A.   Political situation:

The KMT won a landslide victory in the “three-in-one” local elections in December 2005.

1.   The DPP came to power mainly because of the KMT split in the 2000 presidential election.

Total seats of the Legislative Yuan (207)

   KMT (108) DPP (59) PFP (17) New Party (7) Taiwan Independence Party (1) Independents (15)

2.   Fifth Legislative Yuan election in December 2001.

3.   The KMT was defeated in the March 2004 Presidential Election owing to a mystery-shrouded shooting incident. The KMT initiated two lawsuits but lost appeals for invalidation of the election. The Court of Appeals refused to examine evidence.

4.   Sixth Legislative Yuan election in December 2004

5.   Three-in-one local election in December 2005

6.   The elections were a vote of no confidence for President Chen Shui-bian. Reasons of the DPP defeat include:

a.     Economic slowdown:(see B. Taiwan’s Economy)

b.     Repeated scandals: the First Lady and the deputy secretary-general to the president, among others, were involved in shady stock-trading. Another scandal involves construction of Kaohsiung Mass Rapid Transit System.

c.     Negative campaigning: Voters were alienated by the DPP smear campaign against the KMT. President Chen Shui-bian overly stumped for DPP candidates.

d.     Highly restrictive Mainland Policy

7.   Approval rating for President Chen is 21％

 According to a United Daily News opinion poll on December 5, the approval rating for President Chen sharply dropped to an all-time low, owing to the DPP’s crushing defeat in the local elections.  Less than 21percent of those interviewed supported him, while those dissatisfied with his performance increased to 62 percent.  Fifty-six percent of the respondents thought Chen should take responsibility for the electoral fiasco.

Approval rating for President Chen Shui-bian（%）2000 – 2005

(Sources: United Daily News 12/5/2005)

※ According to ERA TV's poll, 12/9/2005, Chen’s rating is 12.6％.

B.   Taiwan’s economy

1.   From 1953 to 2000

Under the KMT administration, the Taiwan economy grew by 8.1 percent per annum on average. Taiwan’s per capita income increased from US$50 to US$14,114.  It was the highest rate in the world. The rapid economic development is acclaimed as “Taiwan miracle.”

2.   From 1996 to 1999

Despite the Asian financial crisis and the earthquake on September 21, 1999, the growth averaged 5.7 percent, while unemployment remained as low as 2.73 percent.

3.   From 2001 to 2004

Since the DPP took power, the growth slowed down to 2.7 percent on average and unemployment increased to 4.8 percent on average.  The per capita income remained the same as in 2000 around US$14,000.

4.   Causes of economic recession

5.   Taiwan stock market under Chen’s administration

6.   Public Debt and GDP

7.   Reasons for economic decline

a.       Despite its minority role in the Legislative Yuan, the ruling DPP has chosen to pursue a policy of “confrontation without compromise” against the opposition parties.

b.      In October 2000, the DPP government decided to halt construction of the fourth nuclear power plant, a reversal of a long-standing policy. The economy has declined ever since.

c.       As President Chen continued his policy of creeping independence; tensions have mounted across the Taiwan Strait and the threat of war has increased.

The DPP’s highly restrictive Mainland policy has been driving out Taiwan’s private capital and deterred foreign and home-coming Taiwanese capital.  Taiwan’s investment in China has topped US$50-100 billion.  Taiwan’s exports to China and Hong Kong accounted for more than 37 percent of its total foreign sales. (Taiwan used to export about 40 percent of its goods and services to the United States).  More than 3.68 million tourists from Taiwan visit China a year.  Taiwan enjoyed a surplus of US$ 45.1 billion in trade with mainland China while a deficit of US$30.4 trade with Japan was registered.

C.   KMT policy on cross-Strait relations

1.    Policy objectives: peace, prosperity, people’s well-being

The KMT is opposed to the formula of ‘one country, two systems’ proposed by the Chinese Communist Party

The KMT is opposed to the idea of ‘Taiwan independence’ promoted by the Democratic Progressive Party

 The KMT insists on maintaining the status quo of the Republic of China, which was founded in 1912.

2.      The main points of consensus between Lien Chan, KMT chairman, and His Chinese communist party counterpart Hu Jin-tao reached in Beijing on April 30^th, 2005 are incorporated in the KMT policy platform:

a.       The consensus of 1992: the consensus requires Taipei and Beijing to acknowledge “one China,” whose connotation may be respectively stated. Taiwan insists that “one China” is the Republic of China.  (The Constitution of the Republic of China recognizes one China.) The consensus of 1992 allows both sides to shelve political disputes for the benefit of economic and cultural cooperation across the Taiwan Strait.

b.      Termination of the state of war and signing of a ‘peace agreement’: the Chinese Communist Party for the first time agreed to work towards peace.

c.       Full-scale economic cooperation: the ultimate objective is to establish a ‘common market.’

d.      Taiwan’s participation in international activities: mainland China has promised to help Taiwan take part in international activities.

e.       Party-to-party consultation: a new platform shall be set in place to facilitate party-to-party consultation.

f.        Direct transportation links: direct flights and direct shipping service shall be started across the Taiwan Strait. 

g.       Tourism: mainland Chinese shall be allowed to visit Taiwan.

3.    Public opinion surveys after Dr. Lien Chan’s visit to mainland China

a.     The United Daily News (April 30)

The Lien-Hu meeting is instrumental to the promotion of cross-Strait peace － 56% affirmative.

The Lien visit to mainland China is instrumental to cross-Strait trade – 52% affirmative.

b.     The China Times (April 30)

Approval of the Lien-Hu meeting － 56% affirmative.

The meeting has a positive impact on cross-Strait relations － 50%

affirmative.  

c.     ET Today TV (April 30)

The DPP government should further promote exchanges across the Taiwan

Strait － 70% affirmative.

d.     ET Today TV and Fu Jen Catholic University (April 30)

Negotiations and contacts for both sides should be resumed under the consensus of 1992 － over 50%

affirmative.

Hostilities should be terminated in order to avoid military conflicts － 60% affirmative.

e.     The Apple Daily (April 30)

The five-point consensus between Lien and Hu is positive for Taiwan － 60% affirmative.

The government should accept the Lien-Hu agreement － 51% affirmative.

f.      TVBS (May 3)

The Lien visit to China is highly valued － 46% affirmative.

The Lien visit will help improve cross-Strait relations － 55% affirmative.

The Lien visit is no loss to Taiwan － 60% affirmative.

4.     Future of Taiwan: Taiwan shall continue to build up its economic strength and consolidate its democracy to enhance its international status. Taiwan shall also try to promote peaceful relations, as well as economic and cultural exchanges, across the Strait to enhance the well-being of its people and help democratize mainland China.