There is every indication that 1988 will be another exciting year of broad change and transformation in the ROC. In order to present to our readers some sense of what to expect, late last year FCR's Editor-in-Chief, Dr. Jiang Ping-lun, who is himself a professor of political science at National Chengchi University, asked four prominent local scholars to meet with the Review's staff and discuss their assessments of the prospects for the ROC in 1988. They are:
Dr. Kuo-hsiung Lee, an associate professor in the Department of Political Science at National Chengchi University;
Dr. Hsin-huang Hsiao, a research fellow in the Institute of Ethnology at Academia Sinica;
Dr. Bernard T.K. Joei, LL.D., the director of the Center of Area Studies at Tamkang University; and
Dr. Tzong-shian Yu, Vice President of the Chung-Hua Institution for Economic Research.
Prof. Lee:
Before we start discussing possible changes in the ROC's political environment in 1988, we should first review the remarkable political changes that have already taken place this year. This is especially true for the six-month period beginning in February with the opening of the 79th session of the Legislative Yuan.
It is clear that the leaders of the ruling party (the KMT), the "DPP" (the "Democratic Progressive Party"), and other political groups outside the government had—and still have—conflicting viewpoints about the current political system and also the speed of democratization.
From reports in the mass media, we are aware of dramatic political events happening almost everyday. Because various political disputes have emerged, it seems to give the impression that the ROC is experiencing significant political disturbances.
But usually political disturbance is only an intermediate, transitory phenomenon following political reforms. In our case, it was buffered during the recess of the Legislative Yuan (from June to August 1987).
Since the 80th session started in September, there has been a trend toward harmony in the Legislative Yuan. We can see progress in the interpellations of the lawmakers (when officials of the government are formally queried about their policies and actions), particularly on the enactment of the new law of assembly and demonstration. The more congenial attitude we now see shows that the earlier political reforms have already had some effect. Thus, the political elites inside and outside the government seem to have a basic consensus that both a sense of tolerance and the skill to give and take are fundamental ingredients of democracy.
Yet success in further systemizing and democratizing the ROC's political body depends on whether the somewhat sensitive political reforms since 1986 will continue or not through compromise between the government and the opposition. And this is the pivotal point if the ROC is to progress steadily.
The ROC political system has been challenged by one political dispute after another. Take the conflict over how best to handle the reshuffling of representative seats in the National Assembly for instance. The KMT came up with the idea to keep the seats of the delegates elected from China mainland on the one hand, and to add the seats of the ones elected by the constituency in Taiwan area on the other. This proposal contradicts the position of the "DPP" members, who insist on an overall re-election of representatives.
Seymour Lipset, a political sociologist, said that one of the essential reasons for the success of European democratic systems is that they not only retained the dignity of the traditional political force— the royalty—they also allowed the new generation to enter the center of political power. Learning a lesson from them may help us solve the conflict of systematic political reforms.
Generally speaking, I suspect our political reforms could well have a clearer picture in 1988. Once this cardinal issue is solved, the ROC's political system will have a fresh outlook.
In 1988, the nature of the ROC's party system will change owing to the new legislation concerning the Law on the Organization of Civic Groups. Opposition parties will be legalized. Starting from the second half of the year, all the parties will do their best to prepare for the coming 1989 general election of both central and local people's representatives and administrators. Therefore, 1988 will be a year of mobilization for different political forces in the ROC.
Both the government and other political forces will mobilize themselves for the coming election. With little doubt, it will be a severe test not only for the opposition, but for the ruling KMT as well. Especially during the second half year, the scene will be set for the results of the 1989 election. And the impact of social mobilization in connection with the elections will prove whether or not the current system can maintain political stability.
The 13th National KMT Party Convention is supposed to be held in 1988. Will the political balance among the KMT members change? In other words, will the young political elite move to the center of political echelon to cope with the new policy directions submitted by the KMT? In addition to seeing the new moderation in political power, the names of the new decision makers of the KMT will probably be known after the Convention.
Among other important events in 1988, the policy of permitting citizens to visit their relatives on China mainland will have to be thoroughly evaluated. It will have been carried out for one year, and most likely the policy will have to be adjusted and revised. Moreover, the interaction on the two sides of the Taiwan Straits can be expected to become more dynamic and also on a larger scale.
Finally, only by maintaining social order can the ROC keep growing stably. I will say that the ROC in 1988 will tend to be a more democratic and open society. Furthermore, its openness and democracy will push the ROC to become more and more internationalized and liberalized. Thus the ROC will be listed as one of the world's modern democracies.
Prof. Hsiao:
Usually most sociologists avoid making specific predictions about the future. For the most part, we just analyze what appears to be long-range tendencies. Anyway, I think the situation in 1988 will not differ too much from what we see now.
Since the lifting of the Emergency Decree, the government has been trying to set the extent of its power and authority to adjust to a new political phase. But unless there are proper laws for both the government and the people to abide by, the disturbances caused by events such as anti-pollution demonstrations will probably continue. Therefore there may be some unrest in 1988 until the related laws are enacted.
But our social unrest should not be completely attributed to the lifting of the Emergency Decree, even though it was prompted somewhat by it. For now, the public seems to expect too much from the lifting of the Decree, and overestimates the effect of it.
Even the government feels incapable of establishing principles for dealing with social events. The Emergency Decree was lifted, and it seems at times that social order has gone with it also. Now and then the government is reluctant to take responsibility for things that it should do, and sometimes it acts firmly at the improper time and place.
I think there are other latent social issues which may become more noticeable next year. Most times, people don't think about finding ways to prevent problems; they only seek solutions afterwards, and it's always too late. The video games problem a few years ago was a typical example.
The notion that "prevention is better than cure" is more often said than done. We can't deny that most problems of today have deep roots. For instance, motorcycle racing among our youth, and the Ta Chia Le fad (gambling in an illegal lottery) have existed for more than three years-long before they became major social problems. I wonder why concerned government officials didn't try to understand and even to stop them before they turned into serious social problems. Now they are tough problems, and people are uncertain about the government's ability to solve them. In addition, there are traditional social problems such as crimes committed by teenagers and gangs that remain unsolved. From my observations, in 1988 these social problems won't be much better or worse than in 1987.
While it's possible to feel optimistic about 1988 even in light of the problems I've mentioned, it's clear that no matter what we will have order. How can there best be social order? Much depends upon whether the Legislative Yuan can establish relevant laws openly, carefully, creatively, and thoroughly during its current session. Several are particularly important:
First, the Law on the Organization of Civic Groups—especially for social gatherings. There is no reason to be afraid of having social organizations, on condition that proper norms have been set for people to abide by. Having healthy and active social organizations is definitely better than not.
Second, the Law of Labor Unions, which the lawmakers are currently amending. This should set the rules for strikes and detail the extent to which self-government of the unions can be expanded.
Third, the Law Concerning Environmental Pollution Disputes has been on the agenda for quite some time. It will probably be discussed in April. For the time being, the problem is that there are no regulations at all for the polluters and anti-pollution groups to observe. Both parties feel victimized, and at present the government can't do anything about such disputes. Even though the polluters are originally to blame for the pollution they cause, for the most part they do not feel guilty about what they have done, and they ignore the protests. This has caused high emotions among both polluters and protesters. The sooner the environmental law is passed the better for everyone.
Fourth, the Law to Protect Consumers is also quite important. Without such legislation, the consumer-producer relationship can't be balanced in society. Even though most people focused their attention on local anti-pollution demonstrations in 1987, actually there are another 10 quasi-social movements underway in our society.
These are movements by labor, consumers, ecological preservationists, anti-pollution groups, teachers, students, women, aborigines, aged veterans, and political offenders. Most of the movements are unpredictable. In case there are no proper regulations, their unpredictability will increase. Therefore the four laws I have just mentioned will help set up a good order for the groups concerned. If these laws can be enacted without much difficulty, we can expect more social order.
Furthermore, the emotional mood about the lifting of the Emergency Decree should have cooled down in 1988, and that will also help establish a new social order. Though the 1989 election may well increase instability in 1988, most parties won't want the election campaign to become too messy, and they will therefore try to maintain social order.
However, there is another potential problem area in 1988; that is "Mainland Fever," flowing from the government's policy of allowing visits to mainland China. It will cause cultural and emotional confusion among the people and the mass media, especially for those who have been to the mainland and those who want to but can't go for various reasons. Fortunately, the influence of the "Mainland Fever" on Taiwan won't be that serious—at least, it will have as much significant impact on the mainland as on Taiwan. I think we can rest assured about that. In the final analysis, 1988 will be a significant year for all of us to welcome and to watch carefully as well.
Prof. Joei:
While the whole country is mobilizing itself in 1988 in response to the limited opening vis-à-vis the mainland, ROC diplomats still seem to be remaining quiet. One reason for their lack of action is that a long-range policy has yet to be formulated, and therefore it is the responsibility of scholars to provide them with suggestions and knowledge that will help improve our foreign relations.
International law is flexible and consists of legal theories, international practices, and precedents which are recognized by most countries. The charter and the resolutions of the United Nations, for instance, are one of the sources of international law, though their status as law varies from case to case. While dealing in diplomatic and business negotiations, the ROC government seldom takes full advantage of international law, though several of its aspects might be very helpful to us.
For example, according to relevant doctrines of international law, the ROC is definitely a political entity. It is a fact that two Chinese political entities exist, even though both profess unification as their common goal. Sovereignty, for example, includes territorial space and territorial waters. But it can have a wider sense which includes the national anthem, flag, and official national name. A foreign power or international body can not intervene in such matters, and of course has no right to change the name of the ROC at its own discretion. We should take advantage of this practice of international law to secure our national name, anthem, and flag, because the sovereignty of any independent state must be respected.
It is of little import that only 23 nations in the world maintain formal diplomatic relations with the ROC, for concepts of international law today are different from those in the 19th Century. In past centuries the international community was like a club, and any newcomer had to have the recognition of the original members, especially the strong powers of Europe, before it could enter the international community.
But today the idea that constitutive recognition is a necessity for a political entity is out of date. Now recognition is "declaratory" in character and essentially cosmetic. No matter whether there is "recognition de jure" (recognition by legal act) between two nations or not, they can still have various relations with each other. This is called "recognition de facto" (recognition of facts).
A new term can be suggested to explain the present status of our foreign relations, that is, "quasi-recognition de jure." Whether other countries recognize us or not does not change the fact that the ROC is a member of the international community. For example, the ROC signed an Agreement on Cultural Cooperation with the State of Bahrain in February 1987, in spite of the fact that the two countries have no diplomatic relations. According to Whiteman, "the conclusion of a bilateral treaty normally does constitute recognition" (International Law, 1963). Therefore, the recognition is tacitly implied. Analogously, quasi-de-jure recognition is implied in a resolution adopted by the European Parliament on July 11, 1985, recommending the strengthening of trade relations with "Taiwan," urging that it be "treated in a manner comparable with other Far Eastern trading partners." We should not slight ourselves in this respect.
In addition to political sovereignty, the nations of the Third World have raised the concept of "economic sovereignty" against foreign exploitation. In other words, any country, if it considers itself oppressed economically by foreign powers, has the right to protest or make accusations. In recent years there have been unreasonable economic sanctions provoked by the ROC's remarkable exporting capacity. On May 1, 1974, the General Assembly of the United Nations adopted a Declaration on the Establishment of a New International Economic Order (G.A. Res. 3201), providing among other things that no State may be subjected to economic, political, or any other type of coercion to prevent the free and full exercise of its full permanent sovereignty. We should adopt the concept of economic sovereignty when defending our position during business talks. It is a pity that our negotiators have not done so yet.
Furthermore, some ideas of our people are falling behind the times. For instance, some think that we no longer need to befriend a number of small countries because we have withdrawn from the UN and do not need their votes any more. Accordingly, we have lost many friends in Africa. It is wrong to abandon a friend who can not do us an immediate good. We should diversify our foreign relations, and pay more attention to those nations in Europe, Africa, and the Third World. Universalizing our diplomatic policy can pro mote our status in the world.
The ROC's foreign exchange reserves will probably be above US$70 billion at the beginning of 1988. This tremendous figure tells that we are an economically powerful state in the world, and it is one of our favorable conditions in negotiations with foreigners. But in diplomatic talks, we seldom make use of this fact. It seems that the government authorities in foreign economic and political affairs sometimes make light of each other, and each agency goes its own way. But diplomacy requires teamwork, which we always seem to lack.
Action, action; we need action badly in diplomacy instead of just sitting and talking. But how? First, we have to determine our target, that is, where we can make an impact and a breakthrough. The only choice is the Third World. We should select countries where communist regimes are being challenged, such as Burkina Faso, Angola, Mozambique, and Seychelles; or those countries where communist regimes have just been overthrown, and build substantive connections with them.
If we spend money judiciously, one after another we can again win the friendship of those we have lost. Although these countries might be unable to help us, and even need our assistance instead, the enterprise is still worthwhile. For some day these countries may help influence the attitudes of powerful nations toward the ROC, especially if there are enough such smaller nations.
For many years, the Republic or China has been suffering from being called by different names by foreigners. On this point, all the ROC people should first call their country the Republic of China before we ask others to. Beyond this, we can initiate a campaign of rectifying our name throughout the world.
There is a practical way to go about this, which is to ask that all foreign mail to the ROC to bear our national name; otherwise it will be returned to the senders. Canada at one time had insisted that all mail from Canada to the ROC bear the name Formosa instead of the ROC. Most countries in the world are eager to do business with us because we have so much foreign exchange reserves, and for their own convenience can be expected to do as we require.
Once foreign businessmen get used to calling us the ROC, most of their governments will acquire of the habit of calling us by our official name as well. But first, all the ROC businessmen and diplomats must activate their sense of dignity and always use our national name. It should not take more than one year or so to achieve our goal of rectifying our national name if we took this approach.
Most foreign organizations in the ROC are ordered by their governments not to have official contact with the ROC. Therefore, we have lost many opportunities to communicate with them. Here is an idea that the Ministry of Foreign Affairs might use in order to help with this problem. It could establish an organization, named "The Foreign Relations Institute" for instance, to deal with all foreign affairs, including cultural exchange and other international cooperation, with countries lacking diplomatic relations with the ROC. It must be organized as a private association or a corporate body, while the MOFA directly controls the personnel, just as the U.S. State Department controls the American Institute in Taiwan (AIT).
All foreign organizations in the ROC could make contact with the new organization as it would not be governmental in name. It always embarrasses the MOFA that all its overseas offices have different names; in total there are about 30 names. It's now time to unify them. All of them could be called branch offices of the Foreign Relations Institute of the ROC.
And lastly, the government should encourage the private sector to hold international conventions and provide them with all possible subsidies for doing so. Currently it is hard to obtain assistance from the government to host international meetings. In fact, not only should the private sector hold international meetings, but also the government itself should do more in this area. And beyond hosting international gatherings, it must send representatives to attend as many international meetings as possible, even if it has to confront the Chinese Communists—which would afford an opportunity for the two sides to debate about which system provides a better life for its citizens. And that is a risk the ROC could well afford to take.
Prof. Yu:
The ROC is a trade-oriented country. In 1986, economists predicted that the ROC would have an 8 percent economic growth rate in 1987. Everyone was surprised that the growth rate far exceeded the estimates. It came about partly because of international events; for instance, the political unrest in South Korea helped the ROC economic picture. Although the constant appreciation of the NT dollar has put us at a disadvantage, the economic growth rate of the ROC may still be over 10 percent this year.
Our economic growth rate is high, and the inflation rate is low (the wholesale inflation rate is even negative). Also the unemployment rate dropped from 2.8 to 1.8 percent in 1987. Our foreign debt is only about US$2 billion. Even though the ROC is able to repay the money, the loaners don't expect us to do so immediately. Moreover, the government budget deficit didn't happen as predicted for 1987, and instead it has collected a handsome revenue. 1987 will go down as a good year for the ROC, and it's hard to find another country in the world which has made comparably excellent records.
How will it be in 1988? I predict the prospects for the world economy will be as bright as this year. Including developed, developing, and socialistic countries, the 1988 world economic growth rate will be around 3.4 percent (0.1 percent higher than 1987). For most developed countries, their 1988 growth won't differ much from 1987 (the U.S. and Canada, 3 percent; Japan, Australia, and New Zealand, 3.3 percent; the European Economic Community, 2.2 percent). The developing countries such as those in Latin America, the Middle East, and Asia, will have a higher economic growth rate in 1988, but our business connections with them are not as close as those with developed countries.
The three main overseas markets of the ROC, namely North America, Western Europe, and Northeast Asia, will have economic growth rates in 1988 of around 2 to 3 percent. In other words, 1988 should be another good economic year.
The NT dollar has been appreciating against the U.S. dollar since December 1985. Up to now, it has appreciated 33 percent—the largest rate of rise in Asia except for the Japanese yen. The appreciation rate of the Korean won is only 7.8 percent, thus many overseas orders were placed to South Korea instead of the ROC in 1987. But South Korea has been suffering from unfortunate labor and student movements, which made part of the business come back to the ROC. This is one of the main reasons why the ROC still keeps exporting in large quantity.
There are two reasons the NT dollar will keep rising in 1988. First, the demand on NT dollars will become greater because of the increase of export surplus. Second, pressure from the U.S. will also force the NT dollar to appreciate. While the rate of NT dollar appreciation in 1988 will be lower than this year, because it will keep rising, ROC exports in 1988 will experience more difficulties.
Still, the ROC should have a great export surplus of about US$19 billion. And the estimated export growth rate for 1988 is 7 to 8 percent; the 1988 economic growth rate should be around 7 percent (about 4 percent lower than this year), mainly owing to the decrease of exports.
Commodity prices in 1988 will much higher than 1987. The prices of oil and farm products in the world market didn't rise much this year, therefore it didn't cause inflationary pressure. Instead, it lowered domestic commodity prices. In 1988, the NT dollar will keep rising, the Central Bank will have to buy more and more foreign currencies, and the demand for NT dollars will continue to increase. All these reasons will bring inflationary pressures in 1988.
Therefore, we will face several economic problems in the next twelve months. First, the problem of the NT dollar appreciation. At present, the export surplus keeps increasing and our current foreign exchange reserves have already passed US$70 billion. Though the government has had little control on foreign exchange since last July, most exporters still want to sell foreign exchange to the Central Bank, for they believe that the NT dollar will keep rising. So, our foreign exchange reserves will still increase and cause inflationary pressures. Most of all, the pressure of NT dollar appreciation from the U.S. will be brought to bear on us.
As I already mentioned, the NT dollar has appreciated 33 percent against U.S. dollar-and is still climbing. It's a wonder that most of our medium-scale enterprises haven't gone bankrupt as predicted. Why? Because the NT dollar didn't rise against the U.S. dollar as much as the Japanese yen and other European currencies, though it has risen a lot. Many overseas orders were transferred from those areas to the ROC. Also, our domestic commodity prices are comparatively low, and the costs to many enterprises were lowered because the price of imported products was reduced so substantially.
Besides these three reasons, most medium-scale enterprises have invested in upgraded production equipment so that they have become more and more productive. These reasons explain how most medium-scale enterprises have broken through the difficulties and have survived. Moreover, the concept of face is very important for Chinese; that also makes most businessmen do their best not to go bankrupt. Nevertheless, if the NT dollar keeps rising in 1988, I'm afraid many enterprises, especially the medium-scale ones, will finally go bankrupt.
Another problem we are going to face is protectionism. The U.S. economy this year is not bad. Even so, protectionism is still very often talked about by the Congressmen representing the declining traditional industries and the labor unions. They ask the government to protect them by limiting importation from overseas.
Because of this trend toward protectionism, the U.S. government has imposed great pressure on the ROC to appreciate the NT dollar and import as many U.S. products as possible. Even the ROC's domestic administration, such as its loan policy, has became the target of protectionists. Likewise, they have caused the ROC much trouble for they interfered with the ROC's labor policies.
The monetary situation is another key problem for 1988. On the one hand, the export surplus keeps increasing; on the other, saving continues to exceed investment in the ROC. Interest rates are falling because most banks have more and more deposits. Quite often some banks even refuse large deposits because there is so much money. How to spend money has become a problem for many people. Some try to invest in real estate, and a lot of people turn to the Ta Chia Le illegal lottery and cause social problems. Others put their money in the stock market, but owing to the lack of professional knowledge of many investors, the stock market is also in a mess. In 1988, how to invest will still be a serious problem for the ROC.
Oil crises happened in 1973 and 1979. Will one happen again because of the Persian Gulf War? From my point of view, the answer is no. Iran won't be so crazy as to start a new war against the U.S. and the European countries. Both Iraq and Iran have to produce as much oil as possible for war expenditures, and they will try every method to export oil to their buyers.
The last thing I want to mention is the stability of the ROC political situation, which very much influences the will of investment. We know that all investors will find the least risky way and the safest area to invest their capital. Therefore, the ROC's political situation in 1988 must remain stable to attract more investment at home and from overseas. Without enough investments, employment opportunities will decrease, and many people will become unemployed-especially those who have just graduated from school. If there is political unrest, not only will foreign investors not invest here, but also domestic investors will refuse to do so. Consequently, we must maintain political stability for our own welfare.
Despite all these issues waiting for us to solve, I am sure we can achieve as much in 1988 as we did in 1987.