International Political Economy: Taiwan

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International Political Economy: Taiwan
Made in Taiwan, an all too familiar sticker found on many products you and I purchase everyday. Taiwan is slightly smaller than Delaware and Maryland combined yet boasts an economy rivaling that of the top nations in the world. Taiwan is known for its rapid economic growth in the 80s and 90s due to the demand for textiles and electronic computer chips manufactured there. However, Taiwan’s once boisterous economy is now beginning to slow its pace due to outsourcing and government restrictions on trade with China.

Taiwan is a democratic nation that has a dynamic capitalist economy. Its neighbor China, on the other hand, is a communist state. This normally would not be too much of a problem except for the rough history between these two countries. To explain the economic crisis Taiwan faces with China, one must understand the history between the two. In 1895, military defeat forced China to cede Taiwan to Japan. Taiwan reverted to Chinese control after World War II. Following the Communist victory on the mainland in 1949, 2 million Nationalists fled to Taiwan and established a government using the 1946 constitution drawn up for all of China. Over the next five decades, the ruling authorities gradually democratized and incorporated the native population within the governing structure (CIA WFB 2006). So Taiwan never formally left China, but is not ruled by the Chinese government either. China does not formally recognize the government of Taiwan, therefore communication between the two on issues such as trade is almost non-existent.

The crisis being discussed is not so much a crisis as it is an economic predicament. Taiwan and China must work out some differences so that Taiwan’s economy can get back on the fast track as it once was. As of early 2006, Taiwan’s restriction on trade and investments with China has been a huge burden upon their economy. A conference concerning these issues was called in July in Taiwan to...
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