Sinorama: When you granted our journal an exclusive interview at the end of 1985, you said that the R.O.C faced challenges on three sides: from Communist China, from the economy, and from society. In the last year and a half, has there been any change in the degree of these challenges? Or is there any new challenge?

Premier Yu Kuo-hwa: Generally speaking, the challenges which our country faces today still come from Communist China, the economy, and from society, but compared to a year and a half ago, they are somewhat different in nature.

As far as Communist China's united front strategy is concerned, our accomplishments over the last forty years in implementing the Three Principles of the People in Taiwan have already revealed the backwardness and poverty of communism, and have consequently spurred the movement to resist tyranny on the part of our mainland compatriots. Now we are even more actively promoting political reform-- not long from now martial law will be lifted--and are stepping towards completely modernized party politics. This will encourage our mainland compatriots still more in their struggle for freedom and for democracy, and in their struggle to oppose tyranny and oppose totalitarianism. In fact, this struggle is in the midst of rapid and widespread development on the mainland.

Under these circumstances, Communist China may misunderstand that after we lift martial law and eliminate the barriers of the mobilization to suppress the insurrection, when society will be even more open, they can pursue their united front policies of infiltration, factionalization, and subversion in an even more unrestrained fashion. In regard to this, we must raise our vigilance and be on guard at all times.

As for the economic side: Although in 1984 our rate of economic growth was only 5.08%, still we had already grasped the challenge of protectionism in international trade; therefore we sought to quicken the pace of economic liberalization and internationalization. In the past two years we have implemented a series of policies in this regard, and especially our strenuous efforts to balance Sino-American trade have become still more positive and active. At the present the average annual consumption per capita of American products is now up to 8.1% of per capita income.

Last year our economic growth rate reached 10.8%, and the trade surplus was more than US$15 billion; the estimated growth rate for the first half of this year will still exceed 10%, while the trade surplus will pass US$8 billion. This kind of long-term trade surplus brings two kinds of challenges: One is the trade friction brought about by strong protectionism in international trade; one is the pressure for fluctuations in the exchange rate and price levels brought about by the large foreign reserves.

What we ourselves can do to improve the situation is, for one thing, to expand imports and reduce the trade surplus; for another, to expand consumption in the domestic market; and finally, to open up foreign exchange controls (the revised regulations for controlling foreign exchange have already passed deliberations by the Legislative Yuan), and reduce the level of foreign reserves.

As for society, because our society is more and more pluralistic, and the rate of change is faster and faster, some people's value systems have become somewhat muddled, even as far as creating a loss of moral standards. But this situation appears to be in the process of gradual adjustment.

Q: It is generally considered that in the three years that you have served as premier the greatest achievements have been in the field of economics, where there have been several path-breaking ways of handling problems; in which area or in which matter do you yourself feel that you have exerted the greatest effort?

A: Administration of public affairs is all tied together, and includes many different areas of which economics is but one. In an administrative structure, all the sectors must be in tune with each other, and have complementary and mutually helpful close relations. As for the total structure, if there is neither a good political system nor a stable society, economic development cannot have success.

In the world there are several countries with vast and fertile lands and abundant resources, but the life of the people is difficult. Essentially, this is not an economic problem, but is a political and social problem. Based on a recognition of this, if we say that our past economic development has had achievements, that is because these are caused by our solid democratic politics and our stable, open society.

Q: Political reform is the main policy objective of the government this year, and the timing of the lifting of martial law is even more the focus of attention at home and abroad. Some people consider that to quickly pass the National Security Law and quickly lift martial law will benefit the nation's image. However, others consider that the adoption of the law needs more careful consideration. What is your opinion?

A: The nation's image is of course important; but the country's stability and security are even more important. We are seeking, after passing the National Security Law and setting detailed principles for its implementation, to quickly lift martial law, but this is by no means completely to improve the country's image; rather we hope to raise the importance of democratic constitutional government. Of course we understand the environment and the duties we face in this period of mobilization for suppressing the insurrection. Therefore, this law has received extremely careful consideration at each stage, from its drafting in the Executive Yuan to its deliberation in the Legislative Yuan.

Q: Democracy needs practice. In our current process of moving more and more toward democracy, what Kind of democratic habits do you think must be developed?

A: From the promulgation of our constitution in 1947 to the present is only forty years. Compared to Britain's 700 years and the United States' 200 years of democratic political history, this is very short. Moreover in these forty years we have been continually in a life-and-death struggle with the Chinese Communists. Nevertheless we have built a firm foundation for democracy in Taiwan. As for the democratic habits of the people, there are at least three aspects we can study from the advanced democratic countries.

First, there should be the habit of obeying the law. The citizens of democratic countries must certainly have a commitment to obeying the law; only then can one maintain both the spirit and practice of democratic politics.

Second, there must be a habit of social responsibility. Society belongs to everyone; if one wants to be a member of society one cannot only make demands on society and accept no responsibility.

Third, one must have the habit of not encroaching on another's freedom in the act of exercising one's own personal freedom. We must understand that freedom is not absolute in any open society, and moreover Western democracies have many laws and moral norms to protect against any individual encroaching on the freedom of another.

Q: We know that the job of premier is very busy, and that leisure is rare. If you had time, what is the thing you would most like to do?

A: If I had more time I would go out of the city to walk or play sports, and get a change of atmosphere; I would also like to read a few more books. One foreign scientist has said that knowledge increases by a multiple of 700 every generation. From this we can picture just how fast is the progress of knowledge. If we do not keep up, and strive to absorb new information, how can we avoid becoming out of date? Although every day I meet visitors, read reports, and discuss problems with colleagues, and although all these activities can help me acquire a little more knowledge, still I feel it is not enough.

Looking forward to the future, Yu notes that the demands of the people on the government are constantly increasing, and that new problems arise even while the old ones are still being worked on.（photo by Chung Yung-ho）

Meeting a younger friend, Premier Yu happily stoops over to chat.

Premier Yu, in the company of now Vice- Premier Lien Chan （who was Minister of Communications at the time of the photo） getting a first-hand report of progress on Taipei's mass transit system.

Premier and Mrs. Yu stop for a photo with fellow visitors to "Window on China".