vernment are at present (1969) in the
hands of Taiwanese independents, or KMT members, more of whom are
entering the central government as well. Because military service is
compulsory, the majority of common soldiers are Taiwanese: as career
officers grow older and their sons show little interest in an army
career, more Taiwan-Chinese are occupying higher army positions. Foreign
policy and major political decisions still lie in the hands of mainland
Chinese, but economic power, once monopolized by them, is now held by
Taiwan-Chinese.

This shift gained impetus with the end of American economic aid, which
had tied local businessmen to American industry and thus worked to the
advantage of mainland Chinese, for these had contacts in the United
States, whereas the Taiwan-Chinese had contacts only in Japan. After the
termination of American economic aid, Taiwanese trade with Japan, the
Philippines, and Korea grew in importance and with it the economic
strength of Taiwan-Chinese businessmen. After 1964, Taiwan became a
strong competitor of Hong Kong and Japan in some export industries, such
as electronics and textiles. We can regard Taiwan from 1964 on as
occupying the "takeoff" stage, to use Rostow's terminology--a stage of
rapid development of new, principally light and consumer, industries.
There has been a rapid rise of industrial towns around the major cities,
and there are already many factories in the countryside, even in some
villages. Electrification is essentially completed, and heavy
industries, such as fertilizer and assembly plants and oil refineries,
now exist.

This rapid industrialization was accompanied by an unusually fast
development of agriculture. A land-reform program limited land
ownership, reduced rents, and redistributed formerly Japanese-owned
land. This was the program that the Nationalist government had attempted
unsuccessfully to enforce in liberated China after the Pacific War. It
is well known that the abolition of landlordism and the distribution of
land to small farmers do not in themselves improve or enlarge
production. The Joint Council on Rural Reconstruction, on which American
advisers worked with Chinese specialists to devise a system comparable
to American agricultural extension services but possessing added
elements of community development, introduced better seeds, more and
better fertilizers, and numerous other innovations which the farmers
quickly adopted, with the result that the