CHALLENGES OF THE 21ST CENTURY

An “Evergreen” Island

Perhaps it is the sympathy which one island nation automatically feels for another that makes it always such a pleasure to return to Taiwan. From your rich agricultural land to the verdant mountains which rise so dramatically from the plain, there are delights to entrance even the most world-weary traveller.

It is not difficult to appreciate why those Portuguese traders, the first Europeans to land here in 1590, named the island Formosa, the “beautiful one” .

And if I may say so Chairman Chang, one glance at your countryside makes it easy to understand why you called your company “Evergreen” .

It is a privilege to be here at your invitation.

I remember so well the ship which you kindly asked me to launch in 1994. It was called Ever Result.

That name encapsulates the fantastic success of your company — it is forever achieving good results.

And your recipe which I have come to know so well is:

— to produce the goods and services that the market wants

— to insist that only the best quality is good enough

— to recruit the most able and dedicated people to meet your exacting standards

— and to provide them with the best conditions in which to work.

And like most successful businessmen (and from my own experience politicians too) your work is your life and like me, you are backed up by a marvellous family.

Shared Legacies

As island nations Britain and Taiwan share common legacies. By geographic fate we stand apart from our neighbours. The sea protects and defends us. But it also stimulates our sense of adventure and sets us on the great trading highways of the world.

But Britain and Taiwan share a great deal more. Our peoples have a tradition of enterprise. We value education and learning. We reward initiative. We respect the family as the essential building brick of society and the link across generations.

And we have a dogged tenacity in the face of adversity.

These are the qualities which have equipped us to survive the turbulence of our century and to thrive on the opportunities which it has offered.

Shaping the Century…

We shall only get the best out of the 21st Century if we learn the lessons of this one, which itself has been one of dramatic change — most of which could not have been foreseen. Indeed, I remember Mark Twain's advice, “never prophesy, especially about the future” !

The advance of science…

We have witnessed the most remarkable advances in science and technology. What we now take for granted would have appeared a mere fantasy in the eyes of our forefathers in 1900. There were no aeroplanes, televisions, plastics, computers or antibiotics.

The atom was still the ultimate indivisible unit of matter.

The era of mechanisation, itself an advance, has given way to the era of automation. And just as mechanisation transformed the use of physical energy, so automation is transforming the use of intellectual energy.

And the speed of change is forever quickening. Development which once took years can now be achieved in months. “Smart” machines transfer technology instantaneously from one country to another. Global communications mean that we can all have access to information wherever we may be in the world. All this is a remarkable tribute, not only to the scientists but to free enterprise which has harnessed the advances so fast.

And the progress of medical science has raised the population of the world from under 2 billion at the beginning of the century to nearly 6 billion now bringing both new challenges, and requiring careful use of resources. And it is still rising.

The ideological battles…

This century has also been shaped by two great political struggles. The first, against Fascism and Nazism which was defeated in a devastating world war. And the second, against the tyranny of Communism whose ambition was to rule the world.

Indeed, for the best part of this century our nations have been forced to take part in a great ideological battle. The battle between Communism and liberty.

The twilight struggle we call the Cold War, when Communism held sway over much of the globe, ended dramatically in 1989 when the Iron Curtain came crashing down: and with it an evil empire of lies and injustice, dogma and propaganda, fell too.

The power of truth, the power of ideas. Ultimately, they amount to the same thing, because only truthful ideas, ideas that are in tune with the essential dignity of man, can prevail across the years.

The ruins of Marxist communism in Eastern Europe and the former Soviet Union, testify most eloquently to that.

The collapse of Soviet communism was the greatest political victory of my lifetime. In the end, the philosophy, economics and politics of liberty were too strong to resist. Our way of life has won.

The problems of transition…

These political changes have left us with a world in transition.

Transition is never easy but it is even harder in those countries which are moving from a command economy to free enterprise. In Russia there is no living tradition or recollection of freedom, and her people have struggled to implement reform.

There are always painful decisions which will cause economic distress and disrupt peoples lives; and without a rule of law, crime and violence flourish.

And there are always hardline Communists who have never accepted reform and take every opportunity to undermine it.

The countries of Central and Eastern Europe, which had a shorter time under Communism than the Soviet Union, are recovering more quickly.

But there are differences in the way they have tackled the problem:

In the Czech Republic, where Prime Minister Vaclav Klaus has a clear vision of a free society, he dismantled the old regime and put in place the structures of liberty

In Poland, where the oppression of Communism could break neither the Roman Catholic Church nor the people's faith in it, a new spirit of enterprise has emerged, which I hope not even recent political setbacks will diminish.

China by virtue of her size and history is in a class of her own. The transition there began well before anyone even dared to contemplate the fall of the Soviet Bloc. In 1978, Deng Xiaoping began the process of economic liberalisation, encouraging a market or enterprise economy but denying political freedom. And the results are startling.

For the past 15 years the average growth rate has been around 9&percent;. Exports have risen to five times what they were in 1980.

Foreign investment is pouring in — from 1979 to the beginning of 1995, over 210,000 foreign funded ventures had been approved with a pledged investment total of $275bn — and last year it is estimated that foreign investment topped $30bn, half of all foreign direct investment to developing countries worldwide.

But let's not get too carried away, it is important to keep a sense of proportion.

China has come a very long way in a short time but she still has some way to go to become an economic super-power.

We should not be surprised that growth is so high, it is bound to be more dramatic when you begin from a low base, and the people have an instinct for trade. But the total GDP of China is still less than that of Belgium and the Netherlands combined. While Britain's GDP is greater than those of China, Taiwan, Hong Kong, Thailand, Malaysia, Indonesia and Singapore put together!

Enterprise has won through…

Although we have won the ideological battle, there are still siren voices who urge the way of socialism — a bigger role for government and a lesser role for the people.

So we must continue to restate the reasons why capitalism and free enterprise are the right way for the next century

Free enterprise works because, like democracy, it gives real power to the people.

Each day in the market-place by their purchases they, not the government, decide what shall be produced.

It was Pope John Paul II who reminded us recently that the collapse of Communism should not be considered simply as a technical problem, but rather it was the violation of human rights:

— the right to private initiative,

— the right to ownership of property,

—and the right to economic freedom.

In other words it is not just that Communism made mistakes — the whole system was fundamentally wrong.

In the end we always knew it would fail because it produced neither human dignity nor prosperity. And the time came when the truth could no longer be kept out.

As, Alexis de Tocqueville, the famous commentator wrote in the middle of the last century:

“Do you want to test whether a people is given to industry and commerce? Do not sound its ports, or examine the wood from its forests, or the produce of its soil. The spirit of trade will get all these things, and without it, they are useless. Examine whether this people's law gives men the courage to seek prosperity, freedom to follow it up, the sense and habits to find it, and the assurance of reaping the benefit.”

De Tocqueville recognised that countries are not automatically rich in proportion to their natural resources. If that were so then Russia would be the richest country in the world. She has everything: oil, gas, diamonds, platinum, gold, silver, the industrial metals, timber and a rich soil.

Countries are rich whose Governments have policies which encourage the essential creativity, initiative and enterprise of man and recognise his desire to do better for his family.

Indeed, it is increasingly evident that man's greatest resource is man himself. So Japan, Switzerland, Hong Kong, Singapore and Taiwan who have no natural resources are now among the most prosperous countries in the world.

… And free trade

But the benefits of enterprise also depend upon the freedom to trade. Here in Taiwan you appreciate this. Exports are your lifeblood. But open trade is not just to be regarded as a statistical indicator of jobs and wealth.

Trade is a vibrant living thing which brings activity, variety and new experiences to every nation.

Moreover, free trade brings three huge benefits.

First, it is a force for political co-operation, harmony and peace.

Second, free trade allows small enterprises, and indeed small countries, to compete on equal terms with the commercial and political giants.

And finally, through free trade poor regions and countries can penetrate international markets and raise their people's living standards.

The West's post-War prosperity could never have been achieved without the orderly framework of free trade.

But remember freedom has its responsibilities

But, a word of caution, freedom solves many problems but unbridled it can also create others. An effective rule of law is vital. Just as we now enjoy the benefits of freedom, we must remember that it carries responsibilities too.

As we look forward, some of the most acute problems will be as much within our societies as between them.

Our freedom is being threatened, in the West certainly, but I believe also more widely, by a lack of respect for the rights and freedoms of others. This manifests itself most clearly in rising crime and violence, which is rapidly becoming the first concern of the law-abiding public and it is one that must be addressed by politicians, lawyers, and civic leaders alike.

The truth is that order requires both justice and moral and social authority. We have to strengthen the institutions — the family, the courts, democratically elected governments — which provide authority. That means recognising people's role in democracy does not end when they cast their votes. They have to live up to and apply in daily life the standards and values which are the foundations of democracy.

The Rise of the Asia/Pacific

We have learnt from our century that free enterprise coupled with free trade has triumphed.

And nowhere is this more apparent than here in the Asia/Pacific where we see a new dynamism in the countries of the region. This is one of the exciting new features of the world as we leave this century and enter the next.

Asia/Pacific is not homogenous.

The countries of the region are diverse in size — ranging from China to Brunei.

They are economically varied — compare Japan to Cambodia.

They differ in political progress, in religion, in culture and in history.

And if you include India, the region contains the largest democracy in the world.

It is axiomatic to say that just as the scene shifts in a play, so the next Act in world history will be set more in Asia than in Europe, more in the Pacific than in the Atlantic, as the economic centre of gravity moves towards this region.

The Asia/Pacific region has an increasing share of the world's wealth creation. And the European Union and NAFTA countries have a lot to learn from this area and its recipe for success.

First, the attitudes of its governments are conducive to growth:

Low tax rates — Growth is greater where countries take a lower proportion of the nation's wealth leaving more available to industry and in the pockets of the people. The two most successful economies in the world are the US and Japan, both of whose governments take about 34&percent; of GDP. This may be high in your terms but it is low in ours, especially when compared with some of the Scandinavian countries which take between 50 and 60&percent;. I should add that my administration reduced ours to just under 40&percent;.

Low regulation and small bureaucracy, with flexible attitudes which are market driven. Contrast this with the European Union where regulations have reached unprecedented levels and are hampering the growth of industry and services.

These regulations are created by a large non-elected bureaucracy while the powers of nationally elected parliaments and government are progressively diminished. All this is invoking increasing hostility and criticism on the part of the people.

Fewer barriers to trade — Co-operation is through business networks which can adapt quickly to changing circumstances.

Here in this region, the needs of the market have led to cross-border arrangements, as for example those between China, Hong Kong and Taiwan.

Again, contrast this with the European Union which is highly protectionist because of the increasingly high costs imposed upon business.

Second, the paramount factor for success is the quality of the people, their hard work, their high savings, their powerful commitment to education and self improvement, their social discipline, and their desire to do better for their families. None of these virtues are new. Indeed, they were the very qualities which the Pilgrim fathers took with them when they sailed from Britain to America in 1620.

And it is not only the qualities of the people, it's the sheer numbers of the people who have those qualities and are in the most economically productive age group — twenty to forty — which is so significant. By the year 2000 there will be 76 million of these in the United States, 94 million in Europe, but 570 million in East Asia. They will constitute an unparalleled resource and a vast market. By the end of this decade the volume of trade within the Asia&/Pacific region is expected to exceed trade within Europe.

At first, investment in this area was met from outside — although here in Taiwan you have always benefited from investment provided by the Taiwanese community overseas. But now the savings of your own people are providing the investment in business and infrastructure in the region.

The irony is that the West and the United States built up their wealth by this same recipe but now you are teaching us back the lesson which we once taught:

Able people, the latest technology, respect for the market — all these things are found in Asia/Pacific and especially in Taiwan.

Economic freedom and political freedom are ultimately inseparable

But already the economic changes which have swept across the Asia/Pacific are beginning to turn upside down many of the old political assumptions.

For political freedom and economic freedom are ultimately inseparable: they are two sides of the same coin.

You cannot open the door to economic liberty and stop the ideals of political and personal liberty from coming in at the same time. Once people start to take decisions in the marketplace, they will soon wish to take them in the city hall.

For free enterprise is economic democracy. It is part of the same web of liberty as freedom of speech, freedom of worship, freedom of association and freedom to own property.

There are those who argue that democracy is perhaps not suitable for Asian countries. Nonsense. Democracy may have begun in the West but it is universal and it has quickly spread the world over. As Warren Christopher pointed out:

“commitment to democracy is neither occidental nor accidental. We are not imposing an American model, we are supporting a universal impulse.”

So whether you start with political freedom or economic freedom, you soon end up having both.

Taiwan — A Nation of Enterprise

Taiwan has shown this to be so, and it has resulted in your being one of the great success stories of our time.

Your quiet revolution is almost complete and you have maintained the sustained economic progress which has made you one of Asia's tigers.

In the past 15 years per capita GNP has risen from $3,167 to $11,604. Last year GNP growth was 6.7&percent; while your unemployment rate is an enviably low 1.7&percent;. Your total foreign trade has reached $210 billion with exports increasing by 21&percent; in 1995. And a recent report predicted that by the year 2010 Taiwan will be the world's fourth largest economy.

But not only is Taiwan booming, you are also helping others achieve success. For you are the 7th largest outward investor in the world. In Britain we have particular reason to welcome such an approach, for of the ten largest Taiwanese investments in Europe, nine of them are in the UK. But your record in this region is even more startling.

You are the fifth largest investor in Indonesia, the fourth in Thailand, the third in the Philippines, the second in Malaysia and China, and the first in Vietnam. Indeed, up to the middle of last year Taiwanese companies had approved direct investments of $24.36 billion in China, making you the second largest investor after Hong Kong, and you have also invested $23.98 billion in South East Asia.

It also gives me great pleasure that the educational links between Britain and Taiwan are so strong. I noted that last year you signed an agreement between my old university of Oxford and the National Taiwan University to strengthen ties and increase exchanges in the future.

And I was especially delighted that recently the Chinese Culture University of Taiwan has linked up with the University of Buckingham of which I am Chancellor to establish academic and educational exchanges.

A total 10,000 Taiwanese young people came to Britain last year to study, and I hope they will become as familiar with our country and with Europe as the previous generation is with the United States.

And after your remarkable economic progress you have decided to follow in our democratic footsteps.

First under President Chiang and now under President Lee your political system has undergone a remarkable transformation into a British style plural democracy, and by the end of March this democratic process will be complete. I believe that with the close ties already established between Britain and Taiwan, as well as our shared interests and values, we have created a strong base for our continued friendship.

And that friendship will equip us to face the challenges ahead.

The International Challenges

Following the end of the Cold War, some people described our modern global political and security environment as a New World Order: my friends, there is no such thing. What we have today is a world ordered in a very different way where economic progress is increasingly followed by democracy.

In this differently ordered world, the Asia-Pacific region enjoys by comparison enviable peace and stability. That has been the basis for its growth and prosperity.

But there have been more than enough conflicts in the past — in Korea, in Vietnam, in Cambodia — to underline the importance of every country maintaining strong and well-equipped forces to defend itself.

For Thatcher's law of politics is that the unexpected happens and we must always be prepared.

It would be quite wrong to be misled by the present favourable situation into imagining that there will be no future threats to peace in the region. The most dangerous threat comes from North Korea's nuclear ambitions. It is very far from clear that these have been successfully checked.

In Asia there are no multilateral defence institutions, no equivalent of NATO.

Nor can you rely on the United Nations to hold the ring. Recently we have expected the UN to fulfil a role for which it is ill-suited and ill-equipped but as we have seen, when it comes to action there is no substitute for the leadership of the nation state.

Stability will therefore depend both on a balance of power between the great countries, and most importantly on a continued American presence.

The principle of the balance of power — in which several weaker forces combine to counter-balance a stronger one — is often under-rated. In fact it makes for stability.

But there also has to be one global power — a military power of last resort — to ensure that regional disputes to do not escalate to uncontainable levels.

That power is and can only be the United States. It is in all our interests to keep her committed to upholding international order, which means remaining a Pacific and indeed a European power. That requires encouragement and support from America's allies and those who benefit from America's presence.

It would have been a rash person who would have predicted at the end of the Vietnam War that America would still have substantial forces in Asia two decades later.

But thank goodness America has had the stamina and resolve to stay because its presence is the critical element in the Asian security equation.

So once again the world puts a big premium on America's wisdom and staying-power. The counterpart is that America must not be excluded from the benefits of economic cooperation in the region.

The omens in fact look quite promising, with APEC assuming a larger role in the region's affairs. Indeed, the multilateral regional organisations such as APEC and ASEAN, will have a vital part in creating a sense of interdependence. That will improve the sense of security of all the countries in the region. The key to their success is that their members are not being asked to surrender sovereignty, but rather to work together as independent countries to pursue their common interests.

Prosperity and Peace

It is on the basis of these two guiding principles — keeping the world's markets free and open, and keeping the United States as a willing and capable superpower to act as an ultimate guarantor of peace — that we can most effectively manage the changes and uncertainties which confront us.

In this way, we can ensure that the dynamic economies of the Asia-Pacific region do not appear to Westerners as a threat, but rather a challenge to improve performance and, indeed, as future markets for Western businesses. This is the way to prosperity. It is also the way to peace.