Taiwan Communiqué No. 67, August 1995

Taiwan under Pressure

A nervous self-confidence

The Chinese missile crisis and Beijing verbal salvo's at Taiwan and President Lee Teng-hui were cause for nervousness on the island: both in the third week of July and the middle of August, the stock market in Taipei dropped sharply, and the New Taiwan dollar moved lower against the US dollar. In interviews with various international media, Taiwanese people expressed a deep concern over the Chinese saber rattling.

However, overall, there was a cautious confidence and determination to weather the storm. An opinion poll, published by the United Daily News on Saturday, 12 August 1995, showed that 79 percent of the 1,236 people interviewed said they would fight to protect Taiwan if China would attempt to invade the island.

Is Lee Teng-hui moving towards independence ?

During the past weeks, the government-controlled Chinese newsmedia, the Xinhua News Agency and the People's Daily in Beijing, launched a stream of invectives and diatribes against Taiwan President Lee Teng-hui, accusing him of "splitting the motherland", and moving towards independence for the island.

The vocal Chinese attacks against Lee sound rather peculiar to the Taiwanese people, who feel that -- if anything -- Mr. Lee has been rather slow in dropping the anachronistic "One China" policy, and in his speeches and statements still clings to "eventual reunification."

According to a press report on 19 August 1995 ("China said to seek to rein in Taiwan with war games", New York Times), the Chinese are actually trying to cause the political downfall of President Lee. For the time being, their actions seem to have the opposite effect, and appear to have increased the cohesion on the island.

During this period, opinion polls in Taiwan showed that support for President Lee Teng-hui was only slightly diminishing, dropping from 79 percent at the time of the first series of Chinese missile tests, down to 73 percent in mid-August, just before the second series. <! -- blank lines here won't affect appearance -->

Redirecting investments, from West to South

The Chinese missile tests are also bound to have a major impact on the investment strategy of Taiwanese businessmen: during the past few years they invested heavily in the Chinese coastal provinces, because of the proximity, similarity in language, and the availability of cheap labor. In total, some 25,000 Taiwan-funded enterprises reportedly have invested between US$ 10 and 20 billion in the mainland.

However, through the missile crisis, they are now seeing the true face of the Chinese: according to newspaper reports in Taiwan, local officials in the coastal provinces have visited Taiwan businesses, and told them they would be subject to a greater number of restrictions. Taiwanese businesses have no legal protection in China.

The Taipei-based China Post reported on 11 August 1995 that business leaders in Taiwan were increasingly calling for a halt in investments in the coastal provinces of the mainland, and for redirecting Taiwan's economic ties to other nations in Southeast Asia, in particular the Philippines and Vietnam. Prominent people in the democratic opposition of the DPP are also calling for a "Southern strategy", aimed at eventual membership in ASEAN.