Taiwan Today

Mr. Chairman and Honorable Members of the Legislative Yuan:

It is my great honor and pleasure to come here to report on the admin­istration at this first meeting of the 46th session of the Legislative Yuan.

The Executive Yuan has submitted to your Yuan a written report on the activities of the various ministries and agencies for the period from January through June of this year. I hope we shall have the benefit of your guidance. I must also express my heartfelt appreciation for the cooperation and support you have given the Executive Yuan, especially in approving the many proposals submitted during the previous session.

Asian situation and the Asian Era

In the light of recent developments and changes, we can see that world af­fairs appear to be centered in Asia and that this is also the focal point of the most serious world problems. Annotating the significance of hot battlefields which still exist in Asia and the increas­ing attention which this part of the world receives are the signing of a nonaggres­sion treaty between West Germany and the Soviet Union and the temporary ceasefire arranged for Israel and the United Arab Republic by the United States and Soviet Union.

The future development of the Asian situation has both pessimistic and optimistic aspects. We are expecting the advent of the Era of Asia. How this era comes about and its eventual consequences depend on the attitude of the free world, and especially on the correct judgments and decisions to be made with wisdom and farsightedness by the free countries of Asia. The concerted efforts of free Asian countries with identical aspirations and identical goals are also needed.

We must point out once again that all the troubles in Asia have been caused by the Chinese Communists since their usurpation of the Chinese mainland. To achieve their fanatical ambition of world conquest, they have ceaselessly carried cut expansionist intrigues through such evil practices as infiltration, subversion and even armed aggression. They have been the root cause of violence and con­flict everywhere. From the Korean War to the present conflicts in Vietnam and Cambodia, there isn't a single crisis that they have not initiated. Their crimes are crystal clear and can be enumerated. Moreover, the countercurrent of appeasement has been increasing during the last 20 years because its advocates are shortsighted, cowardly and ignorant of the truth about Communism. The appeasers have connived in the violence of the Communist elements, thereby undermining the peace and security of the world and increasing the Communist threat to the free countries of Asia. Despite all this, an effective collective security system has yet to be established. Herein lies the basis of the current crisis in Asia.

Of course, we are happy to note the firm anti-Communist stand taken by the free countries of Asia. The strength of their anti-Communist self-defense system has been increasing. The free Asian countries have a clear understanding of the situation and have acted positively and responsibly in their undertakings of security and defense in order to safeguard their independent existence. A united anti-Communist vista is just opening up for Asian countries. We can hope that developments along these lines will bring about the bright Era of Asia in the near future.

In this embryonic and creative stage of a free and prosperous Asian era, we must express our views on some current world developments which are related to the happiness, the misfortunes and the future of Asia.

Welcoming the Great Way in the Era of Asia

First of all, we believe that a lull is not necessarily peace. The current stabilizing of the situation in Vietnam and Cambodia results from the Allied advance into Cambodia to sweep away the Communists. North Vietnam's south­ward strategy was obstructed and it was compelled to seek a new deploy­ment. However, this temporary stability does not mean that the Communists in­tend to seek peace. That they do not is made evident in their arrogant at­titude at the conference table in Paris. At the same time, it is clear that the northeastern part of Cambodia is still being occupied by the troops of North Vietnam and the Viet Congo Communist forces on the Vietnamese and Cambodian borders have been converging and at­tempting to advance into the interior of Cambodia and launch attacks on widely-scattered Cambodian objectives at any time. In February of this year, President Nixon said: "Peace must be far more than the absence of war. Peace must provide a durable structure of interna­tional relationships which inhibits or re­moves the causes of war." This deserves our deliberation and serves to caution us.

Second, in all areas that are threatened by the Communists, the Allied coun­tries should be cautious in the withdrawal or reduction of troops, unless the defense capabilities of the countries de­fended have been substantially reinforced and they are strong enough to resist invasion by any Communist force. Especially at this moment, in which the war situation remains undecided, advance announcement of troop withdrawals will give the enemy an opportunity for ag­gression. Such announcements are inappropriate. It is our belief that Allied troop commitments can be properly and finally adjusted only after the free coun­tries of Asia have established an effec­tive anti-Communist self-defense system.

Third, in this stage of negotiations and confrontation which are being mutu­ally influenced, we consider that we should abide by the strategy of not yielding our principles in negotiations and concentrating our strength in confronta­tion. The principle on which we must stand is respect for the aspirations of the Asian peoples in preserving their existence and seeking freedom. This means that the independence and se­curity of Asian countries must be guaran­teed. The enemies confronting us are evil and treacherous Communists. If we want to win decisive victory, we must concentrate our will, mobilize our strength and deal the Communists a fatal blow.

We shall heartily support any plan that will lead to genuine and lasting peace. Out of our experience, however, we feel compelled to give the free world a special reminder that if we agree to establish coalition government with the Communists or to tolerate the existence of nefarious Communist groups as the price of a truce, this will be tantamount to paving the way for Communist ad­vance and seizure of political power. We should not forget the many bitter lessons to be found in the history of the last few decades.

The present chaotic conditions caused by the Asian Communists seem to have been engendered by the united front led by the Maoists. On the one hand, they have conspired with North Korea in planning occasional attacks on South Ko­rea. On the other, they have rallied North Vietnam as the main force plus the armed strength of the Communists of the Viet Cong, Laos, Cambodia, Malaysia and Thailand for attacks on Cambodia, the encirclement of South Vietnam in the east and the threatening of Thailand in the west with a view to opening the way for communization of the Indochina peninsula. In line with their strategy of an international united front and in addition to their anti-U.S. and anti-Russian endeavors, the Maoists have intensified their intimidation and allurement of Ja­pan in an effort to divide and minimize the cooperative strength of the free Asian countries. Confronted by this situation, we cannot but be aware that the Maoist-­led Asian Communists, guided by their unchanging three-antis policy, will never desist from violence, embrace rationality overnight and accept everlasting peace for Asia. All the free countries of Asia should therefore cast aside their illusions about Communism, unite for self-defense, adopt a unique strategic policy and accelerate the formation of a great anti­-Communist union so as to destroy the Maoists with their concerted effort and eliminate the cause of war. Only in this way can we expect the dawn of a bright and great way in the Era of Asia.

Maoists will never find an outlet

Now let us examine the situation of the Maoist Communists. Since the beginning of this year, the power struggle within the Maoist hierarchy has become more furi­ous, especially with regard to the seizure of party and political power by the military. The chaotic conditions on the mainland are still deteriorating. At the same time, the relations between Moscow and Peiping are unlikely to improve be­cause of their internal, tensions. All phenomena suggest that the Maoists will never be able to escape from their crises at home and abroad and that they will never find an outlet.

As is well known, the reorganization of the Maoist party is based on the "cleansing of the rank and file" with emphasis on "ideological readjustment." Despite their ceaseless struggle, the Mao­ists have been unable to reach the goal of reorganization and actually have accelerated factional fragmentation. Conse­quently, the Chinese Communist Party Central has not been completed. Of the more than 2,500 counties and cities on the mainland, only 15 have organized "party committees" and there is none at the provincial level. In their com­munique at the "second plenary session of the Ninth Chinese Communist Party Central Committee" at the beginning of this month, the Maoists again stressed that "we must seriously continue to carry out struggle-criticism-transformation and undertake a great revolutionary criticism to eliminate the residual poison of Liu Shao-chi's anti-revolutionary, revisionist line." This shows that the Maoist efforts of party reorganization and party build­up have encountered endless problems involving ideological struggle and factional strife. The reorganization ob­viously cannot be completed within a brief time. Maoists recently have expedited their preparations for the conven­ing of the fourth "National Peoples' Con­gress." They contemplate conceal­ment of their domestic and external difficulties under the camouflage of electing a "chief of state," reorganizing the political superstructure and appealing to those of the world who support ap­peasement. Regardless of the convening or nonconvening of the "Peoples' Congress," we can say that the substance and pattern of the Chinese Communist struggle since the "cultural revolution" will be continued.

Recent developments within the "peo­ples' liberation army" indicate that fac­tional strife continues to be very serious. Military cadres have been transferred to work in the Party Central agencies and soldiers occupy more than half the seats on the Politburo and Central Committee. Of the 49 ministries and agencies of the "state council," 40 are wholly controlled by "army representatives." Nearly all local administrative organs are controlled by the military. This phenomenon of the military controlling the party and the administration is now deeply rooted. Even after the convocation of the "Na­tional Peoples' Congress," this cannot be changed completely. This is one of the principal reasons the Chinese Communists eventually will be overthrown as a con­ sequence of their own struggle.

The economy of the mainland is in a state of disruption and disorder. Industrial and agricultural production has declined drastically and cannot be revived. The overall economic crisis is bound to continue for a long time and will be difficult to overcome. This is why Lin Piao dared not touch on economic problems in his political report to the "Ninth Party Congress" last year. It can be predicted that no one will be able to bring forward any concrete economic plans at the "National Peoples' Congress." Mainland social disturbances have continued and become more serious since March of this year, when the campaign of "one strike and three antis" (strike at the counter-revolutionaries, anti-corruption, anti-extravagance and anti-speculation) was launched. Communist persecution has expanded its tar­gets to include every stratum of society. A large number of overseas Chinese who returned to their home places were arrested. As a result, the anti-Communist, anti-tyranny activities of the mainland people have become more violent and widespread.

Relations between Peiping and Moscow are just as bad as ever. With their negotiations deadlocked, each side is continuing its verbal attacks upon the other. Although the border conflict is temporarily quiescent, neither side has slowed down troop reinforcements and preparations for war in frontier areas. Additionally, the political struggle between the two has been intensified in other parts of the world.

Viewed from any angle, the frenzied actions of the Chinese Communists are doomed to failure, because everything they do is contrary to human nature and the currents of the times. Their activities are completely contrary not only to the people's aspirations for a better life and to the laws of social development but also to the conscience of mankind. Whether internal or external, the fanati­cal conduct of the Maoists is more intolerable to the people than that of any other Communist regime. This means that the collapse will necessarily come more quickly than that of other Com­munist regimes.

President Chiang Kai-shek pointed out in his New Year's Day message that the Chinese Communist regime had led itself "into new and deeper chaos, paralysis and epileptic convulsions" and that "catastrophic changes can be expected on the mainland at any time." Once again, we wish to remind the people of other countries that the Chinese people of the mainland are enslaved by the tyrannical Peiping regime. Any act of appeasement which prolongs the existence of the Maoists will add to the agony of the Chinese people and foreclose hope of reestablishing friendships with the people of other countries. As one of its endless conspiracies, the Peiping regime is now carrying out a so-called "diplomatic offensive." The people of all the free nations should be constantly vigilant.

Honorable legislators: The recovery of the mainland and the salvation of our compatriots constitute our sacred and historic duty. This is also an honorable mission which we must carry out to assure the peace of the world and the wel­coming of the Era of Asia. All of our administrative activities and other efforts are directed to the attainment of this goal.

Equality, reciprocity and international justice

In the international sphere, we are strengthening our ties with the United Nations and other international organizations in order to safeguard our rightful position and interests. We are also making efforts to promote regional coopera­tion, win the friendship of other states, achieve closer relationships with friendly nations and help other countries to understand our national policy. Our unchanged goal in international affairs is the common security and prosperity of all peace-loving countries.

The United Nations was established in 1945 and has marked its 25th anniversary. During these last 25 years, the Republic of China, as a charter member and in accord with the basic foreign policy set forth in its own Constitution, has faithfully observed the U.N. Charter, has carried out its various international obligations and has been an honorable member of the world organization. Our rightful position in the United Nations is clearly stipulated in the Charter and is not to be questioned. We have, therefore, been able to obtain the support of friendly countries through the years in safeguard­ing our right of U.N. representation.

Needless to say, the U.N. atmosphere of recent years has been beclouded by attempts to appease the Chinese Communists. In this 25th anniversary year, some countries are still attempting to bring the Chinese Communists into the United Nations by way of "two Chinas." Such a sinister advocacy is clearly opposed to the spirit of the U.N. Charter. We strongly oppose any such scheme, reaffirm our position that the Peiping rebel regime has no right to represent the Chinese people and resolutely oppose any arrangement that would bring the Chinese communists into the U.N. I have been invited to address the U.N. General Assembly next month in celebra­tion of the 25th anniversary. We shall reiterate the Republic of China's position and urge member states to redouble their efforts to uphold the principles for which the U.N. was established.

We have always been supporters of regional cooperation among nations. As a country of the Asian-Pacific area, we have given unstinting support to the Asian and Pacific Council (ASPAC) and have carried out its various projects to promote unity and cooperation among the free countries of the area. At the Fifth Ministerial Conference of ASPAC last June, the member countries had a full exchange of views about the region­al situation and economic development. Members expressed concern about events in Indochina and sympathy for Cam­bodia in its struggle for freedom and independence, reviewed the operation and development of various cooperating groups established under ASPAC and discussed cooperative projects to be newly undertaken. The ASPAC Food and Fertilizer Technology Center proposed by this country was formally opened in Taipei last April. Such other programs as those of the ASPAC Cultural and Social Center, ASPAC Economic Coop­eration Center and Science and Tech­nology Service have been implemented. This shows that the members of ASPAC have gradually become united in support of regional cooperation concept. The movement is from bilateral to multilateral cooperation and from economic, cultural and technical cooperation to political unity. We believe these endeavors will contribute both directly and indirectly to the peace and prosperity of the Asian and Pacific area.

We have consistently paid special attention to the development of international friendships and strengthening of our relations with friendly countries. For example, after the pro-Communist government of Cambodia was overthrown last March, we and the new Cambodian government immediately undertook an exchange of visits. The Chinese and Cambodian governments reached decisions on Chinese aid to Cambodia dur­ing the Taiwan visit of a Cambodian special mission. Assistance has been flowing continuously since our delegation to Cambodia reached Phnom Penh in July. We have reviewed and promoted ties with friendly nations from time to time. Since the first of the year, our Vice Premier, Mr. Chiang Ching-kuo, has visited the United States and the Republic of Vietnam. There also have been my visit to Japan and the visits to Taipei of the South Vietnamese Prime Minister, Mr. Tran Thien Khiem; the Nicaraguan Vice President, Mr. Alfonso Callejas Deshon; and the Peruvian Prime Minister, General Ernesto Montagne Sanchez; and the two visits to Taiwan by the U.S. Vice President, Mr. Spiro Agnew. Frank exchanges of views on the current international situation and other questions of mutual concern took place. These exchanges have enabled us to understand one another better and have been beneficial in our cooperative endeavors. Our relations with other countries also have been promoted through economic, cultural and technical intercourse.

With regard to the case of the Tiao Yu Tai Islands, the Japanese government has claimed that these are Japanese ter­ritory and has maintained that any unilateral claim of the Chinese government to rights over the continental shelf in adjacent sea space is invalid. In reply to the Japanese government, the Chinese government has clearly expressed its dis­agreement. The Chinese government holds that in accordance with the prin­ciples of international law and the stipulations of the 1958 Continental Shelf Convention, China has the right to ex­plore and exploit resources on the continental shelf in the areas adjacent to the coast of China and north of Taiwan. The Chinese government is firm in its position with regard to China's proper rights and interests in these islands and will exert all its efforts to protect these rights and interests.

Based on the principle of equality and reciprocity and in the spirit of upholding international justice, we are convinced that we are marching in the right direction in terms of our international relationships. The worldwide commu­nities of overseas Chinese, who unite in supporting our national policy as a result of their ardent patriotism, have been effective as a bridge for our international relations and are powerful supporters of our diplomatic fighters.

The National Army marching toward modernization

We are following our established policy in national defense and military affairs. Our supreme objectives are con­solidation of this base for national re­covery, intensification of preparations for military operations, including readiness to act at any time, and completion of the sacred mission of mainland recovery. To attain these goals, our administrative emphasis is on the building up of modern armed forces.

Our efforts of national defense are therefore directed to:

—Strengthening of defense measures in Taiwan, Penghu (the Pescadores), Kinmen (Quemoy) and Matsu so as firmly to grasp sea and air superiority in the Taiwan Straits and safeguard the security of our base.

—Continued build-up of the armed forces, accelerated training of the armed forces in combined warfare techniques, renovation of equipment, increase of firepower and augmenting of offensive combat strength.

—Penetration of the enemy's rear areas and the carrying out of activities there, active support for the establishment and development of anti-Commu­nist forces on the mainland, encourage­ment of anti-Communist uprisings on the mainland and the creation of an overall revolutionary environment behind the enemy lines so as to afford opportunity for successful military action.

—Accelerated development of national defense science, expansion of the pro­ductive capacity of military industry, coordination with economic reconstruction and the development of related in­dustries, and the strengthening of prep­arations for mobilization.

—Strict enforcement of the retirement of officers and men in order to assure the youthful vitality of the armed forces and to maintain their full combat readiness. At the same time, the govern­ment is continuing programs of vocation­al, educational and medical assistance and other welfare measures for retired servicemen so they may be helped in resettlement.

Under the spiritual influence of the supreme commander, our armed forces are moving forward step by step toward the goals of national defense with match­less determination, loyalty, courage and unity. They are marching along the road to modernization. We are wholly con­vinced that today's great strength of our armed forces will provide assurance of tomorrow's victory in national recovery.

Progress in the implementation of administrative renovation

Overall administrative renovation is expected by the whole nation for the present and is also essential on the eve of national recovery. We are striving to carry out this renovation in order to create a new atmosphere of national construction.

Implementation of administrative ren­ovation has many aspects. Although we dare not say that we have achieved out­standing results in every aspect, we can attest that we have been pushing this program hard. These are matters that have been concretely implemented and shown satisfactory progress during the last half year:

In the renovation of day-to-day administrative work, emphasis is placed on the improvement of efficiency and the strengthening of measures for the public convenience. These activities were carried out through research, development, control and review. We have chosen the items that should be studied and developed by administrative organizations of various levels in fiscal 1971. Included are 42 subjects for the improvement of administrative efficiency, 14 for the improvement of measures contribut­ing to public convenience and 96 involv­ing business policies. Among these, the measures for public convenience are of concern to the largest number of peo­ple. We have selected the matters which attract the attention of most people and set up four special teams to make spot checks and study the simplification of procedures, revision of the laws involved and the strengthening of coordination with a view to the making of important contributions to public convenience. The matters involved include domiciliary registration and issuance of duplicate copies of household registrations, construction certificates, procedures for the assessment and payment of taxes and land registration.

In order that administrative renova­tion will not become a mere formality, we are carrying out a new control and examination system on an experimental basis: This means we are improving a scientific management method based on the essential spirit of the coordination among planning, execution and review. We are carrying out a system of follow­-up checking, control, examination and appraisal on a number of selected administrative programs in order to assure that they are executed efficiently. The fiscal year of 1970 may be cited as an example. This was the initial period in our experimental implementation of the new system. We made plans on the one hand and experimented, guided and coordinated on the other. Results show that of 512 programs implemented by the different ministries, the Provincial Government and the governments of cities, a total of 409, or 80 per cent, was completed according to schedule at the end of the fiscal year. Programs not completed remain under continuing con­trol in the current fiscal year.

In renovating personnel administration, emphasis is placed on the job classification program. Job classification is one of the most scientific and objective methods of modern personnel management. It is also an effective way to as­ sure that every civil servant fits his job and does his best, and to achieve a clear distribution of power and responsibility. Additionally, this is a fundamental measure to raise administrative efficiency. The first phase of implementation was started last year and included three agencies of the Central Government. So far this year, another four phases have been carried out. These include 266 offices from central to county and town­ship levels. A total of 33,760 jobs has been classified, accounting for 58 per cent of the total government personnel and 75 per cent of the jobs of the 266 agencies involved. As to the effects of implementation, improvements have been made in job simplification, adjustment of duties and title, and definition of the work load and of power and responsibility. However, this is only the initial stage. Continued review and improve­ment are required.

In renovating the fiscal administration, our work is concentrated on implementing the centralized disbursement system. This is also a fundamental measure of overall administrative renovation and has been in the planning stage for years. We believe the adoption of centralized disbursements by the national treasury is a prerequisite to improvement of the government's fiscal administration. After a year of careful preparations, the system was implemented on a trial basis as of July 1. It is listed as one of the programs to be controlled under the said new system. Thanks to your esteemed Yuan's support in approving the revision of the National Treasury Law and thus providing a legal basis, we shall be im­plementing the system in a series of three stages beginning October 1 of this year. As of July 1 next year, all central level agencies in this wartime capital except the Ministry of National Defense, which already is practicing the central disbursement system, will be ready to implement the new disbursement system. It is hoped that this system will help us achieve improved control of budgetary operations, stricter fiscal ad­ministration, more efficient financing of treasury funds and promotion of the use of checks instead of cash.

The Executive Yuan established in July, 1967, a committee in charge of the overall examination, revision and simplification of laws and administrative regulations. Generally speaking, this task was by and large completed by the end of last June, after a period of three years. Our method was to have the com­mittee draft and revise those administra­tive regulations involving more than one ministry or agency while others involving only one ministry or agency were work­ed over individually but were submitted to the committee for approval. After this process, the then existing laws and administrative regulations could be divided into three categories: abolished, re­vised and suspended. Statistics of the last three years show the abolition of 1,492 laws and regulations, the revision of 949 and the suspension of 113. Those suspended may be returned to force on the mainland after recovery. The provision for suspension is included in the "Standards on Central Government Laws" already approved by your esteemed Yuan. Those falling into this category soon will be suspended accordingly. There are still more than three hundred laws and regulations to be revised by various ministries and agencies.

Review of problems in tax reform

Tax reform is one of the major tasks in the current overall renovation of gov­ernment administration. The Executive Yuan established a Tax Reform Com­mission in 1968. Its principal tasks were to review and carry out research on our country's tax policy and structure, to draft proposals for improvement and to make substantial recommendations for the renovation of tax administration. The commission completed its two-year assignment on schedule.

The objectives of tax reform, on which I reported to your esteemed Yuan during the last session, are (1) increase of revenue to meet the needs of government at all levels, (2) acceleration of steady economic growth through financial policy and (3) equitable distribution of the tax burden to carry out the economic ideal envisaged in the Principle of the People's Livelihood of the San Min Chu I (Three Principles of the People).

The Tax Reform Commission undertook the reform of tax policy and struc­ture in carrying out the aforementioned tasks and drafted 14 proposed bills. Of these, legislative procedures have been completed for three and these have now become laws. One is still under delibera­tion by your esteemed Yuan and the remaining ten are under study by the agencies concerned. Six important measures have already been taken in the re­form of tax administration. These include the processing of financial and tax data and establishment of a control cen­ter; improvement of measures involving the employment, reward and punishment of tax personnel; improvement of meas­ures for the rebate of taxes and duties on commodities which are subsequently exported; establishment of a tax personnel training center, implementation of the regulations governing declaration of in­come tax through Certified Public Accountants; and implementation of the joint investigation system in cases of tax evasion.

The carrying out of these reform measures obviously has had a considerable effect on tax collection and administration. Examples include reasonable increases in the percentage of personal income tax in the total income tax volume and the percentage of income tax in total tax revenues. The processing of financial and tax data by scientific methods has effectively prevented tax evasion.

However, in the planning of tax reform, we have encountered some im­portant questions of principle which will require serious consideration and discussion. These matters must be considered from a policy standpoint in con­nection with the laws to be drafted. I would like to raise several of these ques­tions and ask for your counsel.

First, how can we maintain a reason­able relationship between financial receipts and expenditures and economic development. In other words, how can we maintain a rational balance of government receipts and expenditures and at the same time accelerate economic growth. We all know that in the national economy of a democratic country, gov­ernment expenditures are an important factor in stimulating economic activity. Government tax revenues affect people's income and spending. So financial receipts and expenditures and the national product and consumption are closely related. Also involved are commodity prices, the currency issue and many other factors. What should we do to increase government receipts and expenditures while speeding up economic growth? This is a question to be discussed as we plan tax reform.

Second, how shall we establish a stronger tax structure based on the direct tax system. Under the existing system, direct taxes include the income tax and the property tax with the personal income tax and the land tax as the base. In order to establish a direct tax sys­tem, we must start by strengthening collection of the personal income tax and the land tax. But opinions differ on the rate and amount of reductions and exemptions for the income tax. With regard to the land tax, equal attention should be given to financial need and the equalization of land ownership policy. With opinion divided, careful study and discussion are required.

Third, how shall we improve the indirect tax system. Indirect taxes now make up a sizable part of government revenues. It will be difficult to change this situation in the near future. But indirect taxes have many shortcomings. For example, the revenues from the commodity tax, business tax and stamp tax are quite large but their collection is cumbersome and there are many cases of double taxation involved. Improvements are urgently needed. This is why there is a suggestion to merge these three taxes into a new value-added tax. However, would such a system suit our industrial and commercial patterns and could it be carried out effectively? Again, opinions differ. More detailed study and research will be conducted by the Taxa­tion and Tariff Commission of the Ministry of Finance.

In any event, the three objectives of tax reform have already been identified, as I said earlier, and we are moving forward in the right direction.

Carrying through the land reform policy

Accomplishments of land reform must be preserved and expanded. I men­tioned land reform improvements already carried out in my report to your esteem­ed Yuan's last session. We are now drafting a "Statute for Implementation of the Equalization of Land Rights" to ex­tend the land rights equalization program from the cities to the rest of the land. Faults found in the existing statute will be corrected. As I pointed out previously, one of the problems in dis­cussing tax reform is that equal attention must be given both to the land tax and the land reform policy. We also hope to have an integrated land tax law. The two draft proposals will include equalization of land rights policy and the principles of sharing the benefits of land by all the people and the effective use of all land resources. To be carefully studied are such problems as the land value policy and the criteria of the land value tax, the land value increment tax and the prevention of land speculation. The drafting of the two proposed laws will be completed in the near future. The drafts will be submitted to your esteemed Yuan for consideration. Your advice and guidance will be greatly ap­preciated.

We have made sufficient preparation for the overall implementation of the program to equalize land rights. The steps to be taken have been mapped out. The program will be carried out in two stages. The first stage covers all 30 districts in Taiwan and those in Taipei City where land values have not yet been promulgated. From July 1 to August 4, declarations of land value were made by a cooperative people. Statistics show that the values of 99 per cent of the land in the cities and counties of Taiwan Province were declared. For Taipei, the figure was above 96 per cent. This shows the people's support of the government measures. After land value declarations are completed, the government may purchase the land according to declared prices, let the unearned in­crement of land value be enjoyed by the public, and accelerate land utilization. The second stage will begin when legislative procedures have been completed for the "law for equalization of land rights." We expect that this program will be completed by the end of June, 1973.

Implementation of the land-to-the­-tiller program has been actively carried out. Preparations are being made for the purchase and sale of farmland still in the hands of landlords. A wide-rang­ing, comprehensive survey of the rural economy has been completed. Revisions of rules and regulations and the carrying through of the land reform policy will be based on analysis of the information revealed in this survey.

Plans for rural economic construction

During the course of our economic growth, the rapid expansion of industry and business has led to an outward flow of the rural population and a propor­tionate decrease in the agricultural labor force. Furthermore, price increases for equipment, fertilizers, seeds, etc., have raised agricultural production costs and lowered the farmer's margin of profit. These phenomena have affected agri­culture's development and caused concern in various quarters.

The Financial, Economic and Monetary Conference of the Executive Yuan recently adopted an "Outline of Agricultural Policy" to point the direction for the present-stage development of agriculture. Using this policy outline as a guideline, government agencies concerned have worked out plans for implementation and timetables. Further planning and promotional activities are under way. These are important goals:

1. Intensified promotion of mechanization to bring about structural changes in the agricultural sector and raise agricul­ture's per capita productivity. We plan to introduce 120,000 farm machines of various kinds in the next four years. This will mean mechanized benefits for 450,000 hectares of Taiwan farms, about half of the cultivated land area.

2. Lowering of prices for equipment materials used in agricultural produc­tion. Prices of chemical fertilizers were substantially reduced at the first of the year. Prices of locally made power tillers were cut in May. The Chinese Petroleum Corporation subsequently allocated part of its income from petroleum sales as a subsidy for experimental projects in the use of agricultural machinery. The Taiwan Provincial Government has ordered that farmers' fees for water utilization associations be reduced by 10 per cent as of July. Reductions are also contemplated in the rate for farm electricity and the price of chemicals for farm use. All of these measures seek to lower farm costs and raise farm income.

3. Establishment of a committee to centralize the collection and allocation of agricultural funds. This committee will regulate the supply and demand of agricultural capital and strengthen loan services to farmers in order to accelerate the development of agriculture. The World Bank has agreed in principle to a long-range agricultural development fi­nancing plan. Negotiations are under way.

4. Continuous implementation of farm­land consolidation on Taiwan. Sched­uled for consolidation this fiscal year is an area of 50,000 hectares. This is part of the 10-year plan calling for the consolidation of 300,000 hectares.

Additionally, a plan is being prepared to improve the transportation and marketing of agricultural products. This will heighten efficiency, reduce the share of middle men and increase benefits for both producers and consumers. Other plans are aimed at the improvement of animal husbandry, fishery and forestry. Our established guiding principle is the balanced development of agriculture and industry. This requires that agriculture not lag behind the rapid development of industry.

Third year of the Free Elementary Schooling Extension Plan and the second year of the Science Development Plan

The nine-year free elementary schooling plan entered its third year of im­plementation in August. We have positively reviewed the accomplishments of the last two years and effected measures of improvement. We also have made appropriate arrangements for the continued schooling or immediate employment of the first group of students to be graduated from public junior middle schools next June.

At the beginning of the current academic year, 21 public junior middle schools and 12 public junior middle school branches were newly opened. Of this year's primary school graduates, those enrolled in public junior middle 5chools and supplementary junior middle schools totaled 294,771 on September 7. This meant an attendance rate of 79.79 per cent, up 4.09 per cent from the previous academic year.

Review and improvement of junior middle school textbooks and teaching fa­cilities are being continuously carried out. In the last academic year, 45 texts and teachers' handbooks were revised and 50 were newly compiled as part of the first three-year plan for the nine-year free schooling program and to meet current educational needs. Editors and compilers sought to satisfy the requirements of students of varying intellectual levels. With regard to teaching facilities, emphasis has been placed on enlarging the scope of elective vocational courses so as to meet manpower requirements of economic development. Measures control­ling the grouping of students in classes have been revised to make teaching more effective. The government is planning the second three-year phase of the free schooling program in the light of its experience and with attention to opinions expressed during the last two years. Pro­gress is assured in our efforts to effect the expansion of quantity and the im­provement of quality.

We attach great importance to the future of the public junior middle school students who will be graduating in the first class next June. This will amount to a test determining the success or failure of the nine-year schooling program. These are measures that we are imple­menting:

—For students planning to pursue schooling beyond the junior high level, guidance activities have been stepped up so that graduates may enter schools suited to their personality, ability, interest and talent. Additional senior middle schools and senior vocational schools will be established and old ones expanded to meet the greatly increased demand for advanced schooling. Senior high courses will be revised to provide improved con­tinuity with the junior high level. A system of arts and crafts training will be established at the senior high level. Cooperation between schools and enterprises will be strengthened to assure a continuity of education, training and employ­ment.

—For students planning to seek employment immediately after graduation, the government has decided to establish employment guidance centers for public junior middle school graduates in various districts of Taiwan and Taipei. District­ level meetings will be held each year by representatives from enterprises, vocational training institutions and public junior middle schools to work out the ways and means of employment guidance for graduating classes and to coordinate the needs of prospective employers and employees. We anticipate that a third of the junior middle school graduates of next June will seek immediate employ­ment while the other two-thirds will con­tinue their schooling.

Augmented science education and research activities have been in progress under the Science Development Plan im­plemented at the start of the last academic year. Because of the organiza­tional arid functional expansion of the National Science Council, which is in charge of the plan, all operations have been systematically planned and executed. Coordination among academic organizations has been stepped up. The new control and evaluation system emphasiz­ing full attainment of goals has also helped assure implementation of various plans according to schedule.

In science education, improvement depends on the cultivation of talent and the development of science and technology manpower at home. We have therefore drawn Chinese scholars home for teaching, sent science and technology personnel abroad for advanced studies and sought to improve the living standard of scholars at home in order that they may devote themselves to unworried teaching and research. In the last academic year, 137 Chinese scholars returned from abroad as visiting professors and associate professors. In the same period, 150 science and technology personnel were selected and sent abroad for train­ing. At home, 172 chairs were set up temporarily for research professors and associate professors. Opinions have dif­fered as to the success of this program. A review of the findings has led to de­cision to abolish this measure. Instead, the National Science Council is subsidizing contract researchers. Progress reports have to be submitted for screening be­fore payment is made. Another Sum­mer Science Seminar was opened on July 1 of this year and attracted 456 participants.

In science research, we have been augmenting basic science research activities, promoting industrial and applied science research undertakings and at the same time developing the human and social sciences. The six existing basic science research centers will be strengthened so that science development will be able to meet the needs of national construction. Roles and responsibilities of the centers will be adjusted promptly and appropriately as circumstance demand. Qualifications of research person­nel are being raised and will be main­tained at high levels. Every effort is being exerted to assure that basic research activities meet the nation's needs more effectively. Emphasis has been placed on various industrial and applied science research programs. The govern­ment is making sure that research find­ings are promptly applied so as to assure their practical benefit to the national economy. Programs completed in the last year under the Science Development Plan with the assistance of the National Science Council number 17 in industry and mining, 13 in transportation and 6 in agricul­ture. The atomic science research divi­sion has increased to 27 the number of radioisotopes that can be regularly supplied to industrial, agricultural and medical institutions for practical use and ap­plication in research.

Under the Sino-American science and technology cooperation plan started on July 1 last year, activities have been undertaken in four fields: long-term exchange of science personnel, short-term exchange of science personnel, coopera­tive research and sponsorship of science seminars. Most long-term exchanges have involved teaching. Short-term exchange personnel have visited research institutions to exchange views and give special lectures. Cooperative research has dealt with subjects of mutual interest. Science seminars facilitate the communi­cation of research techniques and findings. All of these endeavors in academic intercourse are under way and progress­ing smoothly.

We are unfailingly aware that a modern nation has to be built on a foundation of science. We shall continue to keep this in mind and utilize every possible resource in implementing our Science Development Plan.

Economic growth during the first half of the second year of the Fifth Four-Year Economic Development Plan

This is the second year of our Fifth Four-Year Economic Development Plan. The general situation for the first six months of 1970 has been good. Changes in the most important economic indica­tors are as follows:

Agricultural production was affected by last year's typhoons, which inflicted heavy damage on crops. This resulted in a 1.7 per cent decrease in the agricul­tural output indicator for the first half of 1970 as compared with the same period last year. But owing to the effective control of blight, yield from the first crop of brown rice was 3.2 per cent above last year's first crop.

Industrial production showed a con­siderable slackening in the first quarter of 1970 but regained its vigor in the sec­ond quarter. The indicator of industrial production rose by 15.5 per cent as compared with the first six months of 1969. By industrial classifications, government en­terprises paced the growth; output of electric power showed a gain of 18 per cent. Manufacturing industries were sec­ond with a growth rate of 17.3 per cent. Only mining and building construction showed slight decreases.

Communications and transportation were up during the first half of 1970 except for railways, which had a slight decrease in passenger and freight traffic. Increases were led by international telecommunications, civil aviation and tour­ism. As for construction, the double tracking of the Changhua-Tainan section of the west coast railway is progressing smoothly. Fourteen regional construction projects have been completed and the remainder will be finished by the end of this year. Expansion of Kaohsiung, Keelung and Hualien harbors proceeded on schedule.

Foreign trade made rapid progress. The trade balance improved. Internation­al transactions totaled US$1,419.2 mil­lion in the first half of 1970, an increase of 35.3 per cent over the same period last year. This included US$710.7 million of exports (up 37.7 per cent) and US$708.5 million of imports (up 32.9 per cent) for a favorable bal­ance of US$2.2 million. By the end of August, exports and imports had reached US$991.34 million and US$974.35 million, respectively, for a favorable balance of US$17 million.

In money and banking, the money supply was NT$30,852 million by the end of June, an increase of 6.7 per cent as compared with the end of 1969. The amount had dropped to NT$30,224 million by the end of August, an increase of 4.5 per cent over the end of 1969. Increases were due to the gain in net foreign capital and claims on private enter­prises. Deposits and loans of all banks increased NT$8,900 million and NT$­5,900 million, respectively, in the first half of 1970. The rate of exchange is forty New Taiwan dollars to one U.S. dollar; this rate was recently endorsed by the International Monetary Fund.

Indices of wholesale and consumer prices moved up by 3.5 and 4.67 per cent, respectively, in the first half of 1970. March and April showed the largest fluctuations in food prices; these were followed by increases in the wages of labor. During May and June, the government took effective measures to stabi­lize prices. At the same time, newly harvested crops began to pour into the market. Food and commodity price in­creases were checked and then began to fall. The fluctuation of prices is under close and unceasing surveillance. As a basic measure, we are exerting a great effort to maintain the balance of revenues and expenditures and to bring the money supply under proper control. Additionally, we are giving continuous attention to demand and supply of daily com­modities and to the stabilization of their prices.

Based on present data and the trends of the past, we can predict that the rate of economic growth will exceed 8 per cent in 1970, provided no disadvantageous factors manifest themselves in the second half of the year.

I shall report briefly on the progress of several important public construction projects:

Construction of the multipurpose Tsengwen Dam and Reservoir, which is related to water resources exploitation and development, has been under way for nearly three years. Already completed are two diversion tunnels totaling more than 2,300 meters and a dam with fill of more than 1.3 million cubic meters of cement. Work on the foundation grouting and the pouring of cement aggregate for the main dam is under way along with excavation for the underground power station. The whole proj­ect is scheduled for completion in 1973.

In the ten-year power development program, generation capacity was increased by 300,000 kilowatts last year. Another 480,000 kw of thermal and hydroelectric capacity will be added by the, end of this year and an additional 530,000 kw is under construction. Planning for construction of the first nuclear power plant with capacity of 636,000 kw is moving ahead.

With regard to the north-south ex­pressway, preparations for first-phase con­struction of the northern section is virtu­ally complete. I have submitted the special budget for this construction to your esteemed Yuan for approval. I request your support in this matter so that work can get under way early next year.

Following decision to build the Taichung harbor, we invited Japanese ex­perts to come and help us conduct a model experiment. This will be completed by the end of this year. The planning committee for construction of the port has been established and is going ahead with on-the-spot surveys, drilling and exploration.

Investigation, feasibility study and preliminary planning for construction of the Taoyuan International Airport have been undertaken by the Ralph M. Parsons Company of the United States. This work is under way and the report will be submitted next March.

Improvement of railway facilities is being carried out in several important respects. The Taiwan Provincial Govern­ment is considering feasibility of the round-the-island railway project with respect to engineering techniques, econom­ic value and financing.

All of these basic projects of the present Economic Development Plan are highly important. Since they are direct­ly related to national recovery and the growth of our construction forces, every effort must be made to bring them to faultless completion.

Members of the Legislative Yuan: We have been making daily progress in the development of our nation during recent years. But in the light of the changing world situation, we of the Re­public of China must be stronger than ever. We must stand erect to meet the Era of Asia and honorably shoulder the responsibility of destroying Mao Tse-tung and of laying the foundations of peace for Asia and the world. We must un­ceasingly increase our national strength. We must carry out political, renovation and expand construction positively so as to accelerate the growth of national strength.

As President Chiang Kai-shek has so clearly told us: "During the last twenty years, our strength has grown more than twenty fold. This is the means through which the victory over the Chinese Communists will be won. This is the basis of our faith that we shall fight and win our war against the Chinese Communists." We shall surely re­double our efforts and move steadily for­ward toward self-reliance and the creation of a favorable situation in which to complete our tasks of national recovery and construction.

Thank you.

On the Yuyitung case

September 22, 1970

Wang Tih-wu Chairman, IPI Republic of China National Committee

The case of Quintin Yuyitung, pub­lisher of the Chinese Commercial News, and his brother, Rizal, the editor, has attracted the wide attention of IPI members and the press at large. Reactions from IPI headquar­ters and elsewhere made me feel that, as chairman of the IPI Republic of China National Committee, I must present the facts about the case, and offer explanations on some questions that arose from it. The IPI Repub­lic of China National Committee is just as zealous as any member of the press in defending freedom of the press. And it is from this stand that the IPI Chinese National Committee worked to obtain fair treat­ment for the brothers. I must point out in all frankness that Chinese members of the IPI share the same feeling as other IPI colleagues that the brothers were tried in a Chinese law court and found guilty as charged, and bad to be given two and three years of reformatory edu­cation, despite the fact that under the Chinese law, reformatory education is not considered a criminal sen­tence.

However, I have found out the IPI members and the press at large were not aware of some facts and consequently showed misunderstanding on the case. It is also inevitable that there should be difference of views arising from different circum­stances. All these, I feel, require explanations, and I hope these explanations will be used to arrive at a cool, objective and fair judgment.

I. Facts on the Yuyitung Case

Quintin and Rizal Yuyitung were arrested on the order of President Marcos of the Philippines on March 23, 1970, by agents of the Immigration Commissioner. President Marcos ordered the arrest on the recommendation of Philippine Defense Secretary Manuel T. Yan. Defense Secretary Yan's accusations stated that:

—The Yuyitung brothers promoted, instigated and physically sup­ported armed insurrection to overthrow the government of the Philip­pine republic;

—The Yuyitung brothers carried articles and news reports favorable to the Communist cause in the Chinese Commercial News, that they used their newspaper to promote the Communist movement among the Chinese community in the Philippines and to influence the overseas Chi­nese in the Philippines to switch allegiance to the Mao regime;

—The Yuyitung brothers held responsible positions in the Chinese Commercial News—one was publisher, and the other editor, and that their paper carried articles favorable to Communist cause.

These and other activities favor­able to Communists were evidently derogatory to the Philippine government and harmful to the interests of its people. They constituted a suf­ficient ground for the deportation of the brothers. If they had been allowed to remain on Philippine soil, their presence would have endangered the peace and security of the Phil­ippines.

Acting on these accusations by the Defense Secretary, President Marcos ordered Immigration Com­missioner Reyes to arrest the brothers on the charge of violating the De­portation Act and conduct an investi­gation.

In his accusation, Defense Secretary Yan mentioned the arrest of the Yuyitung brothers by the Philip­pine government in 1962. The accusation said that in March, 1962 the brothers and some staff members of the Chinese Commercial News were arrested. The Deportation Board charged that they were actively engaged in spreading Communist propaganda, that they carried articles derogatory to the Philippine government, and that they tried to influence the overseas Chinese community in favor of the Mao Tse-tung regime on the Communist-controlled China mainland.

The Deportation Board recom­mended that the Yuyitung brothers be deported because the articles in the Chinese Commercial News were anti-Philippine. But on April 17, 1968, the Philippine President issued a Presidential Order requiring an apology and retraction of news reports, cartoons, and articles favorable to the Communists. The Chinese Commercial News complied with the Presidential Order in its May 14, 1968, issue. The charges were then dropped, but the subsequent activities of the Yuyitung brothers and the contents of the Chinese Commercial News showed that the apologies and retraction were not made in good faith. Defense Secretary Yan's accusation stated that the Yuyitung brothers paid some student leaders to disseminate Mao thoughts and that they gave a lecture at the Asia Center of the University of Philippines in favor of Chinese Commu­nists.

Defense Secretary Yan stressed in his accusation that he was merely reopening the 1962 deportation case of the Yuyitung brothers.

On April 1, 1970, a hearing was held in Manila on the Yuyitung case. Altogether 21 sessions were held, during which the Department of Defense submitted to the court as evidence the English translations of articles from 75 issues of the Chi­nese Commercial News which promoted subversion and infiltration and instigated armed revolution for the overthrow of the Philippine government.

Capt. Dizon, a Philippine Army intelligence officer, told the court that Philippine intelligence agents, who searched the premises of the Chinese Commercial News and resi­dences of Quintin and Rizal on March 8 and 9, 1962, found letters from Li Wei-han, chief of Communist China's Central Unified Work Front, addressed to "Comrade Quintin Yuytiung," a code book and other printed materials from Communist China. In the letters, Li castigated Comrade Quintin for "not working hard enough" and said he should "reexamine the matter and submit the results." Capt. Dizon testified that the evidence in the Army's posses­sion showed that Quintin Yuyitung was not only pro-Communist but a high-ranking agent of the Chinese Communists in the Philippines.

An administrative court of the "Philippine Immigration Commission ordered the deportation of the Yuyi­tung brothers in early May, 1970, but released the brothers on bail. But on the night of May 4, the brothers were arrested, and deported to the Republic of China on May 5. The Philippine government at the same time referred the charges against the brothers to the Chinese government.

II. Investigation of the Yuyitung Brothers in the Republic of China

The Chinese government accept­ed the Yuyitung brothers on the fol­lowing grounds: a) Because they were deported by the Philippine gov­ernment and b) because they are citizens of the Republic of China.

After accepting the Yuyitung brothers, the Chinese government found that the charges made by the Philippine government, if proved correct, constituted violation of the Statutes for the Punishment of Seditious Acts. Accordingly, the brothers were turned over to the Taiwan Gar­rison Command, which conducted an investigation of its own.

During the investigation, the brothers were well treated and were allowed to communicate with their Philippine lawyer and their families.

According to the Chinese law and precedents, the offenses the brothers were charged with fall under the jurisdiction of the military tribunal. Since the same law applies, it did not matter whether the accused were tried at a military court or a civil court. The authorities then decided to try the brothers at an open military court, because in this case there was no basic difference between the civil court and the military tribunal.

While the investigation was going on, 193 IPI members who attended the 19th IPI General Assembly in Hongkong, visited the Republic of China on a post-Assembly tour. Through the arrangement of the Republic of China National Committee, Hans Kluthe, immediate past chairman; Barry Bingham, former chair­man; Ernest Meyer, IPI director; Maximo V. Soliven, president of the Manila Overseas Press Club; and myself went to visit the Yuyitung brothers at the Taiwan Garrison Command. We met and talked with the brothers, who appeared in good health as a result of fair treatment during the detention.

After three months of detailed investigation by the Republic of China military prosecutors, a public trial was held on August 14. A three-judge panel headed by Col. Nieh Kai-kuo conducted the trial. The other two judges were Col. Hu Shen­-yi and Capt. Chang Yu-fang. The public prosecutor was Maj. Han Yen­-nien. Chinese lawyer Wang Shan­-hsiang was retained by the Yuyitung brothers as their defense counsel. At­ tending the trial as observers through the assistance of the Republic of China National Committee were: Miss Aw Sian, current IPI chairman; Barry Bingham, a former chairman who represented the American press; Rohan Rivett, official representative of the IPI; and Juan Quijano, Filipino lawyer of the Yuyitung brothers.

The prosecutor first read out his indictment, accusing the Yuyitung brothers of constantly spreading Chinese Communist propaganda in their two publications, the Chinese Com­mercial News an