President Chiang told a meeting on national security that "we must carry out thoroughly the important work of ensuring internal stability and pursue the elimination of Communist agents" so as to defeat invading enemies and prevent infiltration and subversion.
He said that in implementing its responsibilities, the government will not disappoint the people.
President Chiang urged his countrymen to stick to the basic anti-Communist national policy, maintain their courage in facing adverse international events and persevere with unshakable conviction.
President Chiang said he was moved by the way in which patriotic countrymen at home and abroad had expressed their loyalty to the country with gifts of blood and money.
Patriotic sentiment brought out the high morale and dignity of the Chinese people, who remained calm and carried on during a critical period, President Chiang said.
This shows that the Republic of China cannot be discredited and increases confidence in self-reliance and the final victory, the President said.
He expressed appreciation for support of the three emergency measures of the government after President Carter announced diplomatic recognition of the Chinese Communists in mid-December.
The measures included a military alert, stabilization of the economy and suspension of the parliamentary elections.
The President assured the American people of the continued friendship of the Republic of China.
He said: "In our hearts, we still have confidence in the Americans. The American and the Chinese dream remains the same: that of a free and prosperous society."
Premier Sun Yun-suan assured the American business community in the Republic of China of continued government support and said "nothing has really changed in the relationship between our two peoples."
The Premier gave the assurances in an address to the Chinese New Year's dinner of the American Chamber of Commerce in the Republic of China, which has consistently opposed U.S. recognition of Peiping at the expense of free China.
Speaking of the U.S.-ROC relationship in the post-derecognition era, Premier Sun said, "We will do all within our power to smooth your way, personally and in business."
He added, "We will continue to honor our agreements and commitments, and strive for even closer economic and cultural ties with the United States. The investment climate here will be further improved. Special attention will be given to the security and convenience of American people in Taiwan and the education of their children."
Speaking at a gathering of ranking Kuomintang officials, Premier Sun said that the government will shift its emphasis from government-to-government diplomacy to people-to-people diplomacy in its relations with the United States.
He said the break in ROC-U.S. ties was a serious setback. "But we are not discouraged," Sun said. "The majority of American people still support the Republic of China and traditional friendship between the two peoples is not hurt."
The government will promote cooperation and joint activities between the Chinese and American peoples, Sun said. It will continue developing commerce, investment, and cultural, scientific and technological relations. "We should let our American friends know that our two peoples should work together for our common ideals and common interests," he said.
The government will step up economic and technical cooperation with other countries that still maintain diplomatic ties with the Republic of China.
Sun said government and people should be alert against Chinese Communist subversion and united front tactics. Communists are resorting to a peace offensive that shouldn't deceive anyone, he continued. "We must not fall into the trap set by the Chinese Communists," he said.
The Premier urged the people to give full support to the government and live a simple life.
Free China will seek military power for national defense, he said, stabilize commodity prices, promote foreign cooperation and raise the living standard of the people.
Advanced foreign weapons will be acquired and underground military facilities built, he promised.
"By spreading negotiation rumors," Premier Sun said, "the Communists are trying to undermine our fighting will and shake our confidence."
Defense Minister Kao Kuei-yuan said the government will take "extraordinary actions with great determination" to develop new weapons and strengthen combat readiness.
Manufacture of sophisticated weapons is still beyond the capability of domestic industry at the present stage of development, he said, so new measures will be undertaken to achieve a break through.
"The Ministry of National Defense is strengthening cooperation between the ordnance industry and civilian industries so as to overcome technical problems in the shortest time possible," Kao said.
In seeking the participation of civilian industries in the development of defense industry, the Ministry of National Defense will help them upgrade their capabilities.
The defense minister was commenting on the Legislative Yuan's passage of the Statute for the Defense Industry Development Fund.
The Cabinet has set the initial fund target at NT$5 billion, which will be increased in the future as need arises. Public donations are nearing NT$2 billion. The rest will come from the government.
The fund will finance defense research and development, recruitment of personnel and procurement of facilities.
Procurement of weapons from abroad will be funded from other resources, Minister Kao said.
Arthur Paecht and Francois Leotart, who visited Taiwan, expressed optimism over the possibility of the Republic of China buying arms from France. They were optimistic over increased trade between the Republic of China and the European Economic Community.
Paecht said Premier Sun expressed hope France could play an important role in Taiwan's economic development.
Paecht, the former mayor of Frejus, said France has been prudent in manufacturing and selling weapons.
"We now realize," he said, "the need for weapons to help your country defend freedom in the world."
Leotart said he is opposed to French sale of weapons to any country opposing the Republic of China.
"As a member of the National Assembly, I have the obligation to tell my people, col1eagues and government that the Republic of China is a political and economic entity with a booming economy and growing standard of living," he said.
Chinese and foreign military experts in Hong Kong agreed that the strategic position of Taiwan is of great importance in defense of the free world.
Japanese military experts led by Shin Kanamuru, center, visit Taiwan and inspect the Republic of China's defenses. (File photo)
One look at the map shows Taiwan's position in the Pacific defense chain stretching from South Korea through Japan, Okinawa, Taiwan and the Philippines. Taiwan safeguards the vital waterway of the Taiwan Straits.
A Korean expert said Korea and Japan would be exposed if Taiwan were left undefended. He said "normalization" between Washington and Peiping would increase defense budgets in Japan and South Korea.
An American expert said any change in the U.S. Pacific defense concept will move the U.S. frontlines all the way back to Hawaii.
Chinese experts emphasized that the Republic of China helps stabilize Southeast Asia.
Dr. Edward Luttwak of Georgetown University said atomic weapons are not very useful but the ROC should "acquire the option of getting them."
On the U.S. decision to freeze new arms sales to the Republic of China for 1979, Luttwak said "you have to shop around; there's a big world out there."
Asked if the Chinese Communist regime will succeed in its "four modernizations," the expert on strategy said it will take the Communists a long time to catch up with the Republic of China and Russia will not allow Red China to grow "without doing something."
Free China, Japan and the Republic of Korea should sit down and discuss their common security problems now that the United States has walked out on its ally, the Republic of China, said Shin Kanamaru, a member of the Japanese House of Representatives.
Kanamaru, former director of the Japan Self Defense Agency, visited the Republic of China at the head of a 10-member Diet mission composed mostly of military experts.
He said he was unhappy with the way the United States cut diplomatic ties with the Republic of China and established relations with the Chinese Communists. He expressed hope that the United States would come out with an unequivocal policy on the security of Northeast Asia. He suggested the Republic of China, Japan and the Republic of Korea should strengthen their cooperation.
He said the Taiwan Straits is an important sealane to the Persian Gulf for Japan and Korea. Without the Republic of China to assure the security of the Taiwan Straits, there would be no security for Japan, he said, and urged the United States to clarify its stand.
The Kanamaru mission included Masayuka Fujio, member of the House of Representatives; Kiyoshi Mori, another Lower House member; Kazuoki Uchida, former chief of naval operations, Japan Maritime Self-Defense Force; Kazutsugu Sugita, former chief of staff of the Japan Ground Self-Defense Forces; Akira Tokumaru, former commander of the Western Command of the Japan Air Self-Defense Forces; Noboru Minowa, member of the Lower House; Massao Horie, member of the House of Councilors; Osamu Nishi, associate professor of the Japan Self-Defense University; and Takaya Shimizu, staff member of the Liberal-Democratic Party self-defense study group.
Construction of three nuclear power plants now under way will give Taiwan a new and modem look in electricity output.
According to the Taiwan Power Company, the rust nuclear plant was completed when the second generator was instal1ed early this year. The second nuclear power plant is scheduled to be completed in three years' time.
The first genera tor of the second nuclear power plant will become operational by October, 1981, and the second generator by October, 1982, Taipower said.
The second plant is located near the northern tip of Taiwan with an area of 225 hectares. Bechtel Inc. of the United States was engaged as architect/engineer.
The plant is designed on a twin unit concept. Each unit has a boiling water reactor nuclear steam supply system furnished by the General Electric Company and capable of producing 12,450,000 pounds per hour saturated steam at pressure of 985 pounds per square inch.
The two generator units are Westinghouse TC4F-44 three casing reheat turbines, hydrogen cooled. Each is rated at 985,333 kilowatts.
Power will be transmitted to the Taipei area for distribution.
The reactor and auxiliary buildings which house nuclear steam supply equipment have concrete biologic shield walls to stop radiation. Shield walls are provided in other buildings wherever there is the remotest possibility of radiation leakage.
Low enriched uranium pellets sealed in tubes are used as fuel.
Construction of the Suao-Hualien Railroad on northeast coast is expected to be completed by the end of this year. The project is being undertaken by the Retired Servicemen's Engineering Agency, who have given up all holidays for the last five years.
The southern part of the railroad from Hoping to Hualien has had successful trial runs.
The 88.5-kilometer railway includes 19 tunnels with a total length of 32 kilometers and 35 bridges with length of 6.4 kilometers. Work began December 15, 1973. Cost is estimated at US$130 million.
Completion will spur development of eastern Taiwan, which is rich in marble, limestone and other minerals. The Taiwan Railway Administration estimates that the cost can be recovered in three years.
Domestic investment will be encouraged to achieve targeted 8.5 percent economic growth in 1979, according to the Council for Economic Planning and Development.
CEPD officials estimated that the nation will need NT$326.6 billion in domestic investment, of which NT$290.4 billion will be for gross fixed capital formation and NT$36.2 billion for inventory investments.
The figure will represent an increase of 21.6 percent in real terms compared to the value of investments recorded in 1978.
Investments will be aimed at accelerating development of capital-intensive and sophisticated industries to improve the industrial structure and boost economic development.
The Ten Major Construction Projects are in the final stage of completion and the Twelve New Projects are starting this year.
Domestic investments, especially those coming from the private sector, will be further encouraged, officials said.
Of gross fixed capital formation, private investment will account for 49.8 percent to reach NT$144.7 billion, while public investment will contribute 50.2 percent for capital investment outlay of NT$14 5.7 billion.
The share of investment from the private sector will rise by 0.2 percent compared with 1978, while investments from the public sector will decline by the same amount.
The percentages of domestic investment in various sectors are: agriculture, 4.3; industry, 52.9; and services, 42.8.
Most investment will come from domestic savings, which are expected to reach NT$336 billion in 1979, including NT$87.6 billion in government savings, NT$27.6 billion in public enterprise savings and NT$81.7 billion in equipment depreciation.
CEPD estimated that capital needs in 1979 including domestic investment, repayment of foreign loans and other capital outflows will total NT$393.1 billion.
Investment by overseas Chinese, transferred income, foreign loans and other capital outflows will total NT$l.37 billion.
Drastic increase in cars, especially those which are privately owned, is causing a serious drain on the energy supply.
Private cars have been increasing by 22.02 percent annually in the last five years.
Fuel consumption has increased by an average of 20 percent annually. The share of private cars in energy consumption has risen from 6 percent in 1970 to 11 percent in 1978.
The number of buses increased by 7.7 percent in 1973 and 10.09 percent in 1.976. A decline followed in 1977 and 1978, indicating increased use of private cars.
Private cars increased by 33.38 percent in 1973, 34.97 percent in 1974, 22.36 percent in 1975, 20.33 percent in 1976, 25.08 percent in 1977 and even more in 1978.
In 1952, there were about 1,900 buses and an equal number of private cars. Now there are 120,000 cars and 12,000 buses.
At this rate of increase, the newly opened North-South Freeway will be jammed bumper-to bumper with cars in five years, experts said.
The increase in private cars shoots up when per capita income reaches a level of about US$1,000. People then seek transportation that is fast, comfortable and convenient. Cost is no longer an inhibiting factor. Taiwan per capita income reached US$1,304 in 1978.
Cars also cause pollution and traffic problems. In Taiwan, car owners are not required to have a garage. Autos are parked on the streets.
Yu Teng-fa, former independent mayor of Kaohsiung County, and his son, Yu Jui-yen, were arrested on charges of engaging in subversive activities.
The Government Information Office said the Yus were recruited into a subversive organization by a suspected Communist agent, Wu Tai-an, who was arrested along with four other suspects by Bureau of Investigation agents last October and pleaded guilty at an open military trial.
Law enforcement agents found a document appointing Yu Teng-fa as "supreme commander of the Kaohsiung-Tainan area."
The two Yus were turned over to the Taiwan Garrison Command to be tried by a military court.
Daily service has opened on the southern section of the mountain railroad connecting and Hualien on east coast. (File photo)
Communist agents tried to stir up trouble during the parliamentary elections by spreading rumors, the Taiwan Garrison Command disclosed.
General Wang Chin-hsi, commander of the TGC, told Chengchi University students that during the election campaign, there were rumors that some independent candidates had prepared arms and policemen's uniforms with a view to stir ring up violence and blaming it on the government.
Independents were bombarded by rumors that the government was ready to pounce on them for criticizing the ruling Kuomintang.
Those rumors were spread by Communist agents to divide government and people, General Wang said.
With the establishment of diplomatic relations between Washington and Peiping, the Chinese Communists have stepped up subversive activities in Taiwan to reinforce their peace offensive, Wang said.
He called on the people to be vigilant against the Communist conspiracy and safeguard the free way of life in Taiwan.
Crown Prince Fahd issued instructions to the Saudi Arabian foreign ministry to maintain close and friendly relations with the Republic of China.
The instructions came after the United States announced its decision to recognize the Peiping regime.
The Saudi government has continued to show staunch support for the free Chinese government and its desire to strengthen cooperation.
ROC Economic Minister K.S. Chang said in Jeddah that the Republic of China will continue to strengthen ties with Saudi Arabia. He cited cooperation in industry, agriculture, construction and education.
Minister Chang signed an interim agreement with Ghazi Ai-Gosabi, Saudi minister of industry and electricity, on establishing a $300 million joint venture fertilizer plant in the kingdom. It will convert now unused natural gas into urea.
Vice President Shieh Tung-min urged international marine scientists to help develop free China's ocean resources and upgrade research.
Scholars and experts came from Australia, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Thailand, Hong Kong, and the United States.
Addressing the opening session of the first Conference on Marine Science and Technology in the Pacific Area, Vice President Shieh told the 150 participants that Dr. Sun Yat-sen, founding father of the Republic of China, said long ago in his "Plan for National Construction" that Chinese marine resources "might be developed on a basis of international cooperation with mutual respect and mutual benefit."
Dr. Sun conceived of six projects in harbor construction, fishery, shipping, shipbuilding and merchant marine.
The late President Chiang Kai-shek advocated "parallel development of land and sea," Shieh said.
"Research and development of the ocean re quire perhaps more international cooperation than any comparable task," he added. "Moreover, this is the only way to lighten the financial burden of individual countries, solve many problems that transcend national consideration and gather comprehensive data."
Provincial Governor Lin Yang-kang reiterated the policy of providing sufficient arable land for rice planting in order to assure self-sufficiency in food.
Addressing an agricultural and husbandry production held at Chung Hsing University in Taichung, Governor Lin said arable lands should be reserved for food production, including fish culture along seacoasts.
Hsu Wen-fu, chief of the Agricultural Department of the Provincial Government, presided and more than 800 persons participated.
Governor Lin directed attention to an Executive Yuan directive on raising the income of farmers and strengthening rural reconstruction.
He urged cooperation among farmers them selves -to provide expansion on a large scale.
Some laws and regulations have discouraged cooperation, he said, because farmers feared they might lose control of their land.
He expressed hope the Central Government will revise regulations to encourage cooperation.
The Join t Commission on Rural Reconstruction will step up efforts to improve the national diet.
JCRR said dietary habits are changing.
In 1945, the people of Taiwan consumed 11.5 grams of pork daily. Now the amount is 58.5 grams. Consumption of meat has increased 6 times, fish 15 times and fruits and vegetables 25 times.
Calorie intake rose from 1,277 to 2,719.
The report said calorie and protein counts are now less important than vitamins and minerals.
People in Taiwan generally lack vitamin B2 and calcium, followed by vitamin A and iron.
JCRR recommended more dietary education.
Cabinet approval was given the Feitsuiku reservoir project, which is expected to assure Taipei with sufficient water for the next 40 years.
The reservoir will be second largest in Taiwan after the Tsengwen reservoir in southern Taiwan. It will hold 206 million cubic meters of water.
The project also involves construction of a power plant with annual output of 100,000 million megawatts.
The project will cost NT$5.5 billion, not counting water distribution facilities.
The 120-meter high dam will be located on the lower reaches of the Peishih River, a tributary of the Hsintien.
Mayor Lee Teng-hui, who will head the dam construction committee, said geological surveys indicate there will be no downstream danger. Members of the committee include people's representatives as well as experts.
Prices rose by 6.39 percent in Taipei last year, said the Department of Budget, Statistics and Accounting of the City Government.
The index of building construction was up 12.14 percent and that of services 8.1
April brought the biggest rise as the result of continuous rain affecting the food supply.
For all of 1978, food prices were up 9.32 percent. Fruit prices went up 50.37 percent as output declined.
Other price advances last year included: health care, 7.51 percent; clothing, 4.89 percent; education and recreation, 8.01 percent; and transportation, 0.34 percent.