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COUNTRY PROFILES


PROFILE

Population: 23.2 million (January 2012)
Language(s): Mandarin Chinese (official); Taiwanese, Hakka.
Religion(s): Buddhist, Taoist 93%; Christian 4.5%; other 2.5%
Currency: New Taiwan Dollar (NTD)
Major political parties: Kuomintang (Chinese Nationalist) Party (KMT), Democratic Progressive Party (DPP), People First Party (PFP), Taiwan Solidarity Union (TSU), New Party (NP).

Government: Multiparty democracy with directly-elected President.
President: Ma Ying-Jeou (KMT)
Prime Minister/Premier: Sean Chen
Foreign Minister: Timothy Yang
Membership of international groupings/organisations: Asia Pacific Economic Co-operation (APEC), Asian Development Bank (ADB), International Olympic Committee, Intergovernmental Oceanographic Commission (IOC), World Trade Organisation (WTO), Observer status in Organization for Economic Cooperation and Development (OECD), Observer status in World Health Assembly (WHA), Member of the International Association of Judges.

Did You Know?

The People's Republic of China claims sovereignty over Taiwan and regards Taiwan as a province of China. The United Kingdom acknowledges the position of the Chinese Government that Taiwan is a province of China and recognises the Chinese Government as the sole legal government of China. The United Kingdom does not recognise Taiwan as a state and does not have diplomatic relations with Taiwan. The United Kingdom considers the Taiwan issue as one to be settled by the people on both sides of the Taiwan Strait. We are strongly opposed to any use of force and urge both sides to engage in constructive dialogue.

The United Kingdom enjoys a flourishing relationship with Taiwan based on trade, investment, financial, educational, cultural and other exchanges. The information provided below and all references to Taiwan and the Taiwan authorities should be read in this context.

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ECONOMY

Basic Economic Facts

GDP: USD 379.4bn (2009); USD 473.6bn (2010); USD 492.8bn (2011) (Ranked 24th in the world by the IMF in 2010)
GNP per capita: USD 16,997 (2009); USD 19,046 (2010); USD 20,139 (2011)
Annual Growth: 0.7% (2008); -1.9% (2009); 10.8% (2010); 4.04% (2011)
Inflation: 3.5% (2008); -0.9% (2009); 0.96% (2010); 1.42% (2011)
Unemployment: 4.1% (2008); 5.9% (2009); 5.2% (2010); 4.4% (2011)
Major Industries: Electronics, petroleum refining, chemicals, textiles, iron and steel, machinery, cement, food processing vehicles, consumer products, pharmaceuticals.
Major export partners: China 27.1%, Hong Kong 15.1%, US 11.3%, Europe 11.6%, ASEAN 15.3% (2010); China 27.2%, ASEAN 16.5%, Hong Kong 13%, US 11.8%, Europe 10.1%, Japan 5.9% (2011)
Major import partners: Japan 21.5%, China (incl. HK) 15%, US 10.8%, ASEAN 10.8%, Europe 9.7% (2010); Japan 18.5%, China (incl. HK) 16.1%, US 9.1%, ASEAN 11.6%, Europe 10.5% (2011)
Foreign Trade: Exports USD 203.7bn, imports USD 174.7bn (2009); exports USD 274.6bn, imports USD 251.2bn (2010); exports USD 308.3bn, imports USD 281.6bn (2011)

As a small open economy, Taiwan, along with other economies in the region suffered a significant downturn in production starting from late 2008. However, it has now recovered well from the global financial crisis. 2010 GDP hit an all-time high of 10% YoY. The unemployment rate was down from 5.85% in 2009 to 4.4% in 2011. The exports sector is also back on track, up 12.3% in 2011 compared to 2010. The headline inflation rate remains flat, up 1.4% in 2011.

The European debt crisis and global manufacturing output led to a slowing down in the pace of economic growth in the second half of 2011. But with closer economic ties with China and a gradually stabilizing external demand from developed countries and emerging markets, the economy is expected to grow 3.85% in 2012.

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HISTORY

Longer Historical Perspective

Taiwan's aboriginal inhabitants arrived in around 1500BC, apparently from the Pacific islands. Chinese settlement began in the 12th century but not in large numbers until the 17th century. Many of the Chinese immigrants were from Fujian province, which is just across the Strait from Taiwan and whose Min-Nan dialect became what is known as Taiwanese (a dialect of spoken Chinese). The first Europeans to visit were the Portuguese, in 1517, who called Taiwan 'Formosa' (beautiful island). Later, the Spanish and Dutch contested control of the island until the Dutch expelled the Spanish in 1641. The Ming Dynasty loyalist, Cheng Cheng-kung (also known as Koxinga) expelled the Dutch in 1662. Koxinga went to Taiwan to escape the Manchu forces on the mainland which had established the Qing dynasty. Koxinga's forces hoped to use Taiwan as a base from which to re-capture the mainland. Instead, the Manchus defeated Koxinga in 1682.

Taiwan was a prefecture of Fujian province until the late 19th century when, in response to fears over Japanese encroachment, it gained provincial status. Following defeat in the Sino-Japanese War in 1895, Taiwan and Penghu (Pescadores) Islands were ceded to Japan under the Treaty of Shimonoseki. They remained under Japanese rule until 1945 when the Japanese surrendered and the islands were occupied by Chinese Nationalist (KMT) forces. In December 1949, following the Nationalists' defeat on the mainland, the government of the then 'Republic of China' under President Chiang Kai-shek moved to Taiwan, together with approximately two million supporters. The Nationalist (KMT) administration on Taiwan maintained its claim to be the legitimate government of the whole of China and set up a national central government on the island. Chiang Kai-shek held the office of 'President' until his death in 1975. Under his rule, the political system remained virtually frozen for almost 30 years.

Following Chiang Kai-shek’s death Taiwan embarked on a process of reform and gradual democratisation under his son, President Chiang Ching-kuo. In 1986, the main opposition groups came together to form the Democratic Progressive Party (DPP) and were allowed to contest parliamentary elections. They were formally legalised in 1989. Chiang Ching-kuo died in 1987, shortly after Martial Law was lifted. Lee Teng-hui succeeded him as President. Lee was the first Taiwan-born leader of the KMT and was symbolic of evolving 'Taiwanisation' of the KMT. Lee introduced a range of democratic reforms, including lifting restrictions of the press and introducing proper elections to the National Assembly. The first direct elections for the office of President were held in 1996. Lee Teng-hui won and continued as 'President'.

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INTERNATIONAL RELATIONS

Taiwan Relations with the UK

The UK seeks to develop its exports and commercial involvement with Taiwan, including inward investment. We also seek to develop a wide range of unofficial links, particularly in the fields of education and culture. In developing our relations with Taiwan we act within the restraints imposed by our formal position on the status of Taiwan. (See 'Did You Know?' above).

The British Trade and Cultural Office in Taipei (BTCO) was established in 1993 to represent British interests in Taiwan in the absence of diplomatic relations. See the BTCO website (http://www.britishembassy.gov.uk/servlet/Front?pagename=OpenMarket/Xcelerate/ShowPage&c=Page&cid=1065432027326)

Similarly, Taiwanese interests in the UK are represented unofficially by the Taipei Representative Office in the United Kingdom (TRO). Dr Lyushun Shen is currently the Head of the TRO. For further information about Taiwan, visa requirements etc, contact the TRO at Tel: (020) 7881 2650, Fax: (020) 7730 3139 or visit: The TRO Website (http://www.taiwanembassy.org/UK/ct.asp?xItem=1255&CtNode=926&mp=132&xp1=132) . If you plan to visit Taiwan you may also want to look at our Travel Advice (http://www.fco.gov.uk/en/travel-and-living-abroad/travel-advice-by-country/asia-oceania/taiwan/) .

Cultural Relations with the UK

The British Council works to develop long term relations in education, science, the arts and English language and operates as part of the British Trade and Cultural Office. After the US, the UK is the second most popular destination for Taiwanese overseas students (around 15,000 students in British educational institutions at any one time).

Relations with the International Community

Following the communist victory in 1949 most countries recognised the People's Republic of China (PRC). However a significant number, including the United States, continued to recognise the 'Republic of China' (ROC) authorities on Taiwan as the lawful Government of China. The balance shifted significantly in the early 1970s as the PRC's relations with the US and other Western countries began to improve.

The United Kingdom established diplomatic relations with the PRC in 1950 but maintained a consulate in Taiwan, accredited to the provincial rather than central authorities, until 1972 when relations with the PRC were upgraded to full ambassador level. The PRC took over China's seat at the UN in 1971.

The number of countries with which Taiwan has diplomatic relations now numbers 23 (12 in Latin America, four in Africa, six in the Pacific and one in Europe - The Holy See). Taiwan has representative offices in over 60 countries, without diplomatic status. China has opposed Taiwan's participation in international organisations for which statehood is a prerequisite. It has sought to limit Taiwan's participation in other international organisations, insisting it do so under a name other than the 'Republic of China'.

Role of the United States

In 1979, after the US switched its recognition from Taiwan to the PRC, the US Congress passed the Taiwan Relations Act. It states that the US decision to establish diplomatic relations with the People's Republic of China rested upon the expectation that the future of Taiwan would be determined by peaceful means and the US would view any effort to resolve Taiwan’s future by any other means with grave concern. It also states that the US will provide Taiwan with arms of a defensive nature. The US acts as a significant third party in the relationship between Taiwan and the Mainland.

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GEOGRAPHY

The island of Taiwan is found 100 miles across the Taiwan Strait from mainland China. It is 250 miles long and 88 miles across at the widest point. A high and rugged mountain range runs north to south along the island's entire length. This range covers more than half the area of the island, and is the second highest in Asia after the Himalayas. About one quarter of the land area, mainly on the western plain, can be cultivated. The climate is sub-tropical, except for the extreme south, which is tropical. It is affected by the monsoon cycle and rainfall is extremely high, averaging 100 inches per year, falling mostly between late October and March. Summers are hot. The typhoon season lasts from May to November.

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TRADE AND INVESTMENT

Trade and Investment with the UK

Taiwan is a major Asian source of inward investment. There are more than 180 Taiwanese companies with investments in the UK and the UK remains the most attractive destination for Taiwanese manufacturing in Europe. This investment is almost exclusively IT related, although there is a growing interest in biotechnology.

UK Trade & Investment has a dedicated team in the BTCO. Several regional development agencies also have offices in Taiwan and many UK companies have invested successfully in Taiwan.

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POLITICS

Despite the establishment of the People's Republic of China in 1949, the Nationalists, though confined to Taiwan and a few smaller islands, still claimed to be the legitimate government of China, as the 'Republic of China'. Both sides considered the civil war not to have ended and continued an exchange of fire and later propaganda leaflets between the mainland and the offshore islands of Kinmen and Matsu into the 1970s. In 1991, the Taiwan authorities declared that the 'Period of Communist Rebellion' had come to an end, signalling that they considered the civil war to be over.

From 1979, the PRC developed the concept of 'one country, two systems' and put forward a series of proposals for reunification. Taiwan refused to respond to these overtures, but in the 1980s began to relax restrictions on contacts with the mainland. In 1986, the first direct talks between the two sides were held in Hong Kong, to discuss how to deal with the hijacking to the mainland of a China Airlines (the Taiwanese 'national' carrier) flight. Taiwan allowed family visits to the mainland in 1987.

The level of political contact between China and Taiwan was raised in 1993 when representatives of non-official liaison bodies - China's Association for Relations Across the Taiwan Strait (ARATS) and Taiwan's Strait’s Exchange Foundation (SEF) met in Singapore. This was the highest level contact between China and Taiwan since the end of the civil war and marked a significant new stage in the relationship. While the meetings did not result in a political breakthrough, they did show incremental progress in practical issues. Reports of a consensus on the 'One China' principle later proved difficult to sustain. Talks broke off in June 1995 when President Lee Teng-hui visited the United States. China believed that the United States had reneged on a promise not to let the visit go ahead. Tensions further increased when the PRC conducted military exercises in the Taiwan Strait and launched unarmed missiles off the coast of Taiwan in 1996 in advance of the island's first direct elections for President. Formal cross-Strait dialogue between the heads of ARATS and the SEF resumed in October 1998, but it was again broken off in July 1999 following Lee’s statement that Taiwan-China relations were 'state-to-state' in nature.

From mid-2000 until mid-2002 there was a gradual lessening of tensions across the Taiwan Strait, but no new formal talks. In July and August 2002, the new 'President', Chen Shui-bian spoke of Taiwan 'going its own way' and of the existence of 'one country on each side of the Taiwan Strait'. This angered the Chinese who saw these remarks as a repetition of Lee Teng-hui's 'state to state' pronouncement.

China has sought reunification through negotiation; however, the Chinese have not renounced the threat of military action against Taiwan. China enacted its anti-secession law on 14 March 2005, to 'oppose and check 'Taiwanese independence. The anti-secession law reiterates the 'one-China' policy and sets out certain measures to maintain peace and stability in the Taiwan Strait and to promote cross-Strait relations. But it also authorises the use of 'non-peaceful' means if peaceful reunification fails.

Despite political differences, economic and people-to-people links have continued to develop at an impressive rate. As have trade and investment. In 2011, two-way trade totalled USD 160bn. Taiwan is a major investor on the Mainland. In July 2009, Taiwan started limited easing of restrictions on Mainland investment. Although direct trade is still restricted, Taiwanese investment in China is substantial.

Ma Ying-jeou’s inauguration as ‘President’ in May 2008 created new opportunities for improving the relationship. The Chinese President, Hu Jintao, spoke in April 2008 of a “golden opportunity in history” and stressed that peaceful development of cross-Strait relations was a shared wish and interest for both sides. The Kuomintang and the Chinese Communist Party met subsequently in mainland China and agreed, on the basis of the “1992 consensus”, to resume unofficial talks which began in June 2008. A second round was held in November 2008 and led to the launch of direct shipping links across the Taiwan Strait on 18 December 2008 and the start of daily charter flights. High-level talks with Mainland China have resulted in the signing of 16 cross-Strait agreements. The most significant was the Economic Cooperation Framework Agreement (ECFA) in June 2010. There are now 558 weekly direct flights between Taiwan and the Mainland. Ma Ying-jeou was re-elected as ‘President’ in January 2012.

Taiwanese Identity

The Taiwanese sense of identity has varied greatly. During the years of KMT single party rule, 75% of the people in Taiwan identified themselves as Chinese, despite only 15% having direct contact with the mainland. Since the 1990s and democratisation in Taiwan a sharp shift led to a small minority (8%) declaring themselves Chinese, with most accepting a dual Chinese/Taiwanese identity (22%). At the same time those who previously accepted a dual identity have increasingly seen themselves as just Taiwanese (62%).

In the same way as the KMT promoted a China-centric ideology in the period of single party rule, so the DPP pushed a Taiwan-centric consciousness during its eight years in power. This meant increasing the use of “Taiwan” in the names of state-owned enterprises and applying to the UN in the name of Taiwan as well as changes to the focus of teaching and an increased emphasis on local cultures.

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HUMAN RIGHTS

Taiwan has undergone a remarkably smooth transition from an authoritarian one-party system to a fully-fledged democracy. It now has a fully functioning parliamentary democracy, freedom of speech and movement and freedom of the press. There are no political prisoners or exiles. Serious human rights concerns are limited to the use of the death penalty (a de facto moratorium ended in April 2010) and occasional reports of police or military brutality.

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Last Updated: March 2012

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