December 4th 1999

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Articles from this issue:

BOOKS: A RETURN TO MODESTY: Discovering the Lost Virtue, by Wendy Shalit

BOOKS: 'Constanze, Mozart's Beloved', by Agnes Selby

EDITORIAL - Microsoft and the dangers of private monopolies


Fall of the Wall

Contents - 04 December, 1999

ECONOMICS - Can co-operatives civilise capitalism?


ECONOMICS - More than self-interest needed for a functioning economy

England's countryside: reformed to oblivion

HISTORY - Poland's WWWII agony

TAIWAN - Taiwan's quake recovery shows remarkable resilience

NATIONAL AFFAIRS - Senate inquiry questions dairy deregulation


ECONOMICS - Competition, profit and common sense

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Taiwan's quake recovery shows remarkable resilience

by Jeffry Babb

News Weekly, December 4, 1999
Taiwan continues to suffer from the aftermath of the disastrous earthquake of September 21, but the island's economy is back on track, giving testimony to the enormous resilience and energy of the Republic of China on Taiwan.

I had only been back in Taiwan for a couple of hours on Monday, November 1, when in Tuesday's very early hours, another quake struck - apparently unrelated to the first tremor, the experts say. In terms of magnitude, it was even stronger than the September earthquake, registering 6.9 on the Richter scale, but because the epicentre was away from the island, damage was minimal and no injuries were reported.

The same cannot be said for the September 21 earthquake, now universally known as the 921 earthquake, which killed 2,400 people and injured 8,000. The epicentre was in the middle of the island, and the worst affected parts were scenes of utter devastation. Homes were flattened, businesses wiped out and whole mountains shifted.

The tourist area of Sun Moon Lake was particularly affected, with many hotels destroyed or severely damaged. The tourist-dependent area has become so desperate that they are running 'earthquake tours': to let people experience what is left of the area's scenic attractions and view quake damage.

However, the damage, though severe, was nowhere near what the international media led the world to believe. The damage was largely limited to central Nantou County, and even nearby Taichung, the island's third biggest city and a centre of the footwear and garment industries, was hardly affected.

In Taipei, despite the shaking the island's capital received, the damage was limited. One hotel collapsed, but the rest of the city was spared. Television, especially, has a very narrow focus and the CNN cable network, which is heavily committed to the People's Republic of China, was particularly misleading.

Taiwan's main industries these days are in the high-tech sector. The island is the world's leading producer of ten essential high-tech items, from computer mice to laptop computers.

While it was feared at first these industries would be badly affected, the damage was limited, as the high-tech industry is located in the north of the island around the Hsinchu science-based Industrial Park and Taipei. Kaohsiung, the southern port city that is home to most of the island's heavy industry, including China Steel, was barely affected.

Industry back on track
Showing characteristic resilience, the high-tech industry was soon back on track, and the microchip makers - which account for 10 percent of the world's output, making the island the world's fourth largest producer behind the US, Japan and Korea - had production up to near pre-quake levels within weeks.

The problem for the chip industry was not so much damage to factories, as to the delicate instruments needed to make the chips, which had to be recalibrated. Some work in progress was lost.

The Financial Times of London reported that 'Taiwan's exports were worth a record US$11.46 billion in October, soaring 32 percent year-on-year and underlining the island's rapid recovery from the earthquake in September'.

The authoritative paper also reported that the electronics sector - considered hardest hit by the quake - had a rise in exports of 57 percent year-on-year. Exports to Japan were up 62 percent on last year, and those to Hong Kong were up by 34 percent, indicating that the Asian recovery is well under way.

Some areas are still badly affected. The machinery industry - one of Taiwan's key exporters - is located in or near the quake-affected area, and suffered badly.

Showing it takes more than a quake to slow the island down, the China External Trade Development Council (CETRA) said that all Taipei trade shows would go ahead as planned, and a plastics industry show was held a matter of weeks after the quake. Rebuilding the quake-affected areas is underway, but many people are still living in tents - not an attractive proposition with winter coming on.

Paradoxically, the insurance industry welcomed the quake, as coverage was relatively low and the quake will encourage more people to take out policies. Many businesses had quake insurance, but the level of insurance among homeowners was low.
The banks, still recovering from a bad loans scare connected to the Asian slowdown, have been affected by the quake, as their collateral - even land - has in some cases simply disappeared.

Overall, the results of the 921 quake demonstrate Taiwan's remarkable resilience. The Republic of China on Taiwan has gone from an agricultural backwater to an economic powerhouse in the space of fifty years since control of the island passed from Japan to the Republic of China at the end of World War II. Twenty years ago, the island's electronics industry was primitive and barely developed, yet now the island is a world leader. The next millennium holds new challenges and Taiwan is pinning its hopes on new generation industries like biotech and aerospace.

The lesson of history is that when confronted by an obstacle, the people of Taiwan will overcome it.

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