Nation: Taiwan: Shock and Fury

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An angry mob threw eggs and rocks at the U.S. embassy on Taipei's Chung Hsiao West Road. Some 2,000 tried to storm an American compound and were driven back by Marines with tear gas. Near by, students daubed slogans on white sheets taped to the walls. One message: "We protest American recognition of the Communist bandits. We will oppose Communism to the death."

The mood was tense and bitter as Taiwan struggled to come to terms with America's virtual abandonment of its onetime ally. President Chiang Ching-kuo, 68, had only a few hours' warning of the move from U.S. Ambassador Leonard Unger, who was himself startled by it. Chiang lost no time in calling an emergency Cabinet meeting, putting all military units on alert and issuing an angry statement. Carter's decision, he said, "has not only seriously damaged the rights and interests of the government and people of the Republic of China but has also tremendous adverse impact upon the entire free world." As a gesture to erase the shame, Taiwan's Foreign Minister Shen Ch'ang-huan resigned.

Despite the reaction of shock and anger, the Nationalists have long known that the change was coming. Expelled from the U.N. to make room for Peking's delegation in 1971, Taiwan last week could count only a sad roster of 22 foreign countries that still recognize its government. Nearly 50 had switched to Peking. Among the holdouts, only Saudi Arabia carries weight internationally.

Yet for all its political isolation, Taiwan has thrived economically. Its exports of color TV sets, textiles and electronics to the U.S., Japan and many European countries have earned it a place in the top 20 trading nations of the world.

Though Taiwan has a population of 17 million in a land area smaller than Holland, its foreign trade amounted to $17.9 billion in 1977, more than the $16.4 billion that China herself generated in the same year. Business with the U.S. was particularly good-around $7 billion this year, more than the total of America's trade with the Soviet Union and China put together.

The U.S. made possible such prosperity not just by its defense alliance with Taiwan but by sponsoring Taiwan's membership in such key international financial organizations as the World Bank and the International Monetary Fund. Now Taiwan's eligibility for loans from these organizations will come into question. Particularly endangered is the island's most-favored-nation status. Indeed the whole business climate of the island may be its most vulnerable element once the American defense umbrella is removed in 1980.

Very few of Taiwan's inhabitants fear an actual invasion from the mainland. China currently lacks the landing craft and other military equipment for such a move. Taiwan's armed forces of 474,000 men, including a well-trained air force of 316 combat aircraft, 165 of them F-5A/E interceptors that it has built under U.S. license, would make a direct assault on the island extremely costly. Furthermore, the U.S. is maintaining the right to continue selling defensive weapons to Taiwan. Privately, however, the island's officials worry about the possibility of a Communist submarine blockade against Taiwan's deepwater ports, a challenge that could starve Taiwan into submission.