Taiwan, despite its loss of world recognition, gains stronger-than-ever pace in vital trade

Official international recognition is not everything. Taiwan continues to prosper even though only 15 countries, mostly in South and Central America, now maintain diplomatic representation in Taipei, the capital.

This may explain the sedate pace of life at the modest, two-story Foreign Ministry building. In fact, a more accurate picture of Taiwan's position in the world is presented in the bustling external trade development center a few blocks away.

Referring to Taiwan's expulstion from the International Monetary Fund as official representative of China, dr. Tsai Wei-ping, director of the Institute of International Relations, commented, "In financial terms it was no loss at all , because we had not qualified for any loans in years.

"But certainly there was a loss of prestige. Coming after the severance of diplomatic relations with so many countries, our international reputation suffered."

Touring the island and talking to senior government officials and businessmen , I found no indication that the 17 million people of Taiwan are being hurt financially from the diplomatic triumphs of their communist rivals on the mainland.

Consider US dealings with Taipei, for instance. The United States ceased to recognize the Nationalist Chinese government on Taiwan in late 1978 after extending recognition to Peking.

In that year, Taiwanese exports to the US broke the $5 billion mark. In 1979 the total went up to $5.6 billion, constituing 35 percent of Taiwan's total external trade. Already, in the first six months of 1980, the export figure has reached $3.2 billion, a 26 percent increase over the same period last year.

Imports from the US were $3.38 billion last year, a billion-dollar jump over the last year of official recognition. In the first six months of the this year they have leaped almost 50 percent, to $2.2 billion.

To put the figures into context, it might be noted that 10 years ago, total two-way trade was a meager $700 million.

In addition, despite the lack of diplomatic ties, the US Export-Import Bank still lends money to Taiwanese companies to finance their purchases of American goods, using commercial banks as go-betweens to obscure the action.

Two loans have already been arranged this way. The government-controlled China Airlines received a $126 million credit to help buy two Boeing 747 jets, while a $50 million loan was obtained by the China Petroleum Corporation to cover part of the cost of a naphtha cracker. In both cases major US commercial banks conducted the overt negotiations.

A third loan is reportedly under negotiation, using as the official lender the American Institute in Taiwan, which now functions as an unofficial embassy (a number of important countries have established such offices, some of them offering passport and visa services).

Thus the economic relationship can continue to boom, and Taiwanese officials are confident it will do so.

This is typical of the pragmatism now prevailing in Taipei. Although the island has largely lost out in the struggle with the mainland for official world recognition, its leaders feel it is more important than ever to keep open channels of communication through trade to take advantage of any changes in the political climate.

In this regard, there is polite interest, but not much more, in recent statements by the Republican presidential candidate, Ronald Reagan, on the Taiwan issue.

There is some disillusionment in Taipei with the Carter administration, which is not considered to be fully carrying out the spirit of the agreement between the two countries signed after the US switched its diplomatic allegiance to Peking.

Mr. Reagan is highly regarded as a good friend of Taiwan, but officials have noted how his first statements on restoring diplomatic ties with Taipei were quickly diluted by his aides and even himself.

Dr. Chang King-yuh, deputy director of the Institute of International Relations and specialist in US affairs, commented: "We think we are entitled to a more formal relationship with the United States. But we regard the Reagan statements to some extent as mere campaign words, and we must wait to see whether anything comes out of them if a new administration comes into office."

Mr. Tsai, the institute's director, added: "We do not want Taiwan to become a campaign issue. Already the Carter people have been warning against any moves that could alienate mainland China. If Reagan is elected, our relationship with Washington will probably improve, but it is difficult to see by how much."

Government officials take note, for example, of the opposition in Congress to any reversal of diplomatic recognition. For example, Senate majority leader Robert Byrd, after a recent visit to China, argued that revising the relationship would not help Taiwan but would actually heighten tensions between it and China -- at a time when Peking is making friendly noises.

Officially, at least, the Taiwanese say this isn't really that important. As Dr. Tsai noted: "We aren't looking for any help from anyone. This is self-reliance year. From the president down to ordinary peasant we will do the job ourselves."

For that, however, Taiwan needs foreign trade, without which it could hardly survive.

H. K. Shao, director general of the Board of Foreign Trade, projects a figure of nearly $30 billion for the island's exports and imports this year, a 27 percent increase over last year and representing a staggering 96 percent of gross national product.

The main concern is the rise in oil imports, which this year is expected to push the balance of payments into a rare deficit -- although only about $500 million.

To overcome this, an aggressive export promotion drive has been launched, particularly in Western Europe. Preliminary soundings have also been made about forging trade links with Eastern Europe.

But the main links will remain with the US and Japan, which between them account for nearly half of Taiwan's trade.

Mr. Shao predicts further gains for Taiwan's exports to the US, especially as there is a feeling the Carter administration will adopt more liberal economic policies to bolster the President's re-election prospects.