Taiwan Today

October 10, 1977

My fellow countrymen:

This is the 66th anniversary of the Republic of China. Recalling our great achievements in establishing the Republic and looking forward to the prospects of our Revolution, we are con­fident that we shall succeed in national recovery and reconstruc­tion and are sure that the Peiping regime is doomed. All of us are jubilantly joining together to celebrate this glorious day.

Dr. Sun Yat-sen, our National Father, initiated ten revolutions and met with ten reverses before the 1911 Revolution. He never­theless maintained his faith in San Min Chu I (The Three Prin­ciples of the People: Nationalism, Democracy and Social Welfare), reinforced his call for national justice and carried on in his dauntless struggle at the head of revolu­tionary comrades throughout the country. Where there is a will there is a way. Dr. Sun finally broke through all difficulties and dangers and established the Re­public. Taking up Dr. Sun's un­finished tasks, President Chiang Kai-shek repulsed invasions from without, eliminated the traitors within, implemented constitutional rule and suppressed the Chinese Communist rebels. In the course of the National Revolution, these two leaders became more vigorous with each frustration and stronger with each battle. They went on to score one glorious victory after another.

As a result of our incessant efforts here in this bastion of national reconstruction, the Re­public of China today has become the spiritual fortress of Northeast Asia and the beacon of freedom in the Western Pacific. Our unshaken revolutionary spirit and unconquerable national ethos are clearly evident as an inheritance from the testaments and tasks set by our National Father and the late President.

Since their occupation of the Chinese mainland, the Commu­nists have never for a moment ceased in their power struggle. Purges and struggles have been continuous. The "enemy" of yesterday may become the "com­rade-in-arms" of today; the "com­rade-in-arms" of today may become the "enemy" of tomorrow. Although a handful of Chinese Communist chieftains continue to hold up Mao Tse-tung's escutcheon for personal worship, they have negated Mao's "cultural revolu­tion" and have instigated another round of struggle. The "gang of four" backed by Mao has been purged and the "capitalist-roaders" struggled down during the "cultural revolution" have made a comeback. These contradictions, schisms and turmoil provide clinch­ing evidence that the Chinese Communists are doomed. Although the so-called "11th national congress" managed to pro­vide a hodgepodge leadership and to sustain the regime temporarily by dividing up the loot, this does not indicate the slightest evidence of stability nor suggest that Peiping's internal struggle has been terminated. To the contrary, a crisis of even larger-scale struggle is in the making.

The principal victims of the bloody storms of power seizure among the Communist chieftains have been our distressed com­patriots of the mainland. We can­ not forget them for even a moment. They can no longer endure Communist slavery and persecu­tion. As the power struggles go on and on, all of the Chinese Communist cadres and members of the military find that they are in danger and seek opportunity to save themselves.

Mainland compatriots of good conscience who possess a strong sense of what is right have already renounced Communism. They will seize any and every chance to rise up, even at the risk of their lives, and seek freedom. On last July 7, Fan Yuan-yen defected to our side in his MIG19. This reflects the overall psychology of defection at the basic military level and the sanguine and tearful accusations of our 800 million compatriots as well as their aspirations for benevolence and justice. It also attests that regardless of the cruelty of Communist sup­pression or the rigidity of Communist control, human conscience can never be destroyed and the overwhelming determination of the people to be free will never waver. Out of its feelings of fraternity and its sense of responsibility, our government is providing multifarious responses and support for anti-Communist and anti-tyrannical activities that are intended to ensure human rights and freedom on the main­land. This is not merely a response of the spirit but includes many actions of a practical nature.

Although this is a time when the Chinese Communist regime is divided and facing collapse, the mistaken psychology of fearing and appeasing the Chinese Communists is still prevailing in the world. Such an attitude is tantamount to walking into the Com­munist trap step by step and confusing enemy with friend. The unity and cooperation of the democracies has been undermined. Asian security and world peace are exposed to increasingly serious threats. Additionally, the Chinese Communists take advantage of this erroneous psychology to re­sort to their deception of schism, intimidation and blackmail. The Republic of China has consequently faced increasingly difficult challenges in its international rela­tionships. But our people at home and abroad have shown a revolu­tionary spirit of independence and self-reliance and carried on their struggle courageously and with resolution. We have overcome many difficulties and weathered many perils in the last year without fear of any challenges that may be mounted in the stormy· world arena. As for the future, we shall meet new challenges with increased determination and stronger defenses. We are wholly convinced that only by firming up their strength, expressing their solidarity and increasing their co­operation can the free world democracies hope to maintain Asian security and world peace.

We have controlled the flames of terrible Chinese Communist external aggression and safeguarded the security of the Asian and Pacific region here in this bastion of national reconstruction. All of our endeavors are intended to carry out the program of San Min Chu I, liberate our mainland compatriots and reconstruct a democratic China. In terms of diplomacy, we remain in the dem­ocratic camp, uphold justice, promote relations with friendly coun­tries, and seek amity and the enlargement of cooperative ties with all democratic states. In terms of national defense, we have continuously increased our tangible and intangible combat strength and are capable of securing our bastion and annihilating the enemy at any time. In terms of economic development, we have sought to enhance the well-being of all the people and to narrow the gap between the rich and the poor. We are seeking both growth and stability, and attach importance to both indus­try and agriculture and to both city and village. Our objective is a modern society of equitable wealth, peace and happiness.

In order to augment national power and rally popular support, it is essential to put together the strength of construction in poli­tics, national defense, economy, culture, education, communica­tions and society. In carrying out the Ten Major Construction Projects, our government has dem­onstrated the spirit of moving the mountains and filling up the seas. We have passed the tests afforded by the elements. The Ten Projects are now nearing completion. Pre­mier Chiang Ching-kuo has announced that the government will undertake another twelve con­struction projects in the years to come as a part of our national policy. This indicates that the government puts the national interest above everything else and gives priority to the needs of the people. The government has now completed preparations for universal implementation of the equalization of land ownership in the Taiwan area. This will enable us "to use land resources to the full and assure that the benefits are enjoyed by all." Programs of the government show our determination to lay the foundation for a society of equitable wealth. The government will soon conduct elections for five categories of local public officials and representatives of the people. These elections are expected to promote greater unity among the people, enlarge the democratic function of choosing wise and capable representatives, and con­solidate the foundations of local self-government.

All of these unceasing meas­ures of the government for the strengthening and progress of the nation are based on the principles of respect for democracy, the rule of law and the safeguarding of human rights. Implementation is in keeping with the national interest, the people's happiness and social well-being. In all that it does, the government is of one heart and one will with the people at home and abroad. The gov­ernment loves the people whole­-heartedly and the people earnestly support the government. All of us are constantly trying to march forward together hand in hand. This has resulted in a spirit of spiritual exuberance which has borne brilliant and substantial fruit.

History affirms that we can meet any test and successfully face up to any danger. We shall have to overcome many additional difficulties in the years to come. We must unite more earnestly and persevere more determinedly. Wherever they may be - at home, abroad or in front of or behind the enemy's lines - our country­ men must contribute what they can to national construction and the great undertakings of anti-Communism. Thinking positively, government employees should show responsibility and carry out their duties; the people should devote themselves to the nation and cultivate virtue, respect for the law and frugality. Negatively, we should not allow creature comforts to corrupt our thinking, excessive consumption to contaminate our lives, disobedience of the law to disrupt social order or waste to obstruct economic development. I suggest these principles as goals for our countrymen:

- Living standards coordinated with the cultural level.
- Material conditions equating to those of the spirit.
- Day-to-day life consistent with wartime life.
- Social renovation in keeping with administrative reform.

The stronger the storm and the tide that buffet us, the greater the faith and courage we shall require. We have no fear of frustration or challenge. All of the undertakings in our bastion of national construction are car­ried out to realize the ideal of a San Min Chu I society. When the mainland is recovered, we shall make use of what we have already built as a blueprint to construct a new China in which our mainland compatriots will regain their freedom, happiness and well-being under the effulgence of San Min Chu I. This is the great goal of our construction in this bastion. Its attainment will mean the final victory of benevolence over ma­levolence, of justice over injustice and of order over disorder.

Premier Chiang Ching-kuo's oral administrative report to the first meeting of the 60th session of the Legislative Yuan

September 23, 1977

Mr. Chairman and Honorable Members of the Legislative Yuan:

Only seven months has elapsed between the beginning of your last meeting and the start of this session, but many changes have taken place abroad and at home. During these seven months we have coped with and controlled the external situation and have worked hard on our domestic construction projects. We have addressed ourselves to our duty with one mind and heart and never taken it lightly. We have not dared to think of relaxing for even a moment. We have con­stantly kept in mind the necessity for exerting ourselves and moving forward courageously. In reporting on our activities to your esteemed Yuan, I ask your com­ment and counsel.

At the previous meeting, you gave support and approval to many important laws and to the Central Government's fiscal 1978 budget proposal submitted by the Executive Yuan. I want to take this opportunity to express my deep thanks to you. I feel that we can reach the goals of our basic national policy only by applying our collective wisdom through the exercise of democratic and constitutional functions.

The crux of the confusing world situation

The world is still lost in a maze of treacherous changes and instabilities. In the overall perspective, it appears that unless the basic knot can be untied, there is a long way to go before the world situation emerges from confusion to clarity.

First, the contradiction be­tween the free world and the Communist bloc is unresolved despite the strident clamor for "detente." No progress has been made in arms control and the limitation of nuclear weapons. The abuse of human rights behind the Iron Curtain is continuing and even growing worse. There is no way to mitigate the confrontation between the two camps. The so­-called substitution of negotiation for confrontation leads only to another form of confrontation.

Second, local and regional wars are continuing to signal danger for world peace. In Africa, the Middle East and Southeast Asia, one upheaval and sanguine conflict has succeeded another. Near­ly all of these entangled conflicts have been complicated by the involvement of Communist influences. True peace and stability are obviously unattainable as long as the Communists survive.

Third, contrasts between free­dom and slavery and between the haves and have-nots remain as sharp as ever. Without any doubt, poverty-stricken areas become hotbeds of evil Communist in­fluences; starving people are prone to become the victims of Com­munist enslavement. If the demo­cratic camp does not firm up its position, eliminate the source of troubles and set higher sights in its planning, the unfortunate present state of a world that is half free and half slave will be perpetuated indefinitely. Nor will it be easy for the free world to survive.

What lies at the heart of this murky world situation? It is the fact that Communists have set a final goal of conquering the world and burying the free democracies. The Communists have clearly made known that incessant struggle is to be their means and that they are determined to rebel against the world, but people of the world have not taken cognizance of what is going on. They have clung to the illusion that they can "peacefully coexist" with the Communists. This is like sustaining and nourishing a cancer that eventually will poison one's body.

Because we Chinese have suffered the most at the hands of Communists, we are best ac­quainted with their evil nature. We know that the Communists are wicked and tyrannical and that they are the worst enemy of mankind in all history. In the light of this awareness, we believe that the solidarity of unity is the only means of survival. We can save our country only by opposing the Communists to the victorious end. As a consequence of this conviction, we can remain calm in the face of the present world confusion. We have chosen to serve as the outpost of the anti­- Communist frontline and to make Taiwan, Penghu, Kinmen and Matsu our anti-Communist base. However, this is not merely for the purpose of recovering our territory and freeing our com­patriots; we are also dedicated to the safeguarding of democracy and freedom. We intend to make ourselves into a monolith blocking the Communist rapids and into an anti-Communist beacon pene­trating the Communist fog, thus writing a bright new page in human history.

The new posture in the East Asian and Pacific region

There has been no peace in Asia since the Chinese mainland was shut behind the Iron Curtain. With the inception of U.S. con­tact with the Chinese Communists and the loss of all three Indochina states, Asia has been pushed to the brink of catastrophe. Most of the people in free Asia are now aware that any additional deals between the United States and the Peiping regime are bound to lead straight to a new war in Asia.

From the very beginning, we have opposed U.S. dealings with the Chinese Communists. We knew this could only hurt and not help the United States and the free nations in the Asian and Pacific region. Out of our regard for the importance of the alliance between the United States and the Republic of China, we have repeatedly declared that the alliance will benefit both and that an alienation would damage each. We have hoped that this view would lead the U.S. government to dis­tinguish friend from foe, stick to the right course and avoid any rash action that could gratify the enemy and grieve the friend.

There is no doubt that the Chinese Communists intend to undermine the United States by wooing the United States. This is the most sinister of Communist designs.

First, to the Chinese Commu­nists the determined anti-Commu­nist stand of the Republic of China is like a thorn in the back that makes them uneasy all the time. Consequently, the Communists clamor to seize Taiwan by military force, and at the same time seek to undermine the rela­tionship between the United States and the Republic of China in order to deprive the U.S. of a vitally important stronghold in the Western Pacific.

Second, the Chinese Commu­nists have always regarded "burial of the U.S. imperialists" as one of the chief goals of their world revolution. Since they are not strong enough to do this, they are compelled to find other tactics. They seek to lead the United States into diplomatic blunders that will cost America credibility among its allies and destroy its leadership of the free world.

Third, they try to make use of all united front tactics with the United States in opposing Russia. By pretending to unite with the United States, they can increase their bluffing and bargaining power with Russia and deprive the United States of its position as a counterweight. The Chinese and Russian Communists are really jackals roaming the same range and both seek to conquer the world. The hostility between them is an expression of power struggle within the Communist bloc; their alliance or schism cannot be swayed by U.S. policy.

Dealings with the Chinese Communists obviously will hurt, not benefit, the United States. For Asia and the world, such dealings will bring neither stability in the Asian situation nor make any contribution to world peace. On the contrary, these dealings will intensify the turmoil in the Asian and Pacific region and bring endless tragedy to the people of the world.

All Asian free nations have come to understand that the big­gest threat to Asian security originates on the Communist-occupied Chinese mainland. If the United States appeases the Chinese Com­munists, this will be equivalent to encouraging them to light the flames of war in the Taiwan Straits. At one and the same time, the Communists of the Korean peninsula in the north and Southeast Asia in the south will rise up to take advantage of the misfortunes of others. Conse­quently, the free Asian nations with tenuous defenses are in the danger of being communized.

All Asian nations can under­stand that U.S. flirtation with a regime which sits astride the back of the Chinese people can never promote contacts and friendship between the American people and the Chinese people. To the contrary, the appeasement of tyranny will alienate the two peoples. All misunderstandings and animosities between the Chinese people on the mainland and the American people result from the continuous Chinese Communist instigation of "anti-American" and "hate American" movements. Recently the Chinese Communists even went so far as to write hostility to the United States into their party charter. Obviously, the Chinese Communists have made the United States their permanent enemy. So long as the mainland is under Communist control, the United States will never have the chance to get in touch with the Chinese people of the mainland freely and gain their friendship. Although the United States established dip­lomatic relations with the Soviet Union more than 40 years ago, when has it been able freely to contact the Russian people? What has been gained in the way of bona fide friendship with the Rus­sian people?

In the last several months the American people have expressed their universal opposition against yielding to the preposterous Communist blackmail seeking aban­donment of one of their allies. The voice of justice has been raised in the U.S. Congress and in the press. The legislators of various states and cities have passed resolutions pledging moral support to the Republic of China. All of these developments reflect the fact that the broad masses of the American people have come to understand that the continuation of relations between the United States and the Republic of China is crucial to Asian and world peace and that maintenance of the alliance between the two countries is in the best interest of the United States.

It was widely expected that U.S. Secretary of State Cyrus Vance's visit to Peiping last month to seek friendly relations with the Chinese Communists and to persuade Peiping to play an important role in world peace would bear no fruit even in the sense of exploration. This attests that the United States can assist the free world only by standing firm and desisting from its flirtation with the Chinese Communist regime.

The Republic of China has for years done all it could to curb Communist expansion and stabilize the situation in the East Asian and Pacific region. We have con­sistently respected our treaty of alliance and placed a high value on our friendship, but are convinced that only self-help can lead to mutual help. We shall conse­quently continue to adhere to the principle that unity will help each and that schism will hurt both of us ill our common undertakings with the United States to quiet any upheaval in the East Asian and Pacific region.

The truth about the China ques­tion

Many people of the world are still under the fuzzy and false impression that Taiwan is the "knot" and "obstacle" preventing Asian peace. They have distorted fact and fallen into the propaganda trap set by the Communists and their fellow-travelers.

Taiwan became a province of the Republic of China as a result of China's victory in the War of Resistance Against Japan. It has now become a bastion in the struggle against Communism and for national recovery. In keeping with the fundamental spirit of the Constitution of the Republic of China during the last more than 30 years, Taiwan has been made a place of democracy, freedom, prosperity, equitable wealth, stability and peace. It has become a symbol of peace and stability in the Asian-Pacific region as well as the focal point of hope for the Chinese people shut behind the Iron Curtain and scattered around the world. Taiwan is not a "knot" or "obstacle" blocking world peace, but a fortress and bulwark of world peace.

The fall of the Chinese mainland to the Communists resulted from an accumulation of historical mistakes and was the greatest human tragedy of this century. The huge territory and the teem­ing population of China are certain to be influential in world affairs. The question is whether the people of the world want to see China as a member of the free world, contributing to human happiness, or would prefer to connive in the tyrannical rule of the Chinese Communists, thus giving them a free hand to enslave the Chinese people and injure the world. Intelligent people clearly understand that the question is not the so-called "Taiwan issue" of merging Taiwan in the present constituency of mainland China but of the appropriate form of China itself-whether it is to be a democratic China or a Commu­nist China. This is the essence and the truth of the "China issue."

In Taiwan, the Republic of China is striving to lay the founda­tions for a new China of true democracy, freedom and peace in harmony with the Chinese his­torical and cultural tradition. In time to come, we shall take the fruit of our construction in Tai­wan to the mainland together with the Constitution. In this way, all our compatriots-like their brothers and sisters in Taiwan­ will be able to enjoy a happy life, display their wisdom and talent, and contribute to the common well-being and progress of all the people of the world.

This means that there is only one answer to the "China questions;" tyrannical Communist rule must be terminated and a demo­cratic China re-established.

This is also a completely correct answer. The reason is simple: All that the Chinese Communist regime has been doing is designed to destroy the traditional thought, ethics and morals of China and the whole of its system and policy is opposed to the wishes and aspirations of the Chinese people.

We must consequently reiterate:

- There is only one China, which is the Republic of China personally founded by Dr. Sun Yat-sen, and there is only one lawful government, which is the government of the Republic of China created in an election based on the Constitution formulated by the National Assembly. We will never tolerate any change in the governmental system and legiti­macy of the Republic of China. We are determined to ensure our national independence and freedom and meet every form of challenge.

- The Republic of China will never change its basic policy of respecting democracy, enforcing the rule of law and protecting human rights. We are determined to safeguard our constitutional system and implement it through­out China.

- Based on a spirit of inde­pendence and initiative and the principles of equality and reciprocity, the Republic of China follows a consistent foreign policy of good neighborliness with other nations, respect for treaties, the promotion of international co­operation, the advancement of international justice and the assurance of world peace. We shall never change our position of adhering to the democratic camp. We shall continue our close and sincere communications with all freedom-loving nations and peoples. We shall not, however, accept any arrangement that might jeopardize our national interest and our national dignity.

- The Republic of China will never waver from its determined anti-Communist position. We shall never change our established poli­cy of refusing to negotiate or compromise with the Chinese Communists. We have pledged ourselves to struggle to the end in recovering the mainland, wiping out Communist tyranny and establishing a new China based on the Three Principles of the People.

In Chinese history, Prince Shao Kang revived the Hsia dynasty (2205-1782 B.C.) with a brigade of people, and three households of remaining forces of Ch'u state (740-330 B.C.) overcame the Ch'in dynasty (221-206 B.C.). Our anti-Communist struggle is a war of justice to free the people from tyranny, so our success will be decided by the support of the people rather than the numerical strength of troops. By the same token, the destiny of our country will be decided not by the ex­ternal situation but by our own unity and struggle.

We have today the determina­tion and courage for self-establishment, self-reliance and self-confidence. We also have dedicated, unconquerable and ambitious spir­itual strength. Together with our national defenses, our political and economic strength and the staunch support of the overseas Chinese, this will be more than sufficient to control the variables of any time, stem the adverse tide and create a new vista for us.

The domestic situation of the Peiping regime is still a mess

Since the Communists usurped the Chinese mainland 28 years ago, they have kept the 800 million people under duress and taken advantage of the situation to engage in international bluffing and blackmail and to commit evil deeds here and there. These tyrannical acts have generated an anti­ Communist tide throughout the mainland and denied the Com­munist regime even a moment of peace and stability. The Communist party is additionally afflicted by disintegration and re­bellion. The Communists are facing increasingly serious crises.

The Chinese Communists of today are still unable to solve the Gordian knots of the many prob­lems involving the party, adminis­tration, military and economy.

The party and administrative apparatus were crippled long ago by incessant internal strife and squabbling. Although Hua Kuo­-feng has climbed to the top from the crevices of contradiction, he has neither the strength nor the ability to provide effective leader­ship. So Teng Hsiao-ping has re­ turned from the contradictions of struggle. The regime recently held a hodgepodge "third plenary ses­sion of the 10th CCP central committee" and the "11th CCP national congress" in an attempt to cultivate the personal influence of Hua Kuo-feng and recast its leadership. However, factional contradictions, the rivalry between Hua Kuo-feng and Teng Hsiao­-ping in dividing the loot and the continuous struggle by remnants of the "gang of four" will assured­ly trigger another round of power struggle within the Communist party. Now Teng Hsiao-ping has expressed his fear about domestic developments. He said that "some people reject Marxism, Leninism and socialism" and that "some people trip us up stealthily so that we will fall backwards with our arms and legs pointing to the sky." Externally, he resorts to bluff and blackmail. This bluffing and fear apparently reflect the interaction of his arrogance and an inferiority complex. The Com­munist party is fraught with sharp internal contradictions. The cur­ rent compromise is merely the prelude to another bout of fe­rocious and cruel throatcutting. Party schisms and the pace of disintegration will increase.

Militarily, the signs of defeat are fully apparent. Mountain stronghold ism is common in the Chinese Communist armed forces. Since Mao Tse-tung's death, the military leaders of various factions have unscrupulously augmented their influence by sticking closely to the troops under their com­mand. This has led to confrontations between north and south and between regular forces and the militia, which are tools of power struggle. Teng Hsiao-ping has again come to the helm of military power, so he is certain to unite with the armed forces and seek to increase his strength for the confrontation with Hua Kuo-feng. Involvement of the military in the contest will surely intensify the strife. The internal struggle and turmoil of the party will lead to civil war and bring about the collapse of the Chinese Communist regime.

The recent defection of pilot Fan Yuan-yen to freedom indi­cates that most Chinese Commu­nist officers and men are disappointed and even despaired of a Communist regime which is bent upon seizure of power and private gains in total disregard of the people's suffering. This despair has engendered an endemic mood of defection. In other words, the armed forces are no longer the backbone of the Chinese Communist regime and, to the contrary, have become the main force in a future development of "Communists destroying Communism."

The economic backwardness of the Chinese mainland has long been widely known to the world. In recent years, intensified in­ternal struggle has brought confusion to production. This has been exacerbated by natural disasters. Instead of moving ahead, agricultural production has decreased in comparison with the year before last. The Chinese Communists could not cope with shortages and have been compelled to reduce the food ration, forcing the suffering people to tighten their belts still further and endure the pangs of starvation.

Facing this extreme economic predicament, the Chinese Com­munists have convened a series of conferences and refurbished the trickery of "Learn from Tachai in agriculture' and "Learn from Taching in industry," hoping thus to enhance agricultural and indus­trial morale. But none of the tyrannized people of the mainland wants to work for the Communists and be goaded by them like slaves any longer. To the contrary, they are turning their hatred and hostility against the Communists into rebellious slowdowns in farming and industry. These actions even­tually will develop into an uncontrollable tide that will engulf Com­munism.

None of the characteristics of Communism is suitable to the thought and needs of the Chinese people. The Communists' inhuman, irrational and tyrannical poli­cies and actions have forfeited all their support, because these policies and actions totally disregard the lives of the people. The dissipation of popular support is making a basic contribu­tion to burial of the tyrannical Communist regime.

We have been following the chaotic developments on the mainland closely. We have stepped up our political, economic and cul­tural warfare against the Chinese Communist regime. We have been working vigorously to expand our activities behind the enemy's lines so as to instigate and support anti-Communist revolutionary movements, open a new battlefield on the mainland, undermine the foundations of the Communist regime and expedite its destruction. We shall always remember that the obliteration of the Communists and the deliverance of our compatriots constitute a sacred and historic task. We are determined to concentrate all our strength in carrying it out.

Heightening of our alertness and strengthening of our national defense

Facing deceptive changes in the world arena, we must count on the steady development and growth of our own strength to ensure national security. A strong national defense is unquestionably the kingpin of our national strength.

Our primary current national defense assignment is the assur­ance of the security of our bastion, the expansion of our struggle behind the enemy's lines and the perfection of preparations for counterattack when the opportu­nity arises. All that we are to do must be in keeping with the spirit of self-reliance and self-establishment. The implementation of in­dependent com bat capability must be the main objective.

Although the Chinese Commu­nists clamor to invade Taiwan, they merely look strong externally and are weak internally. Even so, we cannot afford to relax. We must maintain maximum alert­ness. It is better that we expect their invasion than that we con­clude they cannot invade. We must strengthen our defenses and step up our war preparations.

Based on this way of thinking, we have completed and perfected our defense preparations in our bastion of Taiwan, Penghu, Kinmen and Matsu. They have become as strong as iron.

Under the requirements of strict and specialized training, the national armed forces have been transformed into a crack force of high morale and perfect combat skill. Moreover, there are reserves of more than 2 million men who can be instantly mobilized. We are confident that with our formidable army, naval and air forces and our heightened vigilance, we can keep the Chinese Communist invaders out of our air space, our seas and the natural barrier of the Taiwan Straits no matter what are the day and hour in which they strike.

Behind the enemy's lines, we are stepping up our activities to instigate Communist defection and establish more guerrilla strong­holds in many places and through different channels. We are uniting with anti-Communist forces on the mainland to expand the arena of combat and induce changes in the situation there.

In building up the armed forces, we base our efforts on the comprehensive concept of establishing a self-initiated national defense system, strengthening total war capability, developing national defense science and technology with vigor, promoting military modernization and unceasingly enhancing our combat prepared­ness and capability in order to carry out our task under any circumstances. We are supremely confident that so long as we can maintain our formidable strength and perfect our preparations, we shall be able to carry out our two-pronged task of providing for our national security and creating the opportunity for national re­covery.

The Ten Major Construction Projects and our economic development

Sustained economic growth of the last more than 20 years has entered a period of transition in which the industrial structure is changing. Secondary and tertiary industries are supplanting primary industry in importance. Light and labor-intensive industries have reached the saturation point of development and are being replaced by heavy, chemical and capital- and technology-intensive industries. The structure of for­eign trade is also changing. Both the content and pattern of ex­ports and imports have entered a period of replacement. These phenomena attest that we are being transformed from a developing into a developed country.

New problems growing out of transition are inevitable in this period. Adjustment is required. Additionally, the buffeting of in­ternational economic develop­ments has brought us some dif­ficulties that must be overcome. Fortunately, we have stuck to our policy of equal emphasis for both stability and growth, and the people of the whole country have exerted themselves and worked with one heart. As a result, we have brought economic fluctuations under control, minimized the unfavorable impacts and tided over the crisis. Now we are moving steadily toward recovery.

Even more importantly, the implementation of the Ten Con­struction Projects in a time of economic recession has produced some positive results. These undertakings have stimulated the production of related industries, absorbed large numbers of the unemployed and importantly diminished the seriousness of eco­nomic stagnation.

Of the Ten Projects, the China Shipbuilding Corporation, the integrated steel mill, Taichung Harbor and the upstream petro­ chemical plants have attained first­ phase completion and become operational, one after another. Follow-up construction is continuing. Several sections of the North-South Freeway have been opened to traffic. Such other projects as the Taoyuan-International Airport, Suao-Hualien rail­way and the nuclear power plants are going ahead on schedule. We are sure all of these projects will be completed in the next two years.

Looking forward from these Ten Projects, we can see the horizon of an upgraded economy. Moreover, the projects have tested our confidence and fortitude and increased our understanding and know-how. The Ten Projects have proceeded without a hitch despite the economic buffeting of the last few years. The determination of the participants in carrying out their assignments without fail and their courage and hard work assure our success in future economic development and national construction.

Additionally, we began the implementation of our Six-Year Economic Development Plan last year. Our primary objective is to adapt ourselves to changes in the economic structure and to mod­ernize industry, commerce and agriculture in order to lay the preliminary foundations for a de­veloped country in the course of upgrading the economy.

We are carrying out with enthusiasm some of the funda­mental guidelines and major measures of the plan. This is the second year of implementation, and in the first six months, the index of agricultural production increased 5.9 per cent compared with the corresponding period of last year. Industrial production increased by about 12.1 per cent. Two-way trade based on customs statistics totaled US$8,219 mil­lion, up 14.9 per cent over the corresponding period of last year. The amount included US$4,176 million in exports and US$4,043 million in imports for a favorable balance of US$133 million. For the same period, the wholesale commodity price index increased by 4.74 per cent and the retail price index by 3.47 per cent. Generally speaking, the price level was stable. Increase in the money supply was maintained at a level of about 20 per cent. In execution of the fiscal 1977 budget, preliminary estimates showed that the balance between revenues and expenditures continued and that an annual surplus could be expected.

The various indicators of the first six months showed that al­though the vitality of our economic recovery was on the in­ crease, the thrust was undeniably not strong enough. Besides this, damage to the infrastructure was incurred in two typhoons which also affected agricultural and in­dustrial production. We expect moderate economic growth this year.

Looking over these develop­ments, we are convinced that basically we should not deviate from the principle of "seeking growth with stability and seeking stability during growth." At the same time, we need to be aware that lack of growth will lead to economic withering, and that stagnation will result in decline. So in the face of keen international economic competition, we must hold onto the key of placing a little more emphasis on growth so that development can be con­tinued and invigorated.

The motive force of develop­ment comes from strong invest­ment enthusiasm and a favorable investment climate. In the six­ year plan we have listed the targets of development as promotion of farm mechanization, improvement of the industrial struc­ture, expeditious expansion of the heavy and chemical industries, strengthening of infrastructure construction, expansion of foreign trade and perfection of community development. We there­fore cannot tolerate further pro­crastination. We must, on the one hand, make our plans and set forth our targets for the encouragement of investment. On the other hand, we must restore con­fidence and the interest of inves­tors in various undertakings and encourage them to expand their production out of long-range con­siderations.

We must strive to carry out these priority tasks:

- Acceleration of agricultural development. We must guide and coordinate agricultural, forestry, fishery and animal husbandry development with progress in industry and trade and enable these sectors to play an active role in supporting economic develop­ment. We shall continue to spur rural construction, extend farm mechanization, improve production and marketing management, and stimulate farm modernization so as to raise the income of farm­ers and improve their livelihood. The guaranteed price for rice and the purchase of surplus rice will be continued in order to stabilize the rural economy.

- Improvement of the industrial structure. We shall expedite the establishment of heavy, chem­ical and sophisticated industries, and abet the vigorous develop­ment of such pivotal industries as steel, electronics, machinery, chem­icals and transportation equip­ment. These measures are aimed at strengthening our industrial foundations and closely coordinating development with the requirements of national defense industry.

- Improvement of the com­petitive position of extant industries in the international market. This will help entrepreneurs in­ crease their investment, renew their equipment, improve their management, reduce their pro­duction costs, raise their productivity, adjust their production range and develop high-quality products in order to break through export bottlenecks.

- Continued expansion of infrastructure construction. Besides completing the nuclear power projects and six transportation and communication projects of the Big Ten Projects, we shall expand telecommunications, highway, har­bor, aviation and shipping facili­ties. Among these new projects, the widening of the east coast railway and planning for the con­struction of the south bend rail­ way will be given high priority to meet the requirements of eco­nomic and social development.

- Improvement of the invest­ment climate. We shall stimulate interest in investment and pro­mote industrial investment by simplifying administrative pro­cedures, assuring reasonable levels in taxes and charges, increasing loans and facilitating the acquisi­tion of industrial land.

- Coordination of government investment with private investment. At a certain stage or in certain circumstances, private industries may hesitate and require stimulation from government in­ vestments. If necessary, government enterprises should increase their investments and prime the pump of private industrial devel­opment in order to sustain economic growth.

- Expansion of foreign trade. We need to strengthen our export organization, train competent trade personnel, establish an in­ternational trade information center, help private traders establish large trading companies and support industries and businesses in opening overseas branches for purposes of trade. At the same time, we should contract for more construction projects abroad to induce the export of related products and that of whole plants.

Two factors will be decisive in the success of the foregoing high-priority tasks:

First, we must be able con­tinuously to introduce the newest technology and recruit large num­bers of competent persons to engage in domestic research and development so that science and technology will take root at home and help upgrade our industry.

Second, we must intensify our economic research and develop­ment by recruiting experts and scholars to assure that research institutes can fulfill their design, guidance and counseling functions. In so doing, we can put our national construction and economic development on the right track and assure that these will move forward steadily and without cease in the right direction.

The amended "Investment In­centive Statute" was recently approved at the last meeting of your esteemed Yuan and has been promulgated by presidential order. The Executive Yuan will earnestly carry it out. We recently approved "Highlights for Improving the Investment Climate" in the hope of creating a better investment climate that will help attain the targets already set. The provisions may be imperfect or insufficient. We shall listen to the views of various circles before making amendments or taking supplementary action.

As the goal of economic de­velopment is to benefit the country and the people, we must adhere to the following principles whenever we plan economic poli­cy: promoting the happiness of all the people, narrowing the income gap of the people and creating a society of equitable wealth. We cannot ignore the fact that the living standard of all the people can be raised only by placing equal emphasis on urban and rural development and giving equal attention to industrial and agricultural development.

Considering the stamina shown in work on the Ten Major Con­struction Projects and the spiritual power demonstrated by government and people during recon­struction after the two devastating typhoons this year, I am confident that we shall continue to succeed in the activities of both national construction and national salvation.

Development of culture, education and science for progress in con­struction

If the economy is the trunk of the tree of national construction, education is its root. Science is the nutrient to assure its luxuri­ant growth. Culture, education and science are inalienable.

We believe that these are the primary functions of education: To disseminate knowledge and skills, change the temperament, shape the personality and cultivate patriotic and law-abiding citizens for the country in keeping with the national culture and spirit. Education should be geared to national construction and the requirements of society by cultivating various talents and developing human resources for national use, thus assuring that the nation will make continuous progress. Whether in terms of quantity or quality, all educational measures must be coordinated with the needs of the nation and the advance of the times. Education has the responsibility of enabling the nation to put down roots and grow.

We have accomplished much in education during past years, but there are undeniably defects which are still to be corrected. These are the defects that are of concern to most people:

- University, college and vocational education has not yet been freed from the rut of formalism. Departmental organization, arrangement of curricula and teaching content are still not perfectly aligned with the requirements. Learning is not linked to applica­tion. Consequently, young people who are graduated from the schools are not necessarily able to apply their learning on the job and join in the procession of national construction.

From primary school through high school and college, the student can never escape the pressure to seek more schooling. Neither the family nor society can get rid of the concept that "first priority must be given to entering a higher school." As a result, the discrepancy between balanced teaching and the aspira­tion for more schooling has not been entirely corrected. This obstructs the educational ideal of a balanced development of morals, intelligence, physique and group spirit.

- The obsession with getting into a higher school brings the keen competition of the entrance examinations as everyone struggles to squeeze through the narrow door. To ensure fairness, we are unable to abandon the system of the joint entrance examination of colleges and universities. We can only make some technical improvements. So the major fields of many students will not match their aptitudes. This means an invisible waste of part of the educational investment and human resources.

Because education cannot fulfill the needs of national construction, meet the student's need for balanced provision of his four requirements and coordinate with his aptitudes, it is no longer so effective. We cannot overlook these problems. In view of these difficulties, the government has considered the views of many experts and scholars and is formu­lating a five-year education development plan. We hope that education can be guided in such a way as to assure healthy develop­ment.

To reach the goal of develop­ing morals, physique and intel­ligence in accordance with the concept of educational equality, we plan to place emphasis on the following:

-Strengthened ideological education, moral education and practical education on the basis of the Three Principles of the People and with ethics, democ­racy and science as the framework. This will generate patriotism in students, cultivate their personalities and produce realistic talents.

- Augmented and continuously developed primary education, adjustment in the stress placed on senior high schools and vocational senior high schools, consolidated junior college and vocational edu­cation, and promotion of teaching methods that relate learning to practice. These steps are intended to build up the reserves of specialized and practical human resources to meet the needs of nationa1 construction.

- Regulation of any increase in or upgrading of college and universities on a basis of the results of the college appraisal program, attention to the apti­tudes and propensities of students, adjustment in the quantity and quality of college departments, improvement in the research en­vironment, and encouragement of academic research and studies in order to enhance the standard of higher education.

- Establishment of a system of social education, expansion of the cultural renaissance movement and the propagation and improve­ment of physical, musical and art education to assure the physical and mental health and develop­ment of the citizenry.

At the same time, the govern­ment has worked out a five-year plan of vocational and technical training, in coordination with the regular program of education and as a supplement to correct inadequacies of the regular schools in training specialists and technicians. Beginning in fiscal 1978, various technical training programs will be increased. During the five years, 260,000 grassroots technicians will be graduated to meet the manpower requirements of various programs.

To develop science, we are energetically supporting science education, promoting academic research, and strengthening and enlarging various research pro­grams in basic science and applied science in coordination with the needs of national construction. We are also increasing and strengthening our international scientific and technical cooperation programs in the hope that science development will take root at home.

In the development and research of applied science, we have decided to proceed in the follow­ing directions:

- To ensure the economical use of our resources.
- To help increase produc­tivity.
- To help improve the lives of the people.
- To coordinate with the production of national defense in­dustry.
- To increase the competition of our products in the international market.
- To emphasize that the re­sults of research have extensible value.

Based on these guidelines, we have formulated the priorities for agricultural, industrial, commu­nication and energy resource re­searches. The related agencies are mapping out work plans. We will concentrate our manpower and money to seek our goal systematically in the hope that we can score more successes.

The establishment of independent scientific research must go through these three stages: introduction, rooting and innova­tion. Close cooperation between academic and business circles is essential in accelerating this proc­ess. In my report to the last meeting of your esteemed Yuan, I mentioned the government con­cept for a scientific and industrial park. These plans are now on the drawing board. The park will take advantage of the climate of academic research to introduce new and advanced technology from abroad and establish a link between the park and domestic industries.

We can thereby ensure mutual support and cooperation between research institutes and industry and raise the quality of domestic industry in innovating and devel­oping products.

We are well aware that the results of scientific development and education cannot be produced overnight but can be confident that as long we are prepared to work hard and patiently, these undertakings will accumulate, take root, grow luxuriantly and bear fruit.

Establishment of a society of equitable wealth and promotion of the people's welfare

The objective of the six-year plan is not limited to the improve­ment and modernization of the economic structure. We also seek a balanced development of the economy and society and the es­tablishment of peaceful and happy society of equitable wealth. History has taught us that the economy of a developing country must be modernized in coordination with non-economic factors and cannot be modernized in isolation.

Our policy of social construc­tion is to achieve a balance with sustained economic development in keeping with the ideal of the Commonwealth of Great Harmony envisaged in the Three Principles of the People. The goal is to eradicate social injustice arising from economic prosperity and to assure that all the people enjoy their share of the fruit of national economic construction.

To attain this objective, we are counting on the use of taxing policy assisted by various constructive social development policies. These policies of support include universal implementation of the equalization of land ownership program, which was undertaken after the land-to-the-tiller program to provide for the reasonable distribution. of land; the construction of large numbers of housing units to assure that everyone owns the house in which he lives; the promotiol1 of regional development plans to prevent the overconcentration of people in the cities and to ensure balanced development of the cities and the countryside; the strengthening of social welfare measures and the public health program to provide care for low-income people; the expansion of vocational training employment services to increase the people's income; and the con­tinuation of family planning to reduce the pressure on the livelihood of each family. All of these policies are intended to attain gradually our goal of wealth with equity and equity with wealth.

We began making preparations for implementation of the Land Ownership Equalization Statute as soon as your esteemed Yuan approved it early this year. Preparations for the Taiwan area have been completed. We realize that this is essential in attaining our ideal of making the best use of the land and assuring that the public enjoys the benefits of the land. We pledge to do our utmost in ensuring justice and accuracy in the implementation, thus carry­ing out the program in keeping with the spirit and provisions of the statute.

Ownership of the 1,530,000 hectares of land in Taiwan prov­ince covered in this program will be processed in two installments. The first, covering 232 hsiang (village groups) and chen (townships) and 1,080,000 hectares was begun on the first of this month with announcement of the gov­ernment-fixed land price and ac­ceptance of owners' declarations of land prices. The other 450,000 hectares will be handled in the second installment.

The implications of the univer­sal implementation of the land ownership equalization program are not limited to promoting the better distribution and use of land and the increase of the land's economic benefits. The completion of this program will mark another peaceful and progressive land and social reform.

As for the construction of houses, the government planned to build 20,000 units during the last two fiscal years. As of last June, 2,500 had been completed and construction of others had been started, although the program is lagging. In the period covered by the Six-Year Economic Development Plan, more than 96,000 units are scheduled to be built and another 78,000 units will be repaired or rebuilt. This work will be carried out from year to year. To assure efficiency, we are studying and improving the system, organization and functions.

One of our social welfare measures is the enlargement of the labor insurance program. As of last June, the number of those insured exceeded 1,760,000. If an insured person has an average of five dependents, the number of those benefited exceeds half of Taiwan's population. The program is thus a major contributor to social stability. We are now amending the labor insurance statute and preparing to raise the payment of benefits and enlarge the scope of coverage. The draft of this amended statute soon will be submitted to your esteemed Yuan for approval. Other measures include the improvement of social welfare services and the social relief program, assistance and guidance for people seeking employment, and strengthening of the public health program. In particular, we are vigorously push­ing medical services in remote areas and the environmental sanitation program in the hope that those with low and medium incomes can obtain the care that they need and feel more secure in their lives.

We know that the success of construction is closely related to the state of social mores and trends. It will be a mockery to promote the welfare of low-in­come people at the same time a minority of high-income people indulge in extravagance. It cannot be denied that our society is sliding into extravagances. We must prevent this tendency as we dedicate ourselves to establishing a society of equitable wealth. We want to create economic prosperity but not to become extravagant in our way of living. We can make our people wealthy, but we must not encourage the waste of our resources. This is not merely a philosophy to which we must ­ adhere in order to assure the purity and thriftiness of society, but also a principle to be grasped in upgrading our economic development. We must be sincere and earnest in correcting degenerative and vainglorious social phe­nomena and in advocating thrift. The government is especially de­termined to crack down on dens of sin and crime that damage society and to create a pure, clean and secure society.

Renovation of the administration and the rallying of popular support

We have pursued administra­tive renovation for years. Our goal is to establish an open society by assuring administrative efficiency and to open a wide vista by developing our economy. In approaching the problem, we

- demand that our administrative colleagues substitute service for control, substitute cooperation for interference and substitute sym­pathy for criticism. This will make our government practical and efficient and enable us to rally popular support and increase our national power.

We have made some progress in the past, but progress has no limits. We should not content ourselves with a small success. By its nature, administrative renova­tion must make continuous progress in keeping with the advance of the times and society. We require a competent and effective government not only to promote our administrative affairs and the people's welfare but also to cope with world developments and to open up a new horizon. In other words, we still have need to provide new ideas and instill new vitality in our administration.

Reviewing past efforts, we be­lieve we can strengthen our efforts and carry out the following:

- We must see that our ad­ministrative personnel establish and strengthen their concepts of political morality. They must be loyal to the country, dedicated to the people and responsible in their jobs-courageously taking up their administrative and legal responsibilities and also their moral and conscientious responsibilities. They must distinguish right from wrong and justice from profit. They must know what should be done and what should not be done. In doing so, they will be at peace in their hearts and have no shame in their lives.

- We must see that our administrative organizations are or­ganic bodies and full of vitality. In ordinary times, these organiza­tions must coordinate their work, avoid departmentalism, demon­strate esprit de corps and promote various administrative measures systematically -and scientifically. In time of war, they must work flexibly, strictly and accurately. They must always maintain a high state of alertness in order to cope with any emergency.

- We must see that our ad­ ministration matches the aspiration of the people. Anything to which the people aspire must be carried out by the government regardless of all difficulties. All things they detest must be terminated by the government, even when these are trifling.

The administrative branch faces the important task of con­ ducting elections for five catego­ries of local public officials. Although the competent organiza­tions have much experience in conducting elections 'and have made many improvements on the occasion of each election, the conduct of five elections at the same time will be a challenge to administrative efficiency. At this time of national difficulty, we cannot afford to have elections undermine our unity. We believe that to the contrary these elections will reinforce this unity even more firmly and link the people closely to the government. It can be said that these elections are an acid test of the government's competence.

The government's position on conducting these elections is not to discriminate against any candidate because of party affiliation, provincial origin or other back­ground. All candidates are re­garded as equal. So long as they are law-abiding citizens of the Republic of China and carry out their campaigns in accordance with the law, they will assuredly be protected by the law.

Our resolution to carry out local self-government in Taiwan could not be stronger. We are determined to take the results of this implementation to the main­land with us along with the Constitution and make this the blueprint for constitutional rule throughout the whole country. At the same time, we have supreme confidence that the foundations of local self-government will be greatly strengthened by the gov­ernment's adherence to "justice, impartiality and the open approach" in the election of able and wise persons to public office. We also believe that democracy and the rule of law is the only way to political modernization.

Move forward courageously to fulfill our tasks

Honorable members: Looking ar