(1996) The Power Structure in Taiwan's Political Economy PDF

The Power Structure in Taiwan's Political Economy
Author(s): Michael Ying-mao Kau

Source: Asian Survey, Vol. 36, No. 3, Informal Politics in East Asia (Mar., 1996), pp. 287-305
Published by: University of California Press
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THE POWER STRUCTURE IN
TAIWAN'S POLITICAL ECONOMY
____________ Michael Ying-mao Kau
The year 1995 was a critical one in Taiwan's political

history. It commemorated the centennial of the Manchu Dynasty's cessation
of the island to Japan under the Shimonoseki Treaty of 1895 and marked the
50th anniversary of the Kuomintang's (KMT) one-party rule. The year also
set the stage for the first direct popular election of Taiwan's president in the
spring of 1996. There is no doubt that Taiwan today is fundamentally differ-
ent from its colonial and authoritarian past. It is a new Taiwan, a dynamic
economic powerhouse and a competitive political democracy. The "eco-
nomic miracle" has been widely recognized around the world, but in the last
several years under Lee Teng-hui, Taiwan has also emerged dramatically as a
dynamic working democracy. Gone are the days of political repression and
secret police control. More than 70 political parties have officially registered
since martial law was lifted in 1987. Press controls were relaxed in the same
year, and the mass media has become one of the most energetic and dynamic
in the world.
The path to political liberalization and democratization in Taiwan, how-
ever, has by no means been smooth. In the political arena, reform had to wait
decades for the power grip and conservative heritage of the KMT to erode
and change; the strengths of social protest and political opposition also took a
long time to nurture and grow; the socioeconomic foundation as a prerequi-
site to democratization took an even longer time to build.
While the essential elements of democratic institution are now very much
in place, the very forces that the KMT had skillfully used to support its au-
thoritarian rule and that later corroded its Leninist one-party control, thus
Michael Ying-mao Kau is Professor of Political Science, Brown Uni-

versity, Providence, Rhode Island. The author wishes to acknowledge the constructive critiques
received from panel and conference participants on an earlier version of this article. The gener-
ous support of the Joseph E. Seagram and Sons, Inc., Fund for the author's research in Taiwan is
also gratefully acknowledged.
? 1996 by The Regents of the University of California
287
288 ASIAN SURVEY, VOL. XXXVI, NO. 3, MARCH 1996
driving forward the process of liberalization, are now creating new problems
for the democratized polity of Taiwan. As political "strong men" disap-
peared and the KMT's monopolistic control diminished, money politics, fac-
tional strife, and even Mafia-type gangster influence have rigorously asserted
themselves to manipulate the process of political reform and transformation,
these pose a serious threat to the future of Taiwan's political stability and
continued democratization.
This article examines the course and characteristics of the political trans-
formation that Taiwan undertook in moving from a Leninist authoritarianism
to an exceptionally competitive, democratic regime. Particular attention will
be given to the forces that shaped the special patterns of this development at
various stages of transformation. The new forces of factionalism, money
politics, and gangster intervention that plague Taiwan's current political tran-
sition and reform also will be assessed to shed light on the prospects for
future development.
The KMT Model of Authoritarian Rule

Soon after the KMT retreated to Taiwan in 1949, Chiang Kai-shek began to
reorganize his one million political followers and military forces into an effi-
cient political machine, creating a corporatist state based on a close alliance
of party, government, and military (tang-cheng-chfin). Patterning itself after
the Leninist communist system, the KMT functioned as the core of the body
politic and penetrated systematically into every sector of society.' Within the
government, power was concentrated in the hands of the executive, with the
legislature reduced to a rubber-stamping "legislative bureau" of the executive
branch of government. Judicial independence and due process of law existed
in name only.
The adoption of the "Temporary Provisions during the Period of Mobiliza-
tion for Suppressing the Communist Rebellion" by the National Assembly in
1948 practically placed the nation under "emergency rule" and provided the
"legal basis" for suspending normal constitutional governing processes and
citizens' civil and political rights. With the imposition of the infamous "three
controls"-martial law, a ban on the formation of opposition parties, and
tight restrictions on freedom of the press-in the name of national emer-
gency, the state had a free hand to do practically anything it saw fit over
society. The state's unrestrained power was further reinforced by the party's
absolute control over the military and police forces.2
1. Ralph N. Clough, Island China (Cambridge, Mass.: Harvard University Press, 1978); and
Hung-mao Tien, The Great Transition: Political and Social Change in the Republic of China
(Stanford: Hoover Institution Press, 1989).
2. See Denis Fred Simon and Michael Ying-mao Kau, eds., Taiwan Beyond the Economic
Miracle (Armonk, N.Y., and London: M. E. Sharpe, 1992).
MICHAEL YING-MAO KAu 289
Under the pervasive corporatist system of KMT leadership, elite recruit-

ment amounted to a straightforward top-down process of political cooptation
and hierarchical control. Even though limited local elections were instituted
early on in the 1950s, candidates were always carefully screened for political
loyalty, and elections were skillfully "supervised" to ensure a KMT majority.
Hence, the party managed to develop a perfect model of a patron-client net-
work among political appointees and elected representatives at all levels.
Signs of political opposition or dissident movements were invariably treated
with harsh measures of intimidation or imprisonment known as "white ter-
ror." The systematic elimination of indigenous political leaders during and
after the 228 (February 28) Incident of 1947, the political persecution of Lei
Cheng, publisher of Free China magazine, in 1960, and the imprisonment of
Professor Peng Min-Ming, chairman of the Political Science Department at
Taiwan University, in 1965, typified the widespread practice of political op-
pression. It is clear that the KMT model of authoritarianism was built not
only with positive incentives for its supporters provided by the patron-client
relationship but was also fortified with the negative sanction of political coer-
cion against its potential adversaries.
The KMT model of authoritarian control extended beyond the core of the
political system. The party apparatus penetrated into labor unions, farmers'
associations, student and youth organizations (through the China Youth
Corps in all high schools and universities), professional organizations, state
enterprises, and the business community. Party cells were established in all
social groups at all levels. Under such an omnipresent network of party con-
trol, organized along functional and geographic lines, there was no room for
the development of subsystem autonomy and activism of the civil society.
In the economic realm, the state carried out its regimentation through regu-
latory control. As has been pointed out frequently by the political economist.
an authoritarian government often exercises control of the economy through
such methods as state licensing, foreign currency allocation, tariff regulation,
and public works contracting. Taiwan's authoritarianism was no exception.
The party was able to bring the business community and private sector in line
with KMT policy and political command through the judicial use of eco-
nomic reward and punishment. In addition, the government maintained an
enormous sector of state and party enterprises that it used systematically to
enforce its industrial policy and political discipline.3
In the 1950s the unique historical circumstances arising from the Japanese
withdrawal from Taiwan in 1945 and the transfer of control of the island to
3. Thomas B. Gold, State and Society in the Taiwan Miracle (Armonk, N.Y. and London: M.
E. Sharpe, 1986), and Nai-teh Wu, The Politics of a Regime Patronage System, dissertation,
Department of Political Science, University of Chicago, 1987.
290 ASIAN SURVEY. VOL. XXXVI, NO. 3, MARCH 1996
the Republic of China (ROC) government gave the KMT a rare opportunity
to superimpose its authoritarian rule. When the Japanese colonial elites with-
drew from all sectors of Taiwanese society at the end of World War Two, the
nascent local leaders and social forces were simply too young and too weak
to compete against the KMT takeover. The political vacuum was quickly
filled by the KMT elites who moved in with powerful military forces. Practi-
cally all top positions in the corporatist structure of the party-government-
military pyramid were filled by mainlander officials who came with Chiang
Kai-shek (see Tables 1 and 2). Hence, the ethnic homogeneity and solidarity
of the ruling elite made the KMT power structure even more invincible.
From Predatory Authoritarianism to Developmental

Authoritarianism to Competitive Democracy
KMT authoritarianism in the 1950s was often characterized as "predatory
authoritarianism," mainly because the party was so preoccupied with regain-
ing control of the mainland that it treated Taiwan simply as a stepping stone
for recuperating the strength for its return. The welfare and development of
Taiwan for its own sake was not the primary focus of the party's long-term
political strategy.4 In the 1960s, however, emerging new circumstances
forced the leadership to reexamine its basic mainland-oriented strategy. As
the People's Republic of China (PRC) further consolidated its position, refus-
ing to disappear as a "passing phenomenon," the KMT had to re-think its
sojourn on Taiwan. The Quemoy Crisis of 1958 forced the KMT to face
squarely the difficult reality of long-term survival on Taiwan versus the
short-term dream of retaking the mainland. Hence, the concept of "economic
development" began to carry increasing weight and moved to the center of
the KMT's political game plan.
There was a new realization that economic development was critical, not
only for support of the military buildup but also for improving the people's
living standard in order to enhance the legitimacy and popularity of the party
and state. Moreover, by allotting certain arenas to the private sector and busi-
ness community to engage in industry and commerce, the state under KMT
tutelage would be able to achieve a unique division of labor between a gov-
ernment specializing in political control and a private sector devoted to eco-
nomic matters. To the ruling elite, the new game plan clearly made a lot of
political and economic sense, especially at the initial stage of economic de-
velopment. The success of its implementation, however, produced many un-
4. For such a conceptualization, see Tun-jen Cheng, "Democratizing the Quasi-Leninist Re-
gime in Taiwan," World Politics, no. 41 (July 1989), pp. 471-99; Tun-jen Cheng and Stephan
Haggard, eds., Political Change in Taiwan (Boulder, Colo.; Lynne Rienner, 1992).
MICHAEL YING-MAO KAU 291
TABLE 1 Composition of the KMT Central Committee, 1952-1993
Election Date Congress Taiwanese Military Legislature Total
Year Date No. % No. % No. % No.
1952 10/19 7th 1 3.1 10 31.3 5 15.6 32

1957 10/23 8th 3 6.0 11 22.0 15 30.0 50
1963 11/22 9th 4 5.4 16 21.6 14 18.9 74

1969 4/8 10th 6 6.1 16 16.2 16 16.2 99
1976 11/17 11th 19 14.6 21 16.2 15 11.5 130
1981 4/3 12th 29 19.3 15 10.0 30 20.0 150
1988 7/12 13th 62 34.4 21 11.7 37 20.6 180
1993 8/17 14th 112 53.3 8 3.8 67 31.9 210
SOURCE: Data are adapted from Teh-fu Huang, "Elections and the Evolution of the Kuomin-
tang," paper presented at the Conference on Democratization in Taiwan, George Washington
University, Washington, D.C., April 8-9, 1994.
TABLE 2 Ethnic Composition of Top Positions, 1987
Taiwanese Mainlander Total
Category No. % No. % No.
Party 33 13.6 210 86.4 243

Government 21 14.0 129 86.0 150
Parliament 220 16.9 1,080 83.1 1,300
Military 15 4.3 335 95.7 350
Police 11 7.3 139 92.7 150
Combined 300 13.7 1,893 86.3 2,193
SOURCES: Kung-Lun pao, March 6, 1987; and Yuan-chien tsa-chih, July 1, 1987, p. 19.
foreseen and unintended consequences that eventually complicated the

KMT's monopolistic control.
Schematically speaking, in order to make economic plans and industrial
policy work and push for the effective execution of economic development,
the government had to enhance the role of planners, technocrats, and entre-
preneurs and concede to them a degree of professional autonomy and polit-
ical influence based on their professionalism and expertise. Such a trend
ultimately strengthened the hand of the professionals and technocrats and

eroded the monopolistic command of the power holders and party function-
aries. In short, economic progress gradually increased the political power
and influence of the new professional groups and the expanding middle class.
In this respect, modernization theory that emphasizes the functional linkage
between economic development and political liberalization is quite on the
mark. The Taiwan experience strongly verifies its validity. There is indeed a
dialectical relationship in the interaction between political development and
economic modernization. The rise of socioeconomic pluralism, as concomi-
tants of Taiwan's "economic miracle," provided some of the most critical
ingredients for the ensuing phase of the island's political liberalization and
democratization.
The 1986-88 period constituted a watershed in Taiwan's political transfor-
mation. In September 1986 opposition forces formally established the Demo-
cratic Progressive Party (DPP) in explicit defiance of existing law and KMT
policy. In the summer of 1987 the government formally lifted martial law.
control of the press, and the ban on contacts and trade with the PRC. In
January 1988 Chiang Ching-kuo died of a heart attack. The departure of the
strong man who had controlled Taiwan politics single-handedly since 1975
symbolized the end of the era of KMT political monopoly. After a brief
power struggle within the party, a native-born Taiwanese, Lee Teng-hui,
managed to succeed Chiang Ching-kuo as president of the Republic and
chairman of the KMT, and the gate of political reform was swung wide open.
The Structural Erosion of the KMT

Corporatist Party State
Up to the 1980s, the KMT had maintained a highly efficient political machine
based on a massive Leninist organizational network in the political arena and
skillful management of patron-client politics in the economic sphere. The
structural and functional integration of the state, the military, the economy,
and society under the centralized command of the party was reinforced by the
imposition of the "three controls." The model of authoritarian rule as
designed and developed by the KMT was almost a perfect one. After four
decades of continuous authoritarian rule, however, the party had also accu-
mulated problematic baggage: self-complacency, corruption, abuse of power,
and arrogance had all set in and spread. As in most authoritarian systems,
there were no effective institutionalized mechanisms of self-cleansing and
reform in operation; within the system, power corrupted, organizations de-
cayed, and personal gain replaced commitment to ideology and political
causes. It is revealing to note that by the late 1980s, even though the party
claimed to have an enormous membership of more than 2.5 million, it invari-
ably failed to demonstrate a commensurate strength at election time and in

political mobilization efforts.
The process of economic development further complicated the KMT's mo-
nopoly of power. The ascendance of a wealthy and assertive middle class
and other autonomous social groups confused the established electoral system
based on strict KMT control and patronage. When elected officials and rep-
resentatives could succeed in the political arena without depending exclu-
sively on the party's resources and support, they began to gain their own
autonomy. By the 1990s, many KMT legislators and officials dared to de-
clare publicly that when orders of the party clashed with the wishes of their
constituents, they would not hesitate to side with the voters on whom their
political careers depended.5
Within the governmental structure, the institutional shift of power and
leadership was even more conspicuous. The mandatory retirement in 1990 of
"senior representatives" of the national parliamentary bodies elected from
mainland constituencies in 1947 and the elections of all members of the Sec-
ond National Assembly and the Second Legislative Yuan solely from Taiwan
in 1991 and 1992, respectively, made these parliamentary organs the new
centers of power and legislation. Asserting their constitutional power over
cabinet appointments and the national budget, as well as legislation, they de-
manded autonomy from strict party control. The momentum of constitutional
reform and democratization also raised objections to the party's penetration
and control of all government operations. Under the principle of "administra-
tive neutrality," the KMT was now asked to withdraw its omnipresence from
the government bureaucracy, the armed forces, the judicial system, and edu-
cational institutions.
Within the party, the emergence of power struggles, factional disputes. and
political fragmentation also contributed greatly to the decline of the KMT's
authoritarian control. After the death of Chiang Ching-kuo, power struggles
and political succession disputes surfaced quickly; liberal and reform-minded
leaders, especially among the elite of Taiwanese origin, rallied to support
President Lee Teng-hui, while the conservative old guard of mainlander ori-
gin formed coalitions, first around Premier Li Huan and later around Premier
Hao Po-tsun. These two broad power constellations were generally referred
to as the "mainstream" and the "non-mainstream" factions. But the power
struggles from 1988 through 1993 represented more than just personality
contests; they were intimately connected with the fundamental issues of the
redistribution of power and the future direction of Taiwan's political develop-
5. Teh-fu Huang, "Elections and the Evolution of the Kuomintang," paper presented at the
Conference on Democratization in Taiwan, George Washington University, Washington, D.C.,
April 8-9, 1994.
ment in the post-authoritarian era. At the forefront was the power struggle
over the method, process, and criteria for selecting the party chairman and
vice chairman, as well as the premier and cabinet members of the Executive
Yuan. On the policy side, the leaders were bitterly divided over such crucial
issues as constitutional reform, party restructuring, and mainland policy.
On the eve of the 14th Party Congress in August 1993, the KMT leader-
ship was so divided that six legislators and some old guard members formally
left to form a separate party known as the Chinese New Party (CNP). They
publicly criticized the mainstream faction's "undemocratic" leadership style
and its "traitorous" mainland policy. Although many mainlander leaders
chose to stay with the KMT establishment, they formed anti-mainstream
groups, such as the New Revolutionary Alliance (Hsin-t'ung-meng-hui), to
continue their factional struggles from within.6 In the parliamentary bodies
at all levels, a wide variety of political factions or coalitions, known as sub-
groups (tz'u-chi t'uan-t'i), also mushroomed within the KMT. Some were
based on personality and leadership factors; others were organized on the
basis of shared political interests, policy alliances, and/or money politics. In
the Legislative Yuan in recent years, for example, roughly a dozen competing
subgroups have emerged, all of whom tried to claim some degree of political
autonomy from the central leadership.7 There is no doubt that by the 1990s,
the KMT's corporatist party-state had been seriously eroded both structurally
and functionally and that the party was no longer capable of enforcing its
traditional authoritarian command.
Taiwanization of the Power Structure

Ever since the Nationalist government took over in 1945 and Chiang Kai-
shek retreated to Taiwan in 1949, giving the KMT a unique opportunity to
monopolize all politically significant leadership positions, the ethnic factor
has played a crucial role in the distribution of power in Taiwan. Before the
mid-1970s, power at the top of the party-state-military pyramid was tightly
held by mainlander elites. As Tables 1 and 2 show, Taiwanese constituted
85% of the island's population but occupied only a minute percentage of the
high positions in the state and party hierarchy. While a handful of Taiwanese
managed to get to these high positions, they represented mainly tokens of
political participation and rarely held posts of genuine significance or power.
As the natural attrition of aging and death depleted the strength of the
mainlander elite, particularly after the KMT shifted gears from "predatory
6. See Tao-tai Hsia and Wendy I. Zeldin, The Fourteenth Party Congress of the Kuomintang,
the Remaking of the Party in Taiwan and the November 1993 and January 1994 Elections
(Washington, D.C.: Law Library, the Library of Congress, 1994).
7. Teh-fu Huang, "Elections and Evolution."
authoritarianism" to "developmental authoritarianism" in the 1970s and

1980s, the policy of indigenization (pen-t'u-hua) that had started under Chi-
ang Ching-kuo began to recruit more native Taiwanese into government ser-
vice. As a result, the ethnic composition of Taiwanese at the national level
increased markedly, from 20% to 30% levels, but as a rule, the Taiwanese
were assigned to positions of lesser importance. Take cabinet appointments,
for example. Key posts such as national defense, finance, economic affairs,
education, and foreign affairs were never held by Taiwanese before Lee
Teng-hui's ascent to leadership in 1988.8 In the last year of Chiang Ching-
kuo rule (1987), even with the declared policies of elite "indigenization,"
important positions in high echelons of the party, government, military, and
police were still predominately controlled by mainlanders (ranging from 86%
to 96%). Statistically, the Taiwanese still played a very insignificant role in
Taiwan's political arena (4% to 14%).
Lee Teng-hui's succession to party chairmanship and the state presidency
in 1988 symbolized a new era in Taiwan's political power structure, and the
ethnic balance of power began to shift decisively from the mainlanders to the
Taiwanese. It took four rounds of fierce power struggle and delicate political
maneuvering, however, for Lee to loosen the tight political grip of the old
guard and establish his personal leadership within the party and government.
The departure of Li Huan and Hao Po-tsun, leaders of the mainlander, non-
mainstream faction from the premiership in 1991 and 1993, respectively, and
the appointment of Lien Chan as premier-the first Taiwanese to occupy that
high office in the post-1947 period- constituted another major watershed in
Taiwan's political transformation (see Tables 1-3). The ethnic ratio of the
elite composition under Lee Teng-hui shifted greatly in favor of the Tai-
wanese in both statistical and substantive terms, and the traditional ethnic
pattern of the distribution of cabinet posts and major party jobs was broken.
Taiwanese now occupied not only about 50% of the top positions in the party
and government hierarchies but were also assigned to posts of real signifi-
cance and power.
The shift of ethnic balance within the parliamentary bodies of the National
Assembly and the Legislative Yuan was equally conspicuous. Before the
complete overhaul of the membership of the National Assembly in 1991 and
the Legislative Yuan in 1992, 70% to 95% of the seats at various time periods
were occupied by "senior representatives" elected on the mainland in 1947.
After those two general elections, as shown in Table 3, the pattern of ethnic
composition was completely reversed in the central parliament. Currently,
Taiwanese constitute 81% of the National Assembly and 78% of the Legisla-
8. See Wen-cheng Lin, Political Integration and Democratization: The Case of Taiwan, Ph.D.
dissertation, the Fletcher School of Law and Diplomacy, 1993.
TABLE 3 Ethnic Distribution of Parliamentary Seats, 1986-1993
Year Constituency Taiwanese Mainlander To tal
No. % No. % No.
National Assembly
1986 101 10.8 834 89.2 935
1992 Regional 192 85.3 33 12.6 225

Nationwide 70 70.0 30 30.0 100
Combined 262 80.6 63 19.4 325
Legislative Yuan
1988 78 25.0 234 75.0 312
1993 Regional 83 82.1 18 17.8 101

Nationwide 43 71.7 17 28.3 60
Combined 126 78.3 35 21.7 161
SOURCES: Michael Ying-mao Kau, Political Challenges of the Post-Chiang Ching-kuo Era,
Hearing Before the Subcommittee on Asian and Pacific Affairs, Committee on Foreign Affairs,
U.S. House of Representatives (Washington, D.C.: U.S. Government Printing Office, 1989);
Teh-fu Huang, "Elections and the Evolution of the Kuomintang"; John F. Copper, Taiwan's 1991
and 1992 Non-Supplemental Elections (Lanham, N.Y. University Press of America, 1994; and
Chung-kuo shih-pao, December 4, 1989.
NOTE: Constitutional amendments passed in 1991 provided for total renewal of the National
Assembly at the end of the year and of the Legislative Yuan at the end of 1992. The terms of all
members elected from mainland constituencies in 1947-48 or in 1969 and since frozen in office
expired at the end of 1991.
tive Yuan.9 Given the fact that the mainlanders represent only 13% of the
island's population, their share of representation (19% and 22%) is still pro-
portionately high. For historical and political reasons, obviously, the KMT
leadership under the Taiwanese majority still gives special consideration to
ensure an appropriate mainlander representation in the political arena. The
"nationwide constituency" and the "overseas Chinese quota" based on pro-
portional representation of the popular vote, which was crafted through con-
stitutional reform was designed to protect the declining representation of the
mainlander population in Taiwan politics.10
9. John F. Copper, Taiwan's 1991 and 1992 Non-Supplemental Elections (Lanham, N.Y. and
London: University Press of America, 1994).
10. See Chung Y. Hsu and Parris H. Chang. eds., The 1991 National Assembly Election in
Taiwan (Chicago: North America Taiwanese Professors' Association, 1992).
The ethnic cleavage has long played a crucial role in Taiwan's politics. In
the past, the KMT's absolute rule was deeply rooted in the ethnic homogene-
ity and political identity of the mainlander power elite. The change in the
composition of the power structure, therefore, has far-reaching implications
for the issue of national identity and policy orientation. Generally speaking,
the mainlander elites tend to maintain a "great China complex," and are more
inclined to preserve the constitutional framework created in China in 1947.
In contrast, most Taiwanese are more likely to look inward for Taiwan's own
national identity and interest. The concept of "Taiwan first," as opposed to
"China first," greatly influences their articulation and perception of national
priorities for foreign and domestic policy. Thus, the dramatic shift in the
ethnic balance of power is bound to have a critical impact on Taiwan's future
development.
The Rise of the DPP

The third critical aspect of the structural transformation of Taiwan politics in
recent years is revealed in the dramatic rise of the opposition Democratic
Progressive Party (DPP) since 1986. The functionalist approach to the causes
of Taiwan's democratization stresses the thesis that the emergence of socio-
economic pluralism as a result of the KMT's "developmental authoritarian-
ism" fostered the erosion of the party state, and this in turn paved the way for
Taiwan's democratization. However, the statist theorist emphasizes the criti-
cal role played by the opposition movements. What has made the difference
is the determined leadership, purposeful strategies, and resolute struggles of
the opposition party.
Before the 1970s, no organized opposition or dissident movements were
permitted in Taiwan. The effective execution of the "three controls" and
"white terror" made it extremely difficult for any anti-government activities
to develop and grow. Even isolated cases of individual challenges to the
KMT autocracy were carefully suppressed. However, the expansion of na-
tional elections by filling the "supplementary seats" allocated to the "Taiwan
region" after 1969 significantly enlarged both the scope and intensity of elec-
toral politics. As elections became the only acceptable and legal channel of
political participation by activists outside the KMT, electoral politics was
quickly seized upon by political dissidents and counter-elites as a method of
political agitation and mass mobilization." In the 1970s, various ad hoc
campaign support groups or committees mushroomed during elections to help
11. Maysing Yang, Political Trends in Taiwan Since the Death of Chiang Ching-kuo, Hearing
Before the Subcommittee on Asian and Pacific Affairs, Committee on Foreign Affairs, U.S.
House of Representatives (Washington, D.C.: U.S. Government Printing Office, 1989), pp.
35-49.
non-KMT candidates organize campaigns and mobilize voters. As activities

of these various groups expanded and intensified throughout the island,
leaders converged to form loose networks of coordination and mutual assist-
ance, commonly known as the tang-wai (outside the ruling party) forces.12
Organizationally, the tang-wai coalitions were deliberately vague and
amorphous in order to avoid government persecution. From time to time,
dissident magazines, such as Mei-li-tao (Formosa) in 1978-79, or scholarly
institutions, such as Kung-kung Cheng-tse Yen-chiu-hui (Association for the
study of public policy) in 1984-86, were organized as cover for political
activities of the tang-wai movements. Although the government continued to
carry out sweeping repression against dissidents (as in the cases of the
Chung-li incident of 1977 and the Kaohsiung incident of 1979), the opposi-
tion movements gathered momentum and such repressive actions became in-
creasingly counterproductive. The tang-wai would exploit the violent
suppression to step up agitation against the government and propagate the
causes of political opposition at home and abroad.13
As political pressure mounted from without, Chiang Ching-kuo began to
call for political reform from within. In September 1986, when the tang-wai
alliance formally declared the formation of the DPP in clear defiance of the
law, Chiang Ching-kuo decided not to prosecute or suppress it. From its
inception, the DPP made its political goals and platform abundantly clear.
Calling the KMT an "alien regime" from mainland China, the DPP claimed
to represent the true aspirations of the indigenous Taiwanese people. It ar-
ticulated the political sufferings of the Taiwanese under the Manchu dynasty,
Japanese imperialism, and KMT dictatorship, and vowed to build a free,
democratic, and independent Taiwan based on the principle of self-determi-
nation. The DPP advocated the policy of "One China, One Taiwan," empha-
sizing that Taiwan's sovereignty does not extend to the mainland and Outer
Mongolia as advocated by the KMT, nor does Beijing have sovereignty over
Taiwan as claimed by the PRC. The ultimate goal of the DPP is to establish a
new Republic of Taiwan under a new constitution. The party pledged to
achieve all these objectives through a peaceful and democratic process. 14
Since the mid-1980s, the tang-wai coalition and its successor, the DPP,
have been making impressive progress in voting strength and political influ-
ence. In the last three elections for the Legislative Yuan in 1986, 1989, and
12. Robert S. Sutter, Taiwan Entering the 21st Century (Lanham, N.Y. and London: Univer-
sity Press of America, 1988).
13. Teh-fu Huang, Min-chu-chin-pu tang yii Tai-wan ti-ch'ii cheng-chih min-chu-hua [The
Democratic Progressive Party and political democratization in Taiwan] (Taipei: Shih-ying ch'u-
pan-she, 1992).
14. Maysing Yang, "The Democratic Movement in Taiwan," paper presented at the Confer-
ence on Forms of Transition to Democracy, Sintra, Portugal, March 14-20, 1993.
FIGURE 1 Voting Strengths (%) in Legislative Yuan Elections. 1972-1992
-U- KMT
SO 614 Non-KMT
50
70 6.16 3 1 Tnw \P
60 -922
~~~~~52 51
40.7 47 49
40-33
300 i3_0.7. 9
20~~~~~~~~~~~~~~~~~~~~
20 - ~~~~~~~~~~~~18.86
10 - 1'3.02
10
1972 1975 1980 1983 1986 1989 1992
SOURCES: Teh-fu Huang, "Elections and the Evolution of the Kuomintang"; and Hung-mao
Tien, "The Election and Taiwan's Democratic Development," paper presented at the Conference
on Democratization in Taiwan, George Washington University, Washington, D.C., April 8-9,
1994.
1992, the popular vote for DPP candidates expanded steadily from 25% to
29% and then to 31%. In contrast, the vote for the KMT dropped markedly
from 69% to 59% to 53% in the same period (see Figure 1). The develop-
ment of popular support for the DPP at the county and city levels was even
more impressive. In the last three local elections-1985, 1989, and 1994-
the vote shares of the DPP leaped from 14% to 30% to 41% while the KMT
shares dropped sharply from 61% to 56% to 47%. Since 1989 the DPP has
captured one-third of Taiwan's 21 local chief executive posts, which has
made it the ruling party in one-third of Taiwan. It should be further noted
that in the spring 1994 local elections, KMT popularity dropped below the
50% mark for the first time. Moreover, the DPP popular vote was only 6%
behind that of the KMT (41% versus 47%), and with only a 3% shift of the
popular vote, therefore, the DPP would have surpassed the KMT in a contest
of popular support at the local level.
On December 3, 1994, elections were held for the first time to elect simul-
taneously the governor of Taiwan Province and the mayors of Taipei and
Kaoshsiung. The KMT's share of the total popular vote was 52% while
39.2% went to the DPP. Although the KMT won the races for governor and
the mayor of Kaohsiung, it took a major beating in the three-way competition

for the capital city of Taipei. The KMT incumbent won only 26% of the
vote, losing the mayoral post to the DPP candidate who won 44%. Although
the KMT managed to buck its declining trend in two of those races, its
strength in the Provincial Assembly and the two city councils declined
sharply. Compared with the 1989 elections, the KMT's seats in the Assem-
bly dropped from 55 to 48 and from 29 to 23 in the Kaohsiung Council. The
most disastrous setback came in the Taipei City Council, where the KMT's
strength dropped from 37 to 20 seats, below the simple majority of 26.
The impressiveness of the DPP's rapid growth should be viewed against
the historical background of the KMT as the unchallenged, dominant party in
Taiwan's political scene for more than 40 years. The KMT claims an enor-
mous membership of 2.5 million and owns a financial empire reportedly
worth more than US$4 billion. In contrast to these giant human and financial
resources, the seven-year old DPP has a membership of about 70,000 and is
constantly in debt. It has been characterized as a "poverty-stricken. malnutri-
tioned little kid" vis-a-vis the giant ruling party.15 However, in the electoral
arena, the DPP is strong and competitive and is catching up rapidly with its
giant brother.
The DPP's political strength should be understood in more than simple
statistical terms. Its contributions to Taiwan's democratization process also
rest on its determination and ability to challenge the traditional political "sa-
cred cows," raise fundamental issues of political legitimacy and constitu-
tional reform, and break new ground for political imagination and innovation.
In fact, many important and popular constitutional and policy reform pro-
grams were originally initiated by the DPP, and in its competition for popular
support, the KMT co-opted them as its own for political purposes. The
KMT's change of position on such major issues as the direct popular election
of the president and Taiwan's admission to the United Nations are clear ex-
amples. In the Legislative Yuan, DPP membership is still relatively small
numerically-51 to the KMT's 97 in the current 159-member house. How-
ever, as DPP members maintain a high degree of solidarity and discipline
while their KMT counterparts are highly factionalized and fragmented, the
influence of the former is often greatly augmented through such tactical ma-
neuvers as forming ad hoc voting alliances with various factions within the
KMT. The passage in 1993 of the sunshine law, under the leadership of the
DPP and against the official stance of the KMT, demonstrated well the DPP's
ability to exert influence and leadership beyond its minority status.'6
15. Julian Baum, "The Money Machine," Far Eastern Economic Review, August 11, 1994,
pp. 62-67.
16. Chung-kuo shih-pao (China times), Taipei, June 8-10, 1993; and Yun-han Chu, "Electo-
ral Competition, Social Cleavages and the Evolving Party System," paper presented at the Con-
Recent public opinion polls indicate that voters give high marks to DPP
leaders' personal integrity and commitment to reform but are rather unsure of
their administrative experience and policy consistency. The public is gener-
ally disenchanted with the KCMT's internal factionalism, power struggles, cor-
ruption, self-complacency, and money politics, and the DPP, responding to
this mood, has been trying to move away from the emotional and ideological
questions of national identity and Taiwan independence and emphasize prag-
matic public policy issues such as welfare reform, clean government, envi-
ronmental protection, urban planning, and pensions for the elderly. Party
members are attempting to project a positive image in which the DPP has
outgrown the opposition movement stage and is advancing toward a new
stage of maturity, responsibility, and policy leadership.
The DPP is confident that it can continue to do well in the future. For the
past decade, the party has managed to increase its share of the popular vote
by 2% to 4% in each major election, a trend that was upheld in the Legisla-
tive Yuan elections just held in December 2, 1995, in which its share in-
creased from the 30.8% won in 1992 to a new high of 33.2% while the KMT
recorded a further decline from 52.5% to 46.1% and the newly organized
CNP collected 13%.17 It should be noted, however, that the ruling KMT still
controls enormous amounts of organizational and financial resources, vastly
more than the DPP. Furthermore, Lee Teng-hui himself is still popular
outside metropolitan centers, as was shown by his 54% majority vote in Tai-
wan's first popular presidential election in March 1996. Nevertheless, the
party is seriously entrapped by its own historical baggage and the new
problems of factionalism, money politics, and gangster influence. There is
no question that the KMT's ability to maintain power will depend on its de-
termination and proficiency in carrying out further reform.
Pernicious Surge of Factionalism, Money

Politics, and Gangster Influence
The constitutional reform and political democratization carried out under Lee
Teng-hui in the 1990s not only greatly expanded the scope of elections for
government executives and legislative representatives at all levels but also
made competitive elections the sole, legitimate channels into key public of-
fices. Hence, pressure on the party machinery to concentrate on winning
elections began to mount right after the forced retirement of all "senior mem-
bers" from the parliamentary bodies in 1991 and the opening up of the entire
national election process. As in all democratic polities, competitive elections
ference on Democratization in Taiwan, George Washington University, Washington, D.C., April

8-9, 1994.
17. Chung-kuo shih-pao, December 3, 1995.
require money and votes to succeed. The problem is even more acute in a
newly democratizing Taiwan where the essential civility of the political cul-
ture and the rules of the game are yet to be developed and institutionalized.
During the heyday of authoritarianism, the KMT was able to manage effec-
tively the task of distributing power, status, economic resources, and other
political spoils. As a result, its ability to discipline and command its follow-
ers for compliance was also effective and predictable. However, as the pro-
cess of reform and democratization set in, the party had to give up its
traditional political privileges and monopolistic power, and as rapid eco-
nomic development spread affluence throughout the society, politicians and
their supporters also became wealthier and more independent of their polit-
ical patronages. The weakening of KMT control coupled with the growing
strength of its followers thus began to change the nature of the traditional
patron-client relationship in Taiwan politics.
In the past, the party called the shots and commanded its political clients to
follow the electoral marching order. But with their increasing wealth and
autonomy, local politicians, factional leaders, and powerful clans are now
emerging practically as "political brokers" to whom the party could come for
help in raising funds and mobilizing votes. Although the previous symbiotic
ties of collaboration remained intact, former clients have now elevated them-
selves to "equal partner" status in dealing with their formal patrons. The
more anxious the weakened party becomes as it tries to win elections and
maintain power, the more opportunities its powerful former clients can ex-
ploit for political bargaining, which in turn entraps the party even deeper into
factional and money politics. Since the 1991 National Assembly elections,
this rampage of factions and money in politics has worsened; even organized
crime and political violence have found windows of opportunity to force their
way into the political arena.
Since the KMT has had to rely increasingly on people who could deliver
either votes or money in order to win elections, the rich and powerful can
easily gain greater political access. It is now quite commonplace to see the
forces of factional bosses, big clans, business conglomerates, and Mafia-type
gangsters take control over local political campaigns. Current political mar-
ket assessments suggest that at least five to six million dollars is required to
run for county magistrate and three to four million to secure a seat in the
Legislative Yuan. Elections today are invariably turned into personal feuds
for territorial control and resource distribution among powerful political fam-
ilies and business conglomerates. In recent years, big business groups behind
every elected official or representative, are found and it is even commonplace
to see gangsters join forces openly to intervene in elections with violence and
intimidation.
The surge of factional struggle and money politics and the breakdown of
party discipline are particularly serious within the ruling party, as shown by
some data and recent occurrences. In 1994, of the 858 first-term councilmen
at the township and village levels, 300 of them (35%) had records of criminal
conviction and/or association with illegal gang organizations.'8 In the same
year at the county level, 260 councilmen in 14 counties were convicted of
vote-buying or receiving bribes.19 During the gubernatorial campaigns in
December 1994, among the prominent politicians serving in the KMT's elec-
tion support committees were 15 county council speakers and 3 vice-speakers
whom the DPP identified as ex-convicts.20 One of the shocking cases of
political violence as revealed by government prosecutors in December 1994
involved Cheng Tai-chi, speaker of the P'ingtung County Council. Cheng,
accompanied by eight of his "gangster brothers," personally shot and killed
his business rival in a Mafia-style execution at the victim's own home.21
Money and power politics seems to be equally rampant at the national
level. Legislator Oung Da-ming, a business tycoon of the well-connected
Hualon Group, was charged in October 1994 with stock market manipulation
that resulted in a $120 million default. When the police showed up at his
penthouse office to search for evidence, 18 lawmakers rushed to his aid and
tried physically to block the police from entering the premises. It was widely
reported that these legislators either had received political contributions from
Oung or had entrusted money to him in stock transactions.22 When the
newly elected Provincial Assembly and Kaohsiung City Council met to elect
their speakers and vice-speakers, the KMT suffered great humiliation when
its official nominees for the vice-speakership were defeated by its own party
members in open defiance of explicit party orders. Again, fierce factional
and money politics were to blame. It was widely pointed out that the suc-
cessful election of Liu Ping-wei as Assembly speaker was attributed to KMT
success in coordinating three major factions in northern and central Taiwan to
form a coalition with the commitment of Liu's own resources from the Hai-
shan Group. But for the vice-speakership, the winning candidate, Yang Wen-
hsin, was reported to have distributed more than $10 million of his family
fortune from the Chang-yi Group as bribes to 12 members of the Grass-Roots
Club in the Provincial Assembly.23 Cases such as these demonstrate clearly
that money politics, factional connections, and gangster ties are currently
18. Free China Journal, January 27, 1995.

19. Hsin hsin-wen (Journalist), Taipei, December 25, 1994.
20. DDP press release, November 25, 1995.
21. Hsin hsin-wen, December 25, 1995.

22. Far Eastern Economic Review, October 27, 1994.
23. Chung-kuo shih-pao, February 18, 1995.
playing a role that is far more powerful than the party's discipline and com-
mitment to build a healthy democracy in Taiwan.
In Conclusion
Following the success of its "economic miracle" in previous decades, Taiwan
has achieved another impressive feat in the past 10 years, this time in the
political arena. Through the efforts of Lee Teng-hui, the corporatist party
state of the KMT has been dramatically transformed into an open, competi-
tive, dynamic democracy. This process manifests itself clearly in four crucial
dimensions: the structural and functional erosion of the KMT party state, the
Taiwanization of the power structure, the dramatic rise of the opposition
DPP, and the upsurge in factional and money politics.
In the past decade, we have witnessed a most fascinating political phenom-
enon in Taiwan. In a positive sense, the breakdown of a corporatist state
ushered in a dynamic, pluralistic civil society. We have also seen how de-
mocratization has created a new "voter sovereignty" in Taiwan's competitive
electoral market. Theoretically, the traditional pattern of state dominance
over society under KMT authoritarianism has been reversed. Now society is
just as powerful as, if not more powerful than the state. As Lee Teng-hui has
put it, the concept that "sovereignty resides in the people" has taken root in
Taiwan.24 However, some serious negative side effects of the democratiza-
tion process have also emerged in the political arena. Although the efforts of
constitutional reform succeeded in putting in place a new democratic institu-
tional framework and an open, competitive electoral system, the civility and
substance of these structural changes are yet to be developed. The decay and
recent purge of the structural and functional features of the corporatist author-
itarianism have ironically opened windows of opportunity through which new
economic and social forces that have been gathering power on the periphery
may assert themselves to expand their turf and protect their interests.
The pernicious assaults on the weakened KMT party machine by aggres-
sive political factions, business conglomerates, and gangster elements are
creating trouble of crisis proportions in Taiwan's orderly process of democra-
tization. The upsurge of vote-buying, corruption, and organized crime in
politics not only badly damages the moral integrity and political leadership of
the KMT but also gravely endangers the smooth transformation of the entire
political system. The DPP has so far been able to insulate itself from the
contamination of money politics and gangster connections but not from fac-
tionalism, which is prevalent within the party.
24. Lee Teng-hui, "Pi-hsO chu-ch'ian tsai-min" [Hold fast on the sovereignty of the people],
Chung-yang jih-pao (Central daily), Taipei, April 23, 1994.
It is clear that the KMT leadership is now confronted with a critical di-
lemma: should it choose to gather up all its courage for the sake of its long-
term survival to cut off ties with the pernicious factional and money politics
at the risk of alienating support from the powerful and rich in society, or
should it continue to indulge in the short-term benefit and expediency of
symbiotic cooperation with resource-rich gangsters and conglomerates to
help it hang onto power and security. The choice between short-term comfort
and long-term goals is always a difficult and painful one for politicians. Pres-
ident Lee has been persistent in calling for the party to face the tough realities
and push forward with continuous reform but whether his calls will hit a
strong responsive cord remains to be seen. The KMT under Lee Teng-hui
has achieved an impressive start at clearing the roadblocks of the old, con-
servative forces and moving down the road of democratization. However, the
tasks of overcoming the barriers of new, vicious, and corrupting forces could
be even more difficult and challenging.

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The Power Structure in Taiwan's Political Economy

Author(s): Michael Ying-mao Kau

____________ Michael Ying-mao Kau

The year 1995 was a critical one in Taiwan's political

Michael Ying-mao Kau is Professor of Political Science, Brown Uni-

? 1996 by The Regents of the University of California

The KMT Model of Authoritarian Rule

Under the pervasive corporatist system of KMT leadership, elite recruit-

From Predatory Authoritarianism to Developmental

TABLE 1 Composition of the KMT Central Committee, 1952-1993

Election Date Congress Taiwanese Military Legislature Total

Year Date No. % No. % No. % No.

1952 10/19 7th 1 3.1 10 31.3 5 15.6 32

1963 11/22 9th 4 5.4 16 21.6 14 18.9 74

1993 8/17 14th 112 53.3 8 3.8 67 31.9 210

TABLE 2 Ethnic Composition of Top Positions, 1987

Taiwanese Mainlander Total

Category No. % No. % No.

Party 33 13.6 210 86.4 243

foreseen and unintended consequences that eventually complicated the

ultimately strengthened the hand of the professionals and technocrats and

The Structural Erosion of the KMT

ably failed to demonstrate a commensurate strength at election time and in

Taiwanization of the Power Structure

authoritarianism" to "developmental authoritarianism" in the 1970s and

TABLE 3 Ethnic Distribution of Parliamentary Seats, 1986-1993

Year Constituency Taiwanese Mainlander To tal

No. % No. % No.

1992 Regional 192 85.3 33 12.6 225

1993 Regional 83 82.1 18 17.8 101

The Rise of the DPP

non-KMT candidates organize campaigns and mobilize voters. As activities

FIGURE 1 Voting Strengths (%) in Legislative Yuan Elections. 1972-1992

1972 1975 1980 1983 1986 1989 1992

the mayor of Kaohsiung, it took a major beating in the three-way competition

Pernicious Surge of Factionalism, Money

ference on Democratization in Taiwan, George Washington University, Washington, D.C., April

18. Free China Journal, January 27, 1995.

21. Hsin hsin-wen, December 25, 1995.

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