Taiwan as a Potential Regional Financial Center

The intention in this paper is to look at the present situation in Taiwan to determine the potential for it to become an important regional financial center, while also examining the shortterm performance of the Taiwanese stock index, as a representation of its current financial position.

The story of Taiwan is the story of waves of immigration from mainland China. Most of the people of Taiwan are descendant of immigrants from China, with 85 percent of Taiwanese descended from Chinese who migrated from the mainland hundreds of years ago. They created a small island nation, but one that was tied to mainland China by blood, trade, and other cultural factors (Tyler, 1996).

The modern history of Taiwan is inextricably linked to the modern history of China. While initially a province of China, it was ceded to Japan late in the last century after the SinoJapanese war, and not returned to China until Japan lost in

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l with both inflation and widespread corporate bankruptcies. As a consequence, financial policies were changed during the mid1980s to favor creating a good climate for private investment, loosening credit expansion, low domestic interest rates, and low inflation. Taiwan also has encouraged, and continues to experience, high rates of domestic savings (Taiwan, 1995). Taiwan's general fiscal policy from the 1950s until the mid1980s was quite conservative. Budgets were designed to show surplus, rather than to stimulate the economy, and deficits were met by strong austerity measures. The generally Confucian atmosphere of Taiwan leant itself to hard work, austerity, high savings, and low risktaking. However, as noted above, that led to the accumulation of foreign exchange that was not particularly useful to Taiwan. The government needed to make a change that would allow for a better use of its resources and continue the longterm growth of the country. Thus, it chose a more expansionary path, with greater competitiveness in the global marketplace. It also established an ongoing development plan that focused on the completion of 14 projects, including expansion of the China Steel Corporation, completion of a fourth nuclear pl
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Some common words found in the essay are:
Hong Kong, Components GDP, Lien Chan, Tenghui Taiwan's, Day Linim, Taiwan Hutton, China Taiwan, Stock Index*,  , United Taiwan's, Steel Corporation, mainland china,   , stock market, % , hong kong, financial system, growth rates,   exports, mainland china taiwan, china taiwan,  56, 56 ,  56 ,  imports ,
Approximate Word count = 2898
Approximate Pages = 12 (250 words per page)

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