majority; and in late 1994, an opposition member was elected Mayor of Taipei, Taiwan's largest city; Taiwan's first direct presidential elections were held in March 1996. The press is free, though at times unreliable, and political debate is unconstrained and vigorous.
Taiwan is an economic powerhouse with the world's third largest foreign exchange reserves and over $235 billion in two-way trade. The economy is expanding at 6% with full employment and low inflation while other other economies in the region are shrinking. Its 21 million people enjoy a per capita Gross Domestic Product of $12,500. As Taiwan has grown richer, the formerly authoritarian system has evolved into a democracy. Opposition by the People's Republic of China (PRC) to any recognition of Taiwan as a separate political entity has limited Taiwan's official diplomatic activity for years. But Taiwan has broad-based unofficial relationships with most of the world's major economies, including the US democratic politics, a robust economy, and economic liberalization shape the Taiwan market.
Taiwan's constitutional system divides the government into five branches or Yuans. The five branches are the Executive Yuan, the Legislative Yuan, the Judicial Yuan, the Control Yuan and the Examination Yuan. At the top of this structure is the President. The President appoints the heads of the Yuans, including the head of the Executive Yuan, the Premier. The LY must confirm the President's nominees for these positions.
The Kuomintang (KMT, or Nationalist Party), which ran the previous authoritarian government on Taiwan, helds most of the key political posts on the island until the March 2000 election. Despite its razor-thin majority in the LY, when push comes to shove the KMT has been able to muster the votes to achieve its most important goals.
The Democratic Progressive Party's (DPP) most salient policy difference with the KMT has been the controversial issue of Taiwan independence. As the DPP has matured and gained a significant role in the LY, it modified its demand for immediate Taiwan independence. Some members of the party now call for the people to decide Taiwan's future through a plebiscite, while others assert that Taiwan is effectively independent already so a formal declaration of independence is unnecessary. The DPP has also staked out generally populist positions of concern for the environment and for working people.
The KMT was historically associated on Taiwan with ethnic Mainlanders (i.e., people who fled to Taiwan with the KMT in 1949 and the descendants of those people). The DPP has sought to identify itself with the ethnic Taiwanese (Chinese who immigrated to Taiwan during the past 300 years, mostly from Fujian Province). As the democratization process proceeded, the ethnic Taiwanese role expanded.
Corruption has been reported as most pervasive in the area of government procurement, particularly in public-sector construction projects. Local-level construction tenders seem to have the highest level of corruption. Some prosecutors estimate that payments to organized crime syndicates amount to 8 to 15 percent of the cost of all public engineering projects. The authorities have been investigating alleged corrupt procurement practices at both the provincial and central level. These investigations have resulted in a few convictions.
The primary objective of the ROC's defense policy is to defend Taiwan, the Pescadores, Kinmen, and Matsu. This entails establishing a fighting force of sufficient readiness to guard the nation and protect its people. The direct and most serious threat to the ROC's national security remains the unwillingness of Peking to renounce the use of military force against Taiwan. Thus, while ROC national defense strategy calls for balanced development of the three Armed Forces, naval and air supremacy receive first priority. In addition to current defensive preparations, a long-term policy of developing an elite fighting force and self-sufficiency in defense technology is also being strictly followed. This calls for restructuring the Armed Forces, streamlining command levels, renovating logistical systems, merging or reassigning military schools and upper-ranking staff units, as well as reducing the total number of men in uniform.
The thinking behind changes to the ROC's Armed Forces over the past few years reflects a shift from equal stress on offense and defense to assuring defense. This strategic principle, as implemented under the Ten-Year Troop Reduction Plan, has led to a targeted force of less than 400,000 troops by the year 2003 and an increase in the ratio of combat troops to overall military manpower.
The allocation of resources among the three services will give priority to air superiority and control of the seas in defensive operations, as well as to coastal defense. Accordingly, a ten-year program is to be implemented in three phases, including the development of a practicable table of organization for the three services to facilitate training and carry out peacetime missions, elimination of overlapping staff units in the three major services, and consolidation of the General Staff Headquarters of the Ministry of National Defense (MND) and the general headquarters of the three services, transferring non-military tasks to organizations outside the MND.
Second-generation weapon systems used by the three armed services are also being actively updated. These include the inception of four E-2T air defense warning systems, the formation of the first Ching-kuo indigenous defense fighter (IDF) squadron, the commissioning of the Cheng-kung and Knox-class missile frigates, and taking delivery of a second batch of AH-1W attack helicopters and OH-58D reconnaissance helicopters.
