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Taiwan Flag

TAIWAN

   In 1895, military defeat forced China to cede Taiwan to Japan. Taiwan reverted to Chinese control after World War II. Following the Communist victory on the mainland in 1949, 2 million Nationalists fled to Taiwan and established a government using the 1946 constitution drawn up for all of China. Over the next five decades, the ruling authorities gradually democratized and incorporated the native population within the governing structure. In 2000, Taiwan underwent its first peaceful transfer of power from the Nationalist to the Democratic Progressive Party. Throughout this period, the island prospered and became one of East Asia's economic "Tigers." The dominant political issues continue to be the relationship between Taiwan and China - specifically the question of eventual unification - as well as domestic political and economic reform.

LOCATION

Eastern Asia, islands bordering the East China Sea, Philippine Sea, South China Sea, and Taiwan Strait, north of the Philippines, off the southeastern coast of China. Slightly smaller than Maryland and Delaware combined.

POPULATION

22,749,838 (July 2004 est.). Taiwanese (including Hakka) 84%, mainland Chinese 14%, aborigine 2%. mixture of Buddhist, Confucian, and Taoist 93%, Christian 4.5%, other 2.5%.

NATURAL RESOURCES

Small deposits of coal, natural gas, limestone, marble, and asbestos.

NATURAL CHALLENGES

Earthquakes and typhoons. air pollution; water pollution from industrial emissions, raw sewage; contamination of drinking water supplies; trade in endangered species; low-level radioactive waste disposal.

ECONOMICS

Taiwan has a dynamic capitalist economy with gradually decreasing guidance of investment and foreign trade by government authorities. In keeping with this trend, some large government-owned banks and industrial firms are being privatized. Exports have provided the primary impetus for industrialization. The trade surplus is substantial, and foreign reserves are the world's third largest. Agriculture contributes 2% to GDP, down from 32% in 1952. While Taiwan is a major investor throughout Southeast Asia, China has become the largest destination for investment and has overtaken the US to become Taiwan's largest export market. Because of its conservative financial approach and its entrepreneurial strengths, Taiwan suffered little compared with many of its neighbors from the Asian financial crisis in 1998. The global economic downturn, combined with problems in policy coordination by the administration and bad debts in the banking system, pushed Taiwan into recession in 2001, the first year of negative growth ever recorded. Unemployment also reached record levels. Output recovered moderately in 2002 in the face of continued global slowdown, fragile consumer confidence, and bad bank loans. Growing economic ties with China are a dominant long-term factor. Exports to China - mainly parts and equipment for the assembly of goods for export to developed countries - drove Taiwan's economic recovery in 2002. Although the SARS epidemic, Typhoon Maemi, corporate scandals, and a drop in consumer spending caused GDP growth to contract to 3.2% in 2003, increasingly strong export performance kept Taiwan's economy on track, and the government expects Taiwan's economy to grow 4.1% in 2004.

Revenues: $56.58 billion
Expenditures: $69.21 billion, including capital expenditures of $14.4 billion (2004 est.)

INDUSTRY

Electronics, petroleum refining, chemicals, textiles, iron and steel, machinery, cement, food processing.

Natural gas - proved reserves:         
38.23 billion cu m (2004)

Debt - external:    
$53.44 billion (2004 est.)

Internet hosts:     
2,777,085 (2003)

Internet users:     
8.83 million (2003)

CONFLICTS

Involved in complex dispute with China, Malaysia, Philippines, Vietnam, and possibly Brunei over the Spratly Islands; the 2002 "Declaration on the Conduct of Parties in the South China Sea" has eased tensions but falls short of a legally binding "code of conduct" desired by several of the disputants; Paracel Islands are occupied by China, but claimed by Taiwan and Vietnam; in 2003, China and Taiwan asserted claims to the Japanese-administered Senkaku Islands (Diaoyu Tai) with increased media coverage and protest actions.

OTHER CONSIDERATIONS

Regional transit point for heroin and methamphetamine; major problem with domestic consumption of methamphetamine and heroin; renewal of domestic methamphetamine production is a problem. ##All Rights Reserved. © 2005 TheWeekInCongress.com

Images and Data; US CIA January 13, 2005)