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Chapter 7 The Transformation of Taiwan under the Republic of China |
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(1945~1970s)
The White TerrorFollowing Japan’s surrender to the Allies in 1945, Taiwan came under the rule of the Republic of China (ROC). Upon having thrown off colonial rule, the Taiwanese welcomed their return to their fatherland. In 1947, less than two years after the handover, however, a series of factors led to the February 28 Incident (二二八事件), a violent disturbance that sowed the seeds of mutual hostility between the Nationalist government1 and the people of Taiwan. After being defeated by the Chinese Communists and the establishment of the People’s Republic of China in 1949,2 the Kuomintang-led government of the ROC retreated to Taiwan, marking the beginning of an era known as the “ROC on Taiwan.” To safeguard its regime, the Nationalist government (國府) implemented martial law (戒嚴令) and resorted to high-handed governance to control the population, which created further antagonism between Taiwan’s society and the government. Lasting until the Emergency Decree was lifted in 1987, this became known as the period of “white terror.” However, the Nationalist government also promoted development, and Taiwan’s economy enjoyed a long period of rapid growth, winning global praise as having performed an “economic miracle,” and transforming Taiwan into a modern country. Further, a “political miracle” was added to this beginning in the 1980s. Responding to various internal and external challenges, the government worked to gradually and peacefully establish democracy, an experience unique among Chinese societies around the world. Taiwan’s history from 1945 to the present is a story marked by expectation and disappointment, frustration and success, tear and laughter, bitterness and sweetness. It is not only a story of Taiwan’s transformation from a sparrow into a phoenix, but also an exemplary record of success in human beings’ striving for freedom and democratization.
1 Nationalist government (國府): refers to the Kuomintang-led government of the ROC in power before the change of the governing party in 2000
2 Chinese communists (中共): refers to both the Chinese Communist Party (CCP) and the People’s Republic of China, established by the CCP on October 1, 1949Tragedy after Taiwan’s Retrocession to the ROC—the February 28 Incident (1945-1949)
With the handing over of Taiwan to the ROC in 1945, rather than giving Taiwan the formal status of a province, the Nationalist government set up a unique administration called the Taiwan Provincial Governor’s Office (臺灣省行政長官公署; TPGO). Chen Yi (陳儀) was appointed provincial governor and made responsible for the island’s military as well as civil affairs. On October 25, 1945, Chen Yi held a Japanese surrender ceremony in Sun Yat-sen Hall (中山堂 present-day Taipei; Zhongshan Hall), which marked the beginning of the ROC’s governance of Taiwan. After his inauguration, Chen announced his goal of establishing Taiwan as a model province based on Dr. Sun Yat-sen’s “Three Principles of the People” (三民主義; nationalism, democracy, and socialism). Unfortunately, Chen’s controversial policies, stubborn character, and erratic ruling style soon roused widespread discontent among the Taiwanese people.
With regard to politics, Chen worked under the assumption that the Taiwanese people had been enslaved by the Japanese and actively promoted a campaign to re-Sinicize (再中國化) them, ignoring their strong desire to participate in the island’s politics after the ending of colonial rule. Thus, with the exception of one “half-mainlander” deputy director appointed to the Education Department, almost all of the higher positions were held by the mainlanders.3 Furthermore, although the speaker of the Taiwan Provincial Assembly only had the right of consultation, Chen Yi still chose his favorite confidant, another “half-mainlander” named Huang Chao-cin (黃朝琴), to hold this post, instead of Lin Sian-tang (林獻堂), a Taiwanese leader who had long enjoyed public support. As mainlanders took most of the higher positions within the government hierarchy while Taiwanese could only serve at low-level ones, the provincial governor was viewed as a new version of the Japanese governor (日本總督), and Taiwan’s return to the ROC was viewed as merely a “change of bosses” (換老闆).
3 Taiwanese people called mainlanders are those who arrived after Taiwan’s retrocession in 1945. “A-shan” (阿山) comes from the word Tangshan (唐山), literally “Tang Mountain,” which refers to China in general. Those Taiwanese who had gone to China during the period of Japanese rule and then returned after 1945 were, therefore, known as “half-mainlanders” (半山), literally “half-mountain.”
In 1946, one year after the Japanese surrender, the TPGO abolished Japanese editions of newspapers, forbade the use of the Japanese language in both writing and speech, and began to use proficiency in Chinese as an important consideration when recruiting people for government jobs. Taiwanese intellectuals suddenly became semi-literate, therefore, and most were excluded from the civil service, which added to people’s feelings of resentment. In addition, the fact that many mainland officials were incompetent and corrupt and soldiers broke the law aroused antipathy and disdain from Taiwan’s people, heightening antagonism between the public and government officials.
Chen Yi, who was infatuated with socialism and mistakenly attributed Japan’s economic success in Taiwan to state-controlled policy, radically enforced it under a slogan of “establishing Taiwan as a model province based on Dr. Sun Yat-sen’s ‘Three Principles of the People.’” His core policy was for an economic system built around government-run enterprises. He established a Takeover Committee (接收委員會) to confiscate important Japanese industries and a Japanese Property Management Committee (日產處理委員會) to take over private Japanese assets. Records show that some 860 Japanese enterprises were taken over, of which the small ones comprised predominantly of Taiwanese capital were sold off, while 399 larger ones became government-owned. These government-owned enterprises belonged to four categories: state-run enterprises, enterprises jointly run by the state and province, province-run enterprises, and county/city-run enterprises. Almost all of the enterprises sold to the private sector were small; large corporations and fundamental mid- and up-stream industries, such as sugar, petroleum, electricity, aluminum, fertilizer, machinery, shipbuilding, and cement, were all absorbed into state-run companies.
The Monopolization Bureau of Tobacco and Wine, established by the Japanese governor-general, continued to run under Chen’s administration. Further, the TPGO founded the Taiwan Provincial Trade Company (台灣省貿易公司) to control trade, and the Taiwan Railway Administration (台灣省鐵路局) and Taiwan Highway Bureau (台灣省公路局) to control transportation. In this way, Chen’s administration effectively controlled all of Taiwan’s economic activities much more tightly than the Japanese had. Although Chen expected to solve Taiwan’s social and economic issues at one go, the results belied his hopes, primarily due to inadequate supplies, as well as bureaucratic inefficiency and widespread corruption in Taiwan’s postwar government-run enterprises.
In addition, the civil war between the Nationalists and Communists in China was reaching a critical phase. Instead of helping Taiwan to recover in the aftermath of World War II, the Nationalist government was busy transporting vital materials and supplies to China from Taiwan. This created imbalances between supply and demand in Taiwan, and led to a dramatic rise in both commodity prices and unemployment. Taiwan had previously been a food exporter, but now began experiencing unprecedented rice shortages. Major differences in societal development between the two sides of the Taiwan Strait also led to dissimilar living habits and customs, which caused further friction between Taiwanese and mainlanders.
All these factors led to a slow buildup of tension between government and populace that finally exploded on the night of February 27, 1947, during a police raid on smuggled tobacco. This sparked the February 28 Incident, in which, without proper investigation, the Nationalist government sent troops to suppress dissent and launched a campaign of “cleaning up hometowns” (清鄉), which resulted in the deaths of thousands of innocent people. Targeting mainly local leaders and elites, the Nationalist government removed obstacles to its future rule over Taiwan and paved the way for the establishment of an authoritarian regime. Taiwanese illusions about China were broken, however, which further fueled antagonism between the government and populace that still exists to this day.
Relocation of the Nationalist Government to Taiwan; Start of Martial Law (1949-1987)
On August 15, 1945, Japan surrendered to Allied forces, bringing the Second World War to its conclusion. Soon thereafter, civil war broke out in China between the Nationalists and the Communists, with the two sides alternating between talks and armed conflict. By 1949, the situation had become extremely precarious for the Nationalist government; on January 21, President Chiang Kai-shek (蔣中正) was forced to step down, while Vice President Li Tsung-jen (李宗仁) took over as acting president. As the Generalissimo of the Kuomintang (國民黨總裁), however, Chiang continued to run the government from behind the scenes and began deploying troops to Taiwan to serve as a last stronghold for the Nationalists’ fight against the Communists. To ensure stability on the island, Chiang proclaimed the Emergency Decree (a form of martial law) in Taiwan on May 20, 1949. Four days later, the Statute for the Punishment of Rebellion (懲治叛亂條例) was approved by the Legislative Yuan. On May 27, the Taiwan Garrison General Headquarters (警備總司令部; TGGH) began to use the Emergency Decree to regulate and censor publications; prohibit the assembly and formation of organizations without prior permission; and enforce bans on such activities as organizing demonstrations, making petitions, and engaging in boycotts or strikes of any kind, by students, laborers, shopkeepers or enterprises.
As the situation in China worsened, on August 1, 1949, the Kuomintang (KMT) set up the Office of the Generalissimo (中國國民黨總裁蔣中正辦公廳) on Taipei’s Grass Mountain (臺北草山; later renamed Yangming Mountain) to run the state from behind the scenes. Four days later, the US released its White Paper on China, in which it stated that it would no longer support the Nationalist government. Confronted with this imminent crisis, Chiang re-organized its military by nominating Generals Chen Cheng (陳誠), Peng Meng-ji (彭孟緝), and Sun Li-ren (孫立人) as its new heads.4 On October 1, the Chinese Communists founded the People’s Republic of China (中華人民共和國; PRC), thereby ending Nationalist rule of the mainland. On October 25, five Communist army corps attacked Kinmen’s Guningtou (古寧頭), but were annihilated on the beach by Nationalist forces, thus preempting any further communist advances and temporarily giving the Nationalist government some breathing space.
4 The new arrangements involved replacing the TGGH with the Southeastern Military Administrator’s Office (東南軍政長官公署) headed by Chiang’s favorite subordinate, Chen Cheng (陳誠) on August 15; the establishment of the Taiwan Peace Preservation Headquarters (臺灣省保安司令部) headed by General Peng Meng-ji (彭孟緝) on September 1; and the creation of the Taiwan Defense Headquarters (臺灣省防衛總司令部) headed by Lieutenant-General Sun Li-ren (孫立人) on September 21.
On December 7, 1949, the ROC government relocated to Taipei and, on March 1, 1950, Chiang Kai-shek resumed the presidency, thereby becoming the supreme leader in name as well as in truth. At this point, the Nationalist government was being subjected to synchronized threats both from within and without, facing invasion by the Communists as well as internal discontent from the Taiwanese people in the aftermath of the February 28 Incident. To face these challenges, Chiang Kai-shek and his son Chiang Ching-kuo (蔣經國) created a rigorous party-state authoritarian regime (黨國威權體制) by copying the Soviet system Chiang Ching-kuo had experience during his youth in Russia. The Emergency Decree proclaimed in 1949 was strictly enforced and applied for the next 38 years, until finally being lifted on July 15, 1987. The period is commonly called “white terror,” under which tens of thousands lost their freedom and lives.
This type of the authoritarian rule is too unique to be classified. In general, it has been called a Quasi-Leninist regime, as it was close but not equivalent to the communist model, since it had slightly weaker control over politics and the economy. Others have dubbed it the Taiwanese Authoritarian Regime or a Martial Law Regime. Regardless of how it is called, the regime possessed an ethnic structure that heavily influenced its operation, that is, a sizeable minority group of powerful mainlanders ruled a large number of weaker Taiwanese. In this sense, the regime resembled the Spartan System of ancient Greece, under which the few but strong Dorians conquered and enslaved a vast number of Messenian inhabitants, at a ratio of around 1 to 20, by monopolizing political, military, and economic power. They also resorted to high-handed governance and terrorism, such as the killing of one person as a warning to the rest. Between 1945 and 1949, 1.02 million people (including some 600,000 soldiers, as well as numerous political personnel, public servants, and teachers) swarmed to Taiwan from China. Of Taiwan’s total population of eight million, the ratio was around one mainlander for every seven Taiwanese, and so the number of mainlanders was large enough to control political and military affairs through the use of terror policies. To this was added a modern political-juridical system and communist ruling technique, and Chiang’s regime was well-safeguarded. The following characteristics of the regime can be listed.
First, the long-term imposition of martial law gave a thick military tincture. The 38 years of martial law set a world record, with TGGH handling national security issues and important criminal cases being tried as courts-martial. The use of force became the primary pillar bolstering the stability of the Nationalist regime. Basic human rights, such as the freedoms of speech, assembly, and formation of organizations and processions, were all frozen.
Second, after its relocation to Taiwan in 1949, the Nationalist government monopolized political power by claiming it was the legitimate government of China (法統). For instance, Chiang’s administration suspended all central government elections, using the excuse that it could not conduct national elections for the whole of China following the fall of the mainland. Representatives of the central government (equivalent to Congressmen) who had been elected in 1947 did not have to run campaigns for their positions, and could be replaced by other candidates when they died. Chiang Kai-shek could be re-elected as president an unlimited number of times, therefore, and was able to pass on the reins of power to his son, Chiang Ching-kuo, as if a hereditary system existed. Since mainlanders occupied most of the offices within the central government, the KMT was able to perpetuate power for itself. Under Chiang’s regime, the existing opposition parties such as the Chinese Youth Party (青年黨) and the China Democratic Socialist Party (民社黨) were nothing more than fragile political vases, while a ban was in effect forbidding the formation of new political parties. Since there was no distinction between the ruling political party and the state, and since most Taiwanese could not participate in the decision-making mechanisms of the central government, many viewed the KMT as an alien power. Some even went so far as to dub it the “Chiang dynasty” (蔣家王朝).
Third, the Nationalist government held complete control over the economy. Dr. Sun Yat-sen’s Principle of Social Well-being was very similar to socialism in nature and, in accordance with this principle, the government owned large and important enterprises. The KMT accumulated immense assets through its monopolistic economic activities, which were operated by both the government and the party itself. Private enterprises were mostly small companies, most of which survived by adhering to rules set by the state-run enterprises and trying to maintain good relations with KMT and government officials. Scholars have therefore described Taiwan’s economy as “Party-State Capitalism” (黨國資本主義).
Fourth, Chiang’s regime maintained complete control over the thoughts and behavior of people. The Nationalist government attributed the fall of the mainland to the indoctrination of young students and intellectuals in communism. Consequently, the government enforced education that instilled in the people the perception that the KMT was the only legitimate party allowed to control political power. The “Three Principles of the People” became a compulsory subject in every senior high school and university and the topic was tested in every public examination. Most media outlets, institutions, and organizations were manipulated either directly or indirectly by the KMT. Moreover, agents and informants from the government’s intelligence and national security bodies were in every corner of Taiwan’s society. With these spies, wiretapping, following people, and threats, the government was able to completely control the people’s thoughts and behavior and envelop the island in a miasma of “white terror.” Soon, everyone had visions of “a miniature TGGH” inside their heads (人人心中有個小警總) to keep them insecure and constantly monitoring their own thoughts.
The two greatest dangers to the Nationalist government’s existence were the invasion of Chinese communists and aspirations for Taiwan independence at home. Of these two, however, the communists were initially the more immediate threat, so the KMT enacted stricter laws for punishing and preventing the spread of communism. On June 13, 1950, the Nationalist government declared the Rules for Prosecuting Communist Spies During the Period of National Mobilization for Suppression of the Communist Rebellion (戡亂時期檢肅匪諜條例) and, on September 29, the Executive Yuan enacted the Regulations on Joint Assurance, Prosecution, and Punishment of Communist Spies during the Period of National Mobilization for Suppression of the Communist Rebellion (戡亂時期檢肅匪諜舉辦連保連坐辦法). On September 17, the Regulations Governing the Surrender of Communists and Communist Adherents (共匪及其追隨附匪份子者之自首辦法) and the Regulations for Rewarding those Who Turn in Communist Spies (檢舉匪諜獎勵辦法) were promulgated. With all of these rules and regulations in place, the intelligence and national security authorities began to actively arrest “communist spies” (匪諜). For example, on May 13, 1950, the Taiwan Provincial Committee of communist China (臺灣省工作委員會), led by Cai Siao-cian (蔡孝乾), was successfully uncovered; on June 18, former Provincial Governor Chen Yi was executed for plotting a revolt; and on November 22, an underground organization founded by the Sociology Department of the Political Bureau under the Chinese Communist Party’s Central Committee (中共中央政治局社會部) was broken.
The second threat to KMT power was the Taiwan independence movement. Most of Taiwan’s elite were silenced in the aftermath of the February 28 Incident, but some went into exile, mostly in Japan, from where they advocated their cause. In 1948, on the first anniversary of the February 28 Incident, Liao Wun-yi (廖文毅) and Sie Syue-hong (謝雪紅) established the Taiwan Re-liberation Alliance (臺灣再解放聯盟) in Hong Kong. Liao then went to Japan to promote the Taiwan independence movement and, in 1956, founded the Provisional Government of the Republic of Taiwan (台灣共和國臨時政府). Whenever the independence movement gained support and followers in Taiwan, however, the KMT would make arrests, including the following high-profile cases: the 1961 Su Dong-ci Incident (蘇東啟事件), in which more than 200 persons were arrested; the 1962 Liao Wun-yi Taiwan Independence Incident (廖文毅臺灣獨立事件), in which more than 200 persons including Guo Guo-ji (郭國基) and Yang Jin-hu (楊金虎) were arrested; and the 1964 Declaration of Taiwan Self-Salvation Incident (台灣人民自救宣言事件), for which National Taiwan University professor Peng Ming-min (彭明敏) and his students Sie Cong-min (謝聰敏) and Wei Ting-chao (魏廷朝) were imprisoned.
It is estimated that more than 15,000 political dissidents and rebels were arrested under martial law, with at least 5,000 executed and the rest imprisoned, and many were in fact wrongfully accused or intentionally persecuted. Intelligence agents often abused their power and terrorized innocent citizens. Taiwan was enveloped in a terrible atmosphere of fear in which everyone felt watched and threatened, from which the period has become known by the nickname of “white terror.” Therefore, antagonism between society and the state that had been initially aroused by the February 28 Incident was further aggravated. Although Taiwan’s society appeared peaceful and calm for a long time, beneath the surface there was an undercurrent of opposition waiting for emergence. The situation eventually turned into a vicious cycle: the severer the government’s measures were, the stronger the people’s antagonism became, which, in turn, caused government restrictions to become even stricter.
To relieve the tension, the ruling KMT, in addition to resorting to political terror, also adopted a compromise model, namely, “politics for mainlanders and economics for Taiwanese” (外省政治，本省經濟). In other words, as the mainlanders kept a tight grasp on the reins of military and political power, they encouraged the Taiwanese to dedicate themselves to economic development and allowed them to become wealthy. Naturally, those Taiwanese who survived the February 28 Incident saw politics as a difficult path fraught with danger, and were more than happy to concentrate on their own economic well-being. Their efforts unexpectedly created an economic miracle in the international environment of antagonism between the free world and the communist bloc.
Educational and Cultural Development and Social Changes: Policies Encouraging Study Abroad
Although the Nationalist government was an autocratic administration, it also put a lot of effort into improving education. The purpose of this was not only to improve the people’s production skills and cultural level, but also to re-Sinicize the Taiwanese people and instill in them the spirit of Chinese nationalism. Subjects such as Chinese history, geography, and the “Three Principles of the People” were emphasized heavily in secondary and higher education. In any case, due to the KMT’s efforts, education flourished. During the period of Japanese colonization, compulsory elementary education was common. In 1968, the Nationalist government expanded upon this, making nine years of education compulsory and increasing the number of secondary and higher education options. As a result, both the quality and quantity of education in Taiwan were greatly elevated. Between 1950 and 2000, the number of schools in Taiwan rose more than five-fold, jumping from 1,504 to 8,158. A closer examination of these figures shows that the number of elementary schools increased from 1,234 to 2,586; secondary schools rose from 128 to 863; colleges climbed from 3 to 78; and universities multiplied from 1 to 57. During this same period, the number of graduates also increased almost ten-fold, jumping from 120,345 to 1,218,495. Among these, elementary school graduates rose from 86,995 to 317,581; college graduates increased from 523 to 126,916; students earning bachelor’s degrees jumped from 1,013 to 107,430; and master’s degree recipients went from 1 to 20,752. In 1950, Taiwan did not have any doctorate programs; in 2000, there were 1,413 Ph.D. holders.
These statistics reveal that the two categories in Taiwan’s educational system that underwent the greatest expansion were the secondary and higher levels. Further, many Taiwanese students studied abroad in advanced countries, with the US a favorite destination. Students who received university or higher level degrees often went on to excel in a wide range of industries, especially in careers involving higher education.
Owing to universal, higher education standards, Taiwan rapidly transformed itself from a relatively conservative and traditional society into a modern, free, and open one. Consequently, Taiwanese people’s philosophies towards life, ways of life, familial attachments, and social concepts also underwent drastic changes.
Transformation from a State-Controlled Economy to a Free-Market Economy: Taiwan’s “Economic Miracle”
In 1949, the Nationalist government fled to Taiwan after being defeated by the Chinese communists. Faced with the external threat of a Chinese communist invasion and the internal problem of how to provide for the livelihood of the million civilian and military personnel that had just arrived, Taiwan was at a critical juncture between life and death. Fortunately, with the outbreak of the Korean War in 1950, the United States began to provide Taiwan with military and economic aid, as well as assistance in the defense of the Taiwan Strait, enabling the Nationalist to survive. In exchange for military and economic aid, however, the US applied political pressure on the Nationalist government to promote free-market economic policies, and so gradually state controls on the economy were relaxed. As a result, private enterprises thrived, setting the stage for their eventual emergence as the backbone of Taiwan’s economic development.
From 1950 to 1964, the main theme of the Nationalist government’s economic development policy was the gradual transition from import substitution to export incentives. In 1950, the sudden influx of more than a million military and civilian personnel to the small island of Taiwan resulted in shortages of many basic necessities, causing severe inflation and trade deficits. From 1950 to 1953, the government implemented several highly successful farmland reform measures, including the reduction of rents to a maximum of 37.5 percent of the main crop, and the land-to-the-tiller program. The government also implemented measures such as paying land taxes with grain and the grain-for-fertilizer exchange program by underestimating produce values. In this manner, the government was able to control large quantities of agricultural resources at extremely low cost, which it could then transfer to the public and industrial sectors to support military, civil, and education personnel, as well as fuel industrial development.
US aid after 1950 greatly helped Taiwan’s devastated economy to recover and allowed stable development to begin. In the 15 years between 1951 and July 1965, Taiwan received US$100 million per year from the US (about US$10 per person annually). It is estimated that capital aid from the US not only accounted for 34 percent of Taiwan’s gross capital formation but, in terms of foreign trade, also compensated for about 91 percent of the imbalance per year. In addition, aid provided by the US was used to affect the economic policies of the Nationalist government in three major ways, all of which were conducive to the gradual formation of a liberalized economy and the development of private enterprises.
First, most of the US aid was used to improve infrastructure on the island, thereby increasing the productivity of private enterprises and promoting growth. Second, the Nationalist government was forced to relax its controls over the economy. Finally, military expenditure was kept in check. Taiwan’s economy soon stabilized and, by 1952, industrial and agricultural production standards had bounced back to the pre-war levels seen in 1938. In 1953, the government began to promote a series of four-year economic plans that would eventually help the country achieve astounding economic growth.
During the initial stages of Taiwan’s economic recovery, the government’s policies focused on limiting imports and encouraging exports, especially of rice and sugar. Measures for promoting import-substitution industrialization were adopted. In 1950, the government began taking measures to increase domestic production and reduce imports, such as implementing a multiple exchange rate system that set low rates for imported raw materials and capital goods and high rates for other imported goods. These measures reduced production costs for local manufacturers while discouraging consumption, thereby protecting domestic manufacturing industries from having to compete with a flood of imports. Restrictions placed on the establishment of factories also protected the interests of specific investors and expedited capital formation. The import-substitution industrialization policies were quite successful at enhancing the productivity of domestic industries while limiting imports.
However, the complicated procedures involved in completing foreign exchange transactions and the severely overvalued foreign exchange rate discouraged exports and hampered economic development. Coupled with Taiwan’s small domestic market, such obstructions soon spiked opportunities for growth and drew demands for change in the late 1950s. Consequently, Taiwan began to formulate export-oriented policies.
In April 1958, the government promulgated the Foreign Exchange and Trade Control Plan (外匯及貿易管制計劃) and, in August of that same year, an exchange rate of NT$40 to US$1 was set up. By 1963, this unified exchange rate had achieved the goal of opening up a whole new era for Taiwan’s export-oriented policies. Through depreciation of the New Taiwan dollar (NT$), the government eliminated a major obstacle and encouraged exports. In 1960, the government introduced the Nineteen Financial and Economic Reform Measures (十九點財經改革方案) and other statutes for encouraging investments. This helped to reduce export tariffs, allowed for the provision of low-interest loans for exports, provided income tax breaks for new investments, increased capitalization, and allocated public land or requisitioned private land for industrial use. The most important measure, however, was the establishment of an export-processing zone in Kaohsiung in 1965, which created a favorable investment environment in Taiwan. All of these encouraging measures led to a boom for local industries and a tremendous increase in exports. Moreover, as export-oriented industries expanded, private enterprises began to develop more rapidly and soon became the primary force driving Taiwan’s economy.
During this period, the international division of labor flourished due to the activities of multinational enterprises, which benefited Taiwan immensely. Caused by inflation and rising labor costs in developed countries, multinational enterprises sought to invest in developing countries to take advantage of lower labor costs and thereby maintain high profits. The practice first appeared in the 1950s between Hong Kong and the US, and later between Japan and the US right after the Second World War. Taiwan joined in the 1960s and, although lacking in capital and technology, the island’s talented, industrious, and cheap labor force attracted foreign investors to set up factories to manufacture products for export.
There were four special characteristics of economic development at this stage: First, the gross national product (GNP) registered double-digit annual growth. Second, industrial production gained a dominant position and surpassed agricultural production. Third, exports increased rapidly, with primary export items shifting from agricultural products to industrial products. Fourth, foreign investment in Taiwan increased dramatically.
It is worthwhile to pay attention to the triangular trade relationship among Taiwan, the US, and Japan, which scholars dubbed the “triangular-linkage structure” (三環構造). In the 1950s, Taiwan exported agricultural products to Japan while importing manufacturing materials from Japan and receiving various forms of aid from the US. In the 1960s, however, exports of industrial products to the US rose sharply and, in the 1970s, Taiwan imported manufacturing materials again from Japan and exported industrial products to the US. In other words, Taiwan would import manufacturing materials and other intermediate products from Japan, process them, and then export the finished products to the US. Consequently, Taiwan had a trade deficit with Japan and trade surplus with the US, tying Taiwan’s economy to the economies of both nations.
Thriving exports of industrial products sharply raised the industrial sector’s contribution to Taiwan’s GNP. Meanwhile, the agricultural sector’s share continued to decline and represented less than 6 percent of total GNP in the 1980s. In other words, Taiwan had already become an industrial and commercial society. With the unabated expansion of private enterprises and Taiwan’s trade surplus with the US, the Nationalist government, under pressure from the US, began expediting economic liberalization. Import controls were gradually relaxed from 1983 onwards and, in 1987, many approval rights of domestic operators over imports were cancelled, removing more than half the controls that had been in place for 30 years or longer. Tariffs were repeatedly reduced to around 5 percent from the early 1980s onwards, thus abolishing most of the import intervention measures. Most foreign exchange controls were removed in July 1987. Other liberalization measures included the privatization of state-owned enterprises and financial institutions. The state’s tight control over the economy gradually gave way to a more liberalized, undistorted, and efficient system.
In summary, the basic direction of the Nationalist government’s economic policies in the postwar period moved from strict control to liberalization. During this process, private enterprises played an important role in promoting economic development by creating a great deal of wealth and reconstituting the structural context of Taiwan’s industries. In this manner, Taiwan was transformed from an agricultural economy into a modern economy of industry and commerce.
Beginning of the Movement Opposing Authoritarian Rule
The KMT’s authoritarian rule led to confrontations between the government and Taiwan’s broader society. Moreover, the KMT continued to assert that it represented all of China and was its sole legitimate government. Many of those who accompanied the Nationalist government to Taiwan occupied high-ranking posts in the central government, and legislators and members of the National Assembly who had been elected to office before the government’s relocation continued to hold their posts without new elections. There were, therefore, few channels for the expression of popular will. Even those local government posts for which elections were held, such as for provincial councilors, county magistrates, city mayors, and members of local councils, were heavily dominated by the KMT. This situation served to deepen the Taiwanese people’s animosity towards the Nationalist government. The KMT’s long-term suppression of Taiwan society made the emergence of anti-establishment sentiments inevitable and, following changes in both domestic and international environments in the early 1970s, anti-authoritarian ideas gradually began to surface and intensify. There were several reasons for the change.
US assistance in the aftermath of World War II helped Taiwan’s economy to develop rapidly, and thus a Taiwanese middle class began to take shape when small and medium-sized enterprises emerged. As a result, people became financially capable of engaging in political activities or assisting political candidates monetarily. In addition, educational development led to the rise of a new class of intellectuals, many of whom had studied abroad. With increased knowledge and skills, they became Taiwan’s new middle-class intellectual elite (中智階層). In the 1970s, many of these individuals were between 30 and 40 years of age and in the prime of their lives. They were now numerically and qualitatively capable of taking the place of those of Taiwan’s elite who had been sacrificed in the February 28 Incident, and thus of taking up the task of challenging the authoritarian establishment.
The international crisis also challenged the rule of the KMT. After withdrawing to Taiwan, the Nationalist government adhered to a policy of “gentlemen won’t stand with thieves” (漢賊不兩立), which led to a national identity crisis. Global confrontation between the two blocs advocating “freedom” and “communism” allowed the ROC to gain US support with regard to its representation of China at the United Nations and its seat as a permanent member on the UN Security Council. Thus, at that time, the ROC had international status to support its orthodoxy and legitimacy for internal rule. After the founding of the People’s Republic of China (PRC) in 1949, however, the Chinese Communists had effective control of China. Consequently, many members of the international community chose to break diplomatic relations with the ROC in order to recognize the PRC. On October 25, 1971, the UN Assembly passed a resolution to replace the Republic of China with the People’s Republic of China, challenging the legitimacy of the Nationalist government in Taiwan. On January 21, 1972 while visiting China, US President Richard Nixon met with Chinese Communist Party Chairman Mao Zedong (毛澤東) and Premier Zhou Enlai (周恩來). On February 27, 1972, the US and the PRC signed the Shanghai Communiqué, one key point of which was that “The United States acknowledges that all Chinese on either side of the Taiwan Strait maintain there is but one China and that Taiwan is a part of China.” In 1978, the US government decided to end diplomatic relations with the ROC and, on January 1, 1979, established formal ties with the PRC. These developments weakened the Nationalist government’s claim to represent all of “China” and led the Taiwanese people to doubt and challenge the legality and legitimacy of the KMT’s monopolization of political power in the name of the central government. In 1971, Da-syue Magazine (大學雜誌) was first published by rising middle-class intellectual elites and people began to participate in political activities, which created powerful forces to challenge the KMT’s authority. Movements advocating democracy and autonomy began to arise in response to the changing tide.
Faced with these new situations both at home and abroad, the Nationalist government had no choice but react. As a result, the Chiang Ching-kuo regime attempted to strengthen the internal legitimacy of the Nationalist government by including supplementary and regular elections for some of the seats in the Legislative Yuan and the National Assembly, as well as by implementing a gradual localization, or Taiwanization, of the government.
On January 10, 1972, Lei Jhen (雷震) published Advice on Saving the Nation for Its Survival (救亡圖存獻議). In this publication, he offered 10 suggestions for saving the nation: (1) announcement of the establishment of the “Chinese Democratic Republic of Taiwan” (中華臺灣民主國); (2) resignation of Chiang Kai-shek from the presidency; (3) implementation of democratic politics; (4) reduction of military expenditure; (5) implementation of the rule of law and safeguarding of human rights; (6) reform of organizations in charge of social security; (7) abolition of the ban on new mass media; (8) streamlining of administrative organizations; (9) abolition of the provincial-level governmental system; and (10) amnesty for all political prisoners. Although none of his suggestions were adopted at the time, the government did at least begin to actively implement localization policies.
On May 20, 1972, Chiang Kai-shek began his fifth term as president of the Republic of China and, six days later, his son Chiang Ching-kuo took up the post of premier. After taking office, Chiang Ching-kuo announced the appointment of seven Taiwanese to his Cabinet: Syu Cing-jhong (徐慶鐘) as vice premier, Lin Jin-sheng (林金生) as minister of the interior, Gao Yu-shu (高玉樹) as minister of transportation, and four ministers without portfolio. These appointments greatly raised the status of Taiwan-born government officials, especially since Gao was not even a member of the KMT. On June 1, 1972, Chiang Ching-kuo appointed Hsieh Tung-min (謝東閔) as the first Taiwan-born governor of Taiwan Province. To further elevate the status of Taiwanese people within the KMT, Chiang Ching-kuo increased the number of Taiwanese members of the party’s Central Standing Committee. He also entrusted Lee Huan (李煥) with implementing a policy in which talented young Taiwanese were promoted or appointed to the level of leading cadre in the KMT headquarters or as directors of local party organizations, posts that in the past had been completely monopolized by mainlanders. Lee Huan supported Da-syue Magazine’s call for political reforms, recruiting important figures associated with the magazine, despite the magazine’s vigorous criticism of old establishment and policies, such as the KMT’s policy of “recovering the mainland” (反攻大陸). People recruited by the KMT included Chang Chun-hung (張俊宏), Chen Shao-ting (陳少廷), and Hsu Hsin-liang (許信良), all of whom later became well known in Taiwan’s political and media circles. On June 29, 1972, the KMT abolished the Measures on Supplementary Elections (增補選辦法) implemented in 1969 and announced the Measures on the Supplementary Parliamentary Elections in the Free Area During the Period of National Mobilization for Suppression of the Communist Rebellion (動員戡亂時期自由地區增加中央民意代表名額選舉辦法). By doing so, the KMT hoped to resolve the crisis regarding its legitimacy, and to increase the number of representative seats held by Taiwanese. On April 5, 1975, Chiang Kai-shek passed away and was succeeded by Yen Chia-kan (嚴家淦). Under the guidance of Chiang Ching-kuo, the KMT’s localization policies were further developed as the government tried to reform the massive and corrupt bureaucracy. The government also began to relax, albeit to a limited extent, its control on freedom of speech.
The long-established and deep-rooted KMT-party government made the task of reform slow and difficult, however. As a result, many of the Taiwanese elite became disappointed or at odds with the party; some even broke away from the party and confronted it. These would later become the leaders of the dangwai5 (黨外; literally, “party outsiders,” i.e. non-KMT), and eventually of the Democratic Progressive Party (民主進步黨; DPP), which was established on September 28, 1986. What began as simply voicing views and criticisms against the government later evolved into a real movement that culminated in political confrontation and, eventually, shook off authoritarian rule by the Nationalist government.
5 Dangwai (黨外): refers to a loose grouping of opposition figures who could not establish an official party due to the Nationalist government’s ban on the formation of political parties
In 1975, a magazine run by Taiwanese entitled the Taiwan Political Review (臺灣政論) was first published. Huang Hsin-chieh (黃信介), Kang Ning-hsiang (康寧祥), and Chang Chun-hung (張俊宏), the magazine’s publisher, president, and editor-in-chief, respectively, all belonged to a group of Taiwanese elite who were dissatisfied with KMT rule. The publication of this magazine therefore signified one of the first joint efforts by local middle-class intellectuals to challenge the KMT establishment. The Taiwan Political Review called upon the government to make extensive constitutional reforms, which was a bold breakthrough at that time, and immediately made the magazine popular amongst intellectuals and the general public. Before long, circulation had reached 36,000 and had attracted the authorities’ attention. In its fifth issue, published on December 27, 1976, the magazine carried an article by Chiou Chuei-liang (邱垂亮) entitled “Two States of Mind—An Evening Discussion with Fou Cong and Professor Liou” (兩種心向—和傅聰、柳教授一夕談) that violated laws on rebellion and sedition. The government moved swiftly, revoking the publisher’s license and abolishing the magazine. Nevertheless, the sparks of dissatisfaction had been ignited, its fire quickly spread beyond the government’s control, and soon other political magazines were carrying on the cause.
With its strongly independent consciousness, the Presbyterian Church has long been active in Taiwan, having the oldest history and most followers of all Protestant churches on the island. The church’s heavy native coloring was reflected in its use of the Taiwanese language for performing religious services and its use of the Taiwanese Romanization
(白話字). On December 29, 1971, the church reacted to the changing international situation of the ROC’s withdrawal from the UN and Nixon’s visit to China by issuing the Taiwan Presbyterian Church’s Statement and Suggestions on National Affairs (臺灣長老教會對國事的聲明與建議). In it, the church advocated self-determination for Taiwan and comprehensive elections for all parliamentarians. On September 28, 1975, in response to US President Gerald Ford’s visit to China, the church issued Our Appeals (我們的呼籲), which not only advocated self-determination for the Taiwanese people and implementation of a constitutional government, but also boldly challenged the KMT’s “one-China” policy. On August 16, 1977, after taking into account the normalization of US-China relations, the Presbyterian Church’s central committee passed a Declaration of Human Rights (人權宣言), in which it advocated “self-determination for the Taiwanese people” and “the establishment of a new and independent country.” It was at this point that advocacy for Taiwan independence began to emerge. On October 10, 1976, Wang Sing-nan (王幸男), a Taiwanese who advocated Taiwan independence, sent a mail bomb to Hsieh Tung-min, governor of Taiwan Province, injuring him. The fact that some individuals resorted to terrorism reveals just how impatient people had become. On October 18, 1976, a Taiwan independence advocate named Huang Hua (黃華) was tried and sentenced to ten years in prison. Anti-establishment movements were emerging from the underground and starting to become a problem for the KMT.
Although the partial elections being implemented at that time were incapable of shaking the KMT’s grip on power, they were still a very important platform from which opposition forces could legally enter the world of politics. In 1977, local elections for county magistrates and city mayors were held, with many from the new generation of Taiwanese elite participating and Hsu Hsin-liang (許信良) quitting the KMT to stand as candidate for Taoyuan County magistrate. On November 19, however, the day that ballots were supposed to be counted in Jhongli City (中壢市), suspicious irregularities were discovered concerning the chief supervisor from the 213th polling station. Outraged at this event, a small riot broke out, with people setting fire to police cars, surrounding the police station, and confronting both the police and government troops. Dubbed the Jhongli Incident (中壢事件), this confrontation marked the first time since the February 28 Incident that Taiwanese people had rallied on the streets and gone head-to-head with the establishment. Success in the Jhongli Incident encouraged dangwai figures to challenge the Nationalist government. During the election itself, the dangwai had managed to make substantial gains, with dangwai candidates winning 4 of the 20 open posts for county magistrates and city mayors (2 of each), 21 of the 77 seats available for the Taiwan Provincial Assembly, and 8 of the 51 open seats on the Taipei City Council. The unprecedented success of the dangwai in this election and the talents of the dangwai members elected noticeably increased the dangwai’s influence in Taiwan. The KMT considered the results of this election to be a major defeat and held the more enlightened clique represented by Lee Huan (李煥) responsible for the party’s setback. The KMT consequently demoted this group and replaced it with a more conservative one led by Wang Sheng (王昇). The only effect this had, however, was to further exacerbate confrontations between society and the state.
On March 21, 1978, Chiang Ching-kuo became the sixth-term president of the ROC and continued to promote gradual democratic reform. On July 20, 1978, the Executive Yuan passed the Bylaw Measures on the Supplementary Parliamentary Elections During the Period of National Mobilization for Suppression of the Communist Rebellion (動員戡亂時期自由地區增加中央民意代表名額選舉辦法細則). While incumbent parliamentarians did not have to go through an election to keep their posts, this law raised the quota for the Taiwan area so as to give Taiwanese people more opportunities for political participation.
To better unite societal strength in confronting the KMT and to coordinate islandwide campaigns, on October 6, 1978, Legislator Huang Hsin-chieh announced the formation of the Taiwanese Dangwai Group for Election Campaigns (臺灣黨外人士助選團). On October 31, Huang proposed “12 Political Constructions” (十二大政治建設), making an appeal for the complete implementation of a constitutional government so that elections for parliament and popular elections for provincial governor, mayors, and other posts, could be held. Also called for was the abolition of the Emergency Decree. Suddenly, the entire island was seething with excitement from campaign activities. The ruling KMT, worried that the situation was getting out of hand, tried various measures to counteract it. For instance, on December 12, 1978, there was a confrontation on the campus of National Taiwan University between supporters of the Democracy Wall (民主牆) and those of the Patriotism Wall (愛國牆), with the former representing the power of the public and the latter representing the countering force of the government.
It can clearly be seen, therefore, that the challenges being issued by society against the ruling party’s authority were slowly gaining momentum, and the post-228 fear that the KMT had used to maintain stability was becoming less effective. Had this gradual democratization movement been allowed to continue smoothly and comprehensively, Taiwan would no doubt have transformed peacefully from an authoritarian state into a democratic one. Unfortunately, just as the campaign for supplementary parliamentarian elections was underway in December 1978, US President Jimmy Carter suddenly announced that the United States would establish formal diplomatic ties with the PRC on January 1, 1979. The impact of Carter’s announcement on both the Nationalist government and Taiwan society led to panic and, on December 16, 1978, President Chiang Ching-kuo announced the suspension of all supplementary election campaign activities in the hope of temporarily easing confrontation between Taiwanese society and the government.
This left the fundamental problems of democratization unresolved, however, sowing seeds of tension and instability that would give rise to the Kaohsiung Incident (美麗島事件).
