Taiwan 1300
Photo by: Jürgen Effner

Republic of China

Chung Hwa Min Kuo



The island of Taiwan, in Eastern Asia, is about 161 kilometers (100 miles) away from the southeast part of mainland China, and about 483 kilometers (300 miles) north of the Philippine island of Luzon. The East China Sea forms the northern border of Taiwan, the Taiwan Straits are to the west, the Philippine Sea to the south, and the Pacific Ocean on the east coast. The territory is slightly smaller than the combined area of Maryland and Delaware in the United States. Taiwan occupies a total area of 35,980 square kilometers (13,892 square miles). Its capital city, Taipei, is in the northeast, and is the most densely populated area in the territory.


As of November 2000, the population of Taiwan was estimated at 22,257,000. People aged 14 years and under comprise 22 percent of the total population, while 70 percent belong in the 15 to 64 age bracket. The earliest government census records, dated 1905, set the island's population at 3.12 million, which doubled to 6.02 million by 1945. Subsequently, the Taiwanese population increased at an average of 3.84 percent, prompting the government to implement strict population control measures such as family planning. By 1997, the population growth rate had dropped to 1 percent.

Besides government family planning programs, the decline in population growth can be linked to the change of attitude in the younger generation who, due to better education and career opportunities, now tend to marry later. There has been a decrease in potential mothers between the ages of 20 and 34. Of the 326,002 births registered in Taiwan in 1997, the ratio was 109.04 boys for every 100 girls. The greater male-to-female ratio on the island is in keeping with Chinese culture, which traditionally values sons above daughters.

The population distribution curve measured by age groups indicates an aging population. In 1990 people aged 65 and over comprised about 6.1 percent of Taiwan's population. This figure increased to 8 percent in 2000 and, with average life expectancy at 76.35 years, the government estimates that the percentage of its elderly population will increase to 19.1 percent by 2030. In an attempt to encourage a moderate increase in population, the government modified its former population reduction slogan from, "One [child] is not too few; two are just right," to "Two are just right."

Because of the increasing industrialization of Taiwan, people are flocking to the urban-metropolitan areas of the island, which absorb 67.8 percent of the total population. In 1997 the population density of Taiwan was the second highest in the world next to Bangladesh, with 601 people per square kilometer (1,557 per square mile). The capital city, Taipei, which covers 272 square kilometers (105 square miles), is the most densely populated area with 9,560 persons per square kilometer (24,760 per square mile). Second to Taipei is Kaohsiung City with an area of 154 square kilometers (59 square miles), which is home to 9,350 persons per square kilometer (24,216

per square mile), while Taichung City, with an area of 163 square kilometers (63 square miles), has 5,519 inhabitants per square kilometer (14,294 per square mile).


Data generated by the Directorate General of Budget, Accounting and Statistics (DGBAS) shows that the government spent NT$1.164 trillion in 1999. A big percentage of the budget went to national defense (22.6 percent); followed by education, science, and culture (17.4 percent); economic programs (14.8 percent); social welfare (13.5 percent); general administration (11.6 percent); and pension and survivor's benefits (11.1 percent). In the same year, the government posted a budget surplus amounting to NT$64.6 billion, while external debt amounted to US$35 billion.

Taiwan's government collects 18 different categories of taxation, which provide the revenue for national expenditures. Nine of these categories are classified as direct taxes : corporate income tax , individual income tax, rural land tax, land value tax, land value increment tax, estate and gift tax, mining-lot tax, house tax, and deed tax. The other 9 taxes are indirect and include customs duty , business tax, commodity tax, stamp duty, vehicle license tax, securities transaction tax, amusement tax, slaughter tax, and harbor dues.

Taxes are collected by the National Tax Administration, which administers different tax collection offices in the different provinces and municipalities. In 1999 tax revenue alone accounted for 62.7 percent of the govern-ment's total revenues. In the same period, the government was able to collect a little over NT$770 billion in taxes according to DGBAS statistics.


The government is laying the foundation for a national information infrastructure through 30 different projects designed to make the country into a competitive and knowledge-based society. The different projects are focused on enhancing broadband access, improving the quality of Internet service, improving and diversifying the content of local web sites, and promoting electronic commerce and other Internet-based applications. As of 1 July 1999, Taiwan had 15 Internet service providers and 4.13 million Internet users. Based on official estimates, there are at least 52,000 locally authored web sites in Taiwan, 89.6 percent of which are dot-coms (Internet-based companies offering different types of conventional and innovative goods and services). Most of these web sites are written in Chinese, although many provide English versions.

As of April 2000, the Directorate General of Telecommunications estimated the mobile phone subscribers at 13.78 million, a number that was higher than the estimated 12.49 million telephone main lines. In July 2000, Taiwan reduced its international direct dialing (IDD) fees by an average of 15 percent. Earlier, charges on local and mobile phones, leased lines and Internet service had seen reductions of between 2 percent and 5 percent. Further reductions are expected once a separate accounting system has been established and an evaluation of the state-run telecom company carried out.


From 1986 to 1998, Taiwan's floriculture (flower-growing industry) underwent huge and profitable expansion, and its export value increased from US$3.7 million to US$41.5 million. As demand and sales increased, Taiwan's floral nurseries were expanded from 3,500 hectares to 10,000 hectares. The major export markets for flowers are Japan, Hong Kong, and the United States. Most flower farms allocate half of their planting area to producing cut flowers, that is, flowers sold as single stems for vases and floral arrangements, while the other half is used for nursery production. Annual production of cut flowers is 1.4 billion stems and 25 million potted plants.


In 1998, the Taiwanese fishing industry harvested fish worth US$2.9 billion, of which 62 percent came from deep-sea fishing, 20 percent from aquaculture, 15 percent from offshore fishing, and 3 percent from coastal fishing. Skipjack and eel are Taiwan's biggest water-based export items. The export value of eel, most of which goes to Japan, exceeded US$400 million in 1998.

To protect natural resources and further develop the island's fishing industry, Taiwan's government invested in the construction of fishing harbors, wholesale markets, modern equipment, and other infrastructure during the 1980s. During the 1990s, the government complemented this initiative with renewed efforts to raise public awareness of environmental and conservation issues. Several environmental laws were passed, such as the Water Pollution Control Act in 1991 and the Environmental Impact Assessment Act in 1994.

Taiwan's mountainous terrain serves as a natural hazard to its thriving fishing industry, especially in the rainy season when mud and silt are deposited in the island's wide and shallow river beds. The government, therefore, set aside and developed areas especially suited to aquaculture (the production of scientifically farmed fish), and Taiwan has become a world leader in aqua-cultural development. The industry flourished in the 1980s, but received a setback when the grass shrimp industry was hit by an epidemic in 1987. During the 1990s, government further boosted production by promoting automation, encouraging the use of biotechnology, and improving its marketing strategy.


In the 1950s, the farming of livestock in Taiwan was a backyard enterprise. In just 4 decades since, livestock grew into a multi-billion dollar industry and has become a major export product. In 1998, livestock production was valued at more than US$3.6 billion, accounting for 41.56 percent of the total value of agricultural production. Hog farming still ranks first in the livestock industry, followed by broiler chickens, eggs, and milk. However, an outbreak of foot and mouth disease in March 1997 caused a temporary decline in export sales. The official estimate of hog farms stricken by the disease is 6,147 across 20 cities. To control the spread of the disease, the government ordered the extermination of all affected animals and the immediate vaccination of those unaffected. Roughly 21 million doses of vaccines were used to bring the disease under control. Since then, the hog industry has recovered and export sales have returned to the normal level.

Taiwan attributes the growth of its agricultural industry to the dedication of its farmers, the development of a farmers' organization, continual improvements in techniques and infrastructure, and the implementation of a beneficial land reform program. The government continues to support its farmers with price guarantees, low-interest loans, economic incentives, and other helpful measures.

Through technological improvements such as new cultivars, growth regulators, and mechanization, crop yields per hectare of land jumped from 8,600 kilos in 1945 to 16,384 kilos in 1998. Taiwanese fruit growers have applied advanced horticultural technology to modernize their operations. Through the effective control of plant diseases, adjustments to fruit maturation periods, the cultivation of improved fruit strains, and the implementation of multiple annual harvests, the fruit sector has witnessed profitable growth.

Taiwan has used information technology to create the National Agricultural Information Service, an integrated agricultural information database that includes planning, production, and marketing information related to domestic farming, forestry, fishing, and animal husbandry. This database provides rapid access to information and communication, and allows players in the agricultural sector to exchange ideas at an international level.

Taiwan's agricultural sector faces several challenges. Efficient farming is hindered by the rapidly aging agrarian workforce and a severe shortage of new young workers, who have abandoned the rural life for more profitable careers in the cities. Farmers are having to confront falling incomes, rising costs, and increased foreign competition, and as Taiwan's entry into the WTO approaches, the farmers' predicament will worsen before it gets better.

Another factor that serves to hinder agricultural growth is the island's mountainous topography, which restricts farming to the arable western slopes and alluvial plains. To make matters worse, plots are small with most farmers having less than 1 hectare of cultivable land. This restricts the application of advanced agricultural methods such as mechanization, since these depend on economies of scale (large output) to be cost-effective. Promotion of efficiency in the farming industry has not kept pace with other sectors. About 10 percent of Taiwan's total farmland has been neglected because farming has ceased to be profitable.

The development of aquaculture is seriously threatened by environmental degradation. Freshwater aquaculture uses huge amounts of ground water, sometimes causing land to shift or cave in. Two of Taiwan's government agencies, the Ministry of Economic Affairs and the Council of Agriculture, have jointly promoted recycling systems that use fresh water more efficiently, and have encouraged aquaculturists to switch to marine ranching.

Taiwan's fishing and aquaculture industries are endangered by the pollution of its rivers and coastal waters caused primarily by the expansion of urban communities. There are 21 primary, 29 secondary, and 79 ordinary rivers in Taiwan. According to the Environmental Protection Administration (EPA), 33.8 percent of primary and secondary rivers are polluted to different degrees. Most industrial, agricultural, and residential wastewater drains directly into rivers, seriously polluting the water downstream. By April 1998 only 240,000 households (33.25 percent) were connected to the sewage system.



According to the Institute for Information Industry, Taiwan's software market will have reached up to NT$150 billion in production value by 2001 due to rising global demand for software. Continued investment and a steady supply of competent human resources are 2 major factors behind the sharp growth of Taiwan's software industry in recent years. The industry will have the opportunity to upgrade its production value further in the future, especially as e-commerce becomes increasingly popular among domestic enterprises in Taiwan.

In 1998 Taiwan's hardware information technology industry registered a total production value of US$33.8 billion, up by 11.9 percent from US$30 billion of the previous year, making it Taiwan's most important foreign exchange earner. Since 1995, Taiwan has been the world's third-largest computer hardware supplier after the United States and Japan. Taiwan has about 900 computer hardware manufacturers employing close to 100,000 workers. These companies manufacture laptop computers, monitors, desktop PCs, and motherboards which, in 1998, accounted for about 80 percent of the production value of the information technology industry. To secure a lion's share of the world market, Taiwan's manufacturers strive to maintain high quality and competitive prices. According to statistics released by the Institute for Information Industry, Taiwan has already replaced Singapore as Japan's second largest supplier of information products after the United States. In March 2000, Taiwan earned the distinction of becoming the world's leading manufacturer of CD-ROM drives, a feat made possible by Japan's withdrawal from the CD-ROM market in 1998. In 1999 Taiwan also claimed to be the world's largest supplier of notebook PCs, with an estimated world market share of 49 percent.


Thirteen automobile manufacturers have plants in Taiwan. Most of these are working in partnership with foreign carmakers, mostly Japanese. These companies produce and import automobiles. In 1998, roughly 402,000 automobiles were produced in Taiwan, and the value of the automotive industry reached US$9.93 billion.

However, limited parking space and the efficient mass transit systems in urban districts have resulted in the decline of the domestic car market. From a high of 542,000 units sold in 1995, only 476,000 were purchased in 1998, with 80 percent of the demand being for sedans. In recent years, competition between locally made and imported vehicles has gradually decreased. In 1998 the domestic automobile industry, although threatened by imports from Japan and the United States, still managed to capture about 84 percent of the market, with over 70 percent of the 292,000 domestically made sedans supplied by 3 companies: Ford Lio Ho Motor Co., Ltd. (20.3 percent), Yulon Motor Co., Ltd. (28.6 percent), and Kuozui Motors, Ltd. (22.4 percent). In the commercial vehicle market, China Motor Corporation maintained its traditional top position, producing over half of the 115,700 commercial vehicles sold.

To strengthen the industry, automobile manufacturers need to invest in research and design (R&D), and to improve their own technology in engines, computerized gearing systems, and several other components, to enhance their design capability. One of the industry's weaknesses is its dependence on foreign engines and its inability to produce other key parts such as airbags, which has curtailed its plans to export vehicles. Since 1999, the Ministry of Economic Affairs has allocated funding to encourage R&D and thus alleviate the automobile industry's dependence on imports from Japan and elsewhere.


The Taiwanese textile industry produces synthetic fibers, yarns, fabrics, clothing, and clothes accessories. In the last few years, local manufacturers have attempted to develop man-made fibers and fabrics to compensate for Taiwan's inability to produce cotton or wool, and its limited production of silk and linen. In 1998, Taiwan produced 3.25 million metric tons of man-made fiber, the third highest volume in the world. The country's output of polyester fiber, at 2.68 million tons, occupied second place globally. Nylon production was the world's highest at 301,000 tons. Taiwan has also started mass-producing carbon, spandex, and viscose fibers. The chief export markets for Taiwan's textile exports are the United States, Hong Kong, and other Southeast Asian countries.


One of the biggest retailers in Taiwan is the 7-11 chain of convenience stores. In terms of store-to-population density, Taiwan has the highest ratio in the world with one 7-11 outlet for every 10,000 people. Owned by the President Chain Store Group, the company's revenues amounted to US$1.29 billion in 1998. The President Group is a household name in Taiwan, where almost everybody has used its products or services at one time or another. Moreover, it is the largest Taiwanese investor in mainland China. In October 1999, the Ministry of Economic Affairs approved a US$328 million mainland-bound investment project proposed by the President Group. The company is diversifying its operations by reinvesting in the Starbucks coffee shop chain and the Conforama home furniture and appliance chain.

Aside from food and beverages, an emerging retail market in Taiwan is the home improvement and furniture market. With the population's increased spending power, ever-increasing numbers of people are renovating their homes and surroundings. In 1992, internationally renowned companies like Ethan Allen, ID-design, Ikea, and B&Q entered the Taiwanese market. In an interview with the Free China Journal in 1999, an Ikea official estimated the annual value of the furniture sector in Taiwan at US$203 million. This estimate did not include the home improvement sector.

In 1998, Ikea's international chain of stores posted earnings worth US$7.02 billion. According to the Taiwan Furniture Manufacturers' Association, the huge potential of the sector evidenced by the earnings of the foreign companies has attracted Taiwan-based furniture exporters to offer their products to the domestic market as well.


Taiwan has no territories or colonies.


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—Maria Cecilia T. Ubarra




New Taiwan dollar (NT$). One dollar equals 100 cents. There are notes of 50, 100, 500, and 1,000 dollars. There are coins of 50 cents, and 1, 5, and 10 dollars.


Machinery and electrical equipment (51 percent), metals, textiles, plastics, chemicals.


Machinery and electrical equipment (51 percent), minerals, precision equipment.


US$386 billion (purchasing power parity, 2000 est.).


Exports: US$148.38 billion (f.o.b., 2000). Imports: US$140.01 billion (c.i.f., 2000).

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