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Taiwan does better than ever, despite lack of formal ties

Taiwan is an island and a government that, like Janus, faces two ways. One face is turned firmly toward the world, and particularly toward the United States, Western Europe, and Japan. This bustling, tropic-green island's 18 million people are active participants in the world economic system, buying from and selling to most of the globe's major industrialized countries and the developing nations as well.

The other face looks 100 miles across the Taiwan Strait at the People's Republic of China and its billion inhabitants.

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Peking claims Taiwan as a province. Taiwan still clings to the proud title, Republic of China, and insists it is the only legitimate government of all China. Only two score nations still recognize that title, but Taiwan will not let it go. "As there is only one sun in the sky, so there can be only one government under the heavens. That remains our position," said Dr. James Soong, a government spokesman.

economically, Taiwan is in sound health and doing better than it ever has before. In terms of formal ties, things don't look so good: It has lost its seat at the United Nations, it has been booted out of the World Bank and the International Monetary Fund, its defense treaty with the United States has been unilaterally canceled by Washington.

Yet Taiwan has established what it calls "substantive relations" with all the world's major trading nations. American investment in the island continues, there is a billion-dollar surplus in trade with Western Europe, and even East European countries are establishing commercial links with the island.

There was a brief flight of capital from Taiwan after Washington, Taiwan's security guarantor for so many years, derecognized Taipei and set up full full diplomatic relations with Peking in 1979. In economic erms, however, 1979 turned out to be a very good year. And 1980, despite the doubled price of imported oil, showed a respectable 6 to 7 percent economic growth rate.

"Taiwan has established its own unique international identity," says a longtime observer of the island. "Given continuing peace, there is no reason the government should not remain viable or its people should not reach the level of the advanced industrialized nations."

That is all very well, as far as the face Taiwan presents to the global community is concerned. But what of its relations with the Chinese mainland? Peking refuses to rule out the use of force to take over Taiwan, even though in fact there is less tension across the Taiwan Strait than at any time in the 31 years since the defeated Chiang Kai-shek government established its capital on the island. Most observers feel negotiations for peaceful reunification between Peking and Taipei are unlikely so long as Chiang Kai-shek's son and heir, Chiang Ching-kuo, remains in active control of the island as its President.

Peking has offered Taiwan three major conditions:

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* It can keep its present social and economic system, and its standard of living, which is several times higher than that of the mainland.

* It can keep a degree of autonomy, and even its own armed forces.

* It must give up all claims to the government of all China

Many, perhaps most Taiwanese, distrust Peking's words regarding the first two points. For the government, whose key posts are still in the hands of the 2 million mainlanders who fled to the island after the communist takeover of the mainland, the principal sticking point is the third condition.

"If we give way on that point, we lose our raison d'etre," one senior official said.

Taiwan rejects every single offer, because it fears that to respond would be to accept implicitly the status of local or regional government that Peking seeks to impose on it. Ordinary islanders also have the feeling that they are much better off than the mainland and see no reason why they should be absorbed by the mainland.

"The Kuomintang government has never been accepted by the Taiwanese people," this leader said, "but I dare say 99 percent of us do not want to be under communist rule either. Even though we don't have a very democratic government, we still prefer to stay within the free enterprise system."

This does not mean that Taiwan will never be reunified with the mainland. Continued peace is the prerequisite, but with Peking's abandonment of the "ultraleftist" line, there is for the first time the possibility of a gradual reconciliation between Peking and Taipei, a number of observers, say.

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