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Taiwan thriving in the shadow of a mainland Chinese dragon

KAOHSIUNG -- Taipei's dynamism and optimism is contagious. Walking around this prosperous and increasingly world-class city, one is reminded of the self-reliant and can-do attitude which turned Taiwan from a poor and languid backwater at the end of WWII, to one of East Asia's most prosperous places.

But leafy avenues and upscale shops aside, not to mention the iconic Taipei 101 skyscraper, the world's second-tallest building, the capital of the Republic of China remains a model of resourcefulness and resilience.

To be sure, the numbers tell only part of the story; historically a high-growth export-oriented economy based largely on free enterprise, Taiwan's GDP growth in 2010 reached 10 percent; despite the global recessionary gloom, growth will still hold at 5 percent this year, an impressive gain.

Moreover, per capita income has grown to US$19,500 from US$2,300 in 1980.

Geography certainly hasn't changed and Taiwan remains in the shadow, and some would say the creeping social sphere of influence, of its longtime rival the People's Republic of China (PRC).

When Mao Zedong's Communist forces seized the mainland in 1949 following the Chinese Civil War, the Nationalists went into exile on Taiwan. Thus China was divided de facto into two competing governments and two starkly different social visions.

Though political tensions have eased remarkably between both sides of the Taiwan Strait since the election of Nationalist President Ma Ying-jeou, the unnerving fact remains that the PRC regime has never renounced the use of force to reunify Taiwan.

According to Chang Chun-fu, the deputy director-general of the Bureau of Foreign Trade, “Forty-one percent of our exports now go to Mainland China as compared to 11 percent to the USA.”

Back in the 1980's about 30 percent of Taiwan exports went to the U.S.

He added that the “production costs are too high in Taiwan,” so many private-sector firms have invested in China.

There's at least US$100 billion in Taiwanese investment in China, despite Taipei and Beijing being political rivals.

Chang stresses that Taiwan's focus remains on a “service economy, and green industry such as solar panels.”

Currently Taiwan is the second-largest producer of solar panels; most are exported to Europe.

Moreover Taiwan's research and development (R&D) sector remains impressive but with clear dependence on assembly and production in China, especially in the computer industry.

The bigger story remains the island's quality of life improvements.

Having first been to Taiwan in the mid-1970's and 1980's, the island was defined by fast economic growth but often at the expense of the environment; air pollution, especially given the hot and humid climate, was a serious problem.

This is far less so today as the island has widely embraced “green technology.”

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