Li Kuo-Ting: The Adaptable Strategist Behind Taiwan's Success

Li Kuo-Ting: The Adaptable Strategist Behind Taiwan's Success

What you need to know

James Baron tours the life and times of Taiwan's Li Kuo-ting.

“Li Kuo-ting's name,” wrote Hong Kong economist Tony Fu-Lai Yu (余赴禮), “is well-known in Taiwan.” If this were true when Yu penned the words 10 years ago, it certainly isn't now.

Granted, as Yu points out, Li's name (李國鼎) is enshrined in a foundation that funds scientific endeavor in Taiwan and promotes cross-Strait cooperation in science.

An archive at the Institute of Modern History at Taiwan's national academy, Academia Sinica (中央研究院), is dedicated to his personal papers and photographs. Yet, less than 15 years after his death, the name of the man commonly cited as the brains behind Taiwan's economic development, remains unfamiliar to much of the general public.

Tucked down a small lane off Zhongsheng District's (中正區) Tai'an Street (泰安街) in Taipei, Kwoh Ting-Li's Residence (李國鼎故居) is emblematic of its former inhabitant's relative obscurity. It is marked out on the map at the nearest metro station – Zhongxiao Fuxing (忠孝復興) – and well signposted, but it's not the kind of place you'd be likely to stumble upon by chance.

Photo Credit: James Baron

The grounds consist of two main buildings – the small exhibition center that greets you as you enter and the residence itself, a Japanese colonial building of blue-green slats. With its horizontal slats of a lighter blue, and porthole windows on either side of the cantilevered door, the entrance is probably the most distinctive feature.

Although there doesn't seem to be any indication of the exact year of its construction, the building originally served as a residence for officials of the telegraph bureau under the Japanese colonial government. After World War II, it became the residence of the minister of finance, a position which Li assumed in 1969, having served as minister for economic affairs from 1965. The sign outside the compound seems to conflate his appointment as finance chief with the year that he moved into the house – 1972.

“Unlike traditional Chinese buildings, which were symmetrical, the Japanese favored asymmetrical houses,” says a guide for one of the tours that takes place every hour. She does not explain exactly why that is, but it's possible she is referring to the balanced layout of Chinese courtyard homes, where the main building sits at the back and all the open space is out front. Japanese homes, in contrast, sat in the center, surrounded by a garden on all sides.

An assistant at the exhibition center points out the various trees in the garden. It is winter and only the cherry blossoms add any color, but near the entrance gates, there are tea tree bushes and the haggard skeleton of an old starfruit tree. “In Mr. Li's time, this had fruit,” she says. “But it was damaged in a big typhoon and now … no fruit.” She says that the Japanese were culturally different in their penchant for having fruit trees in their gardens. Chinese families would usually view fruit-bearing trees and plants as agricultural, something separate from home life. “In the Japanese era, there were big orange trees behind the house,” the assistant says.

Inside the house, there's a rather musty smell. The furnishings and decorations are mostly plain. Just inside the door, as you remove your shoes, a cheap print of Da Vinci's last supper greets you on one wall. On the other side is a Balinese painting depicting Hindu worshippers holding up lotus flower offerings.

Photo Credit: James Baron

Going anticlockwise through the house, one enters Li's study. Forming the northwest corner of the building, it has two long windows along both sides and looks like it would have been a pleasant work space for the aging civil servant. In Li's day, the room was chock full of books, but only a few remain now, the rest having being donated to National Central University (國立中央大學) in Zhongli, Taoyuan County. Li graduated from this NCU in its original incarnation in Nanjing, China, in 1930.

Most noticeable is a copy of the bestselling book “Megatrends 2000,” a statistics-based analysis of the top socioeconomic trends at the end of last century. This is Li all over: known as the “godfather of technology” in Taiwan, he was always a step ahead of the curve, even in his old age. From 1976, he was a Minister without Portfolio, then later an unofficial adviser. This period saw some of his important contributions.

An éminence grise in the formation of government policy toward science and technology, he encouraged entrepreneurs to invest in high-tech industries and provided funding to electronics firms. He was largely responsible for the creation of the Hsinchu Science Park in 1980, reportedly consulting Silicon Valley founder Frederick Terman for the undertaking.

Along with his successor as economics minister (and later ROC Premier), Sun Yun-suan (孫運璿), Li encouraged Taiwan's top talent to repatriate from the United States, bringing their tech know-how and vision back home. The recruitment of Morris Chang (張忠謀), founder of Taiwan Semiconductor Manufacturing Company, is perhaps the most notable example of this policy. Chang had already enjoyed a 25-year career at Texas Instruments, rising to group vice president, before he was tapped by Sun to head up the International Technology Research Institute (工業技術研究院) in 1988.

Further evidence of Li's multifaceted role in boosting manufacturing in Taiwan can be seen in three glass tanks atop filing cabinets and a bookcase at the far end of the study. These contain plastic dolls that Li picked up on his many visits abroad. A rather tawdry ensemble, they served as samples for factories, helping to make Taiwan one of the world's leading producers of cheap plastic toys from the late 1960s.

Photo Credit: James Baron

A photo of former President C.K..Yan (嚴家淦) watches over the living room. While Yan was the nominal head of state from 1975 to 1978, he was effectively just a stop-gap between President Chiang Kai-shek (蔣中正), who died in 1975, and his son Chiang Ching-kuo (蔣經國) who took the helm three years later. It was common knowledge that Chiang, Jr. was running the show for years before his father died. Perched on a shelf in the corner, amidst glass and ceramic horses, lions and swans, a small image of the younger Chiang is twinned with a photo of U.S. President Ronald Reagan.

Noting the prominence afforded to Yan's photo, the guide says Li had a great deal of respect for Yan. The latter often functioned as an intermediary when Li had to communicate important ideas to the Chiangs – Li could apparently come across as a little impatient when trying to get his point across. An information board in the visitor center featuring a suave-looking Li leaning on his desk in front of his finance team refers to the “three quicknesses” (三快) for which he was known. These were the brisk pace at which he walked (走路快), the breakneck speed at which he got things done (做事快), and the rapid-fire delivery of his speech (講話快). More measured in his approach, Yan proved the perfect foil to the energetic reformer.

On a low, round table in front of the old television is a small bronze bust of a beaming Chiang, Snr. Across the room, a large oil painting of rice fields fringed by mountains reveals a connection to another Asian strongman. This rather insipid work was donated by ill-fated Vietnamese President Ngô Đình Diệm. The Vietnamese leader was a devout Christian who saw biblical scripture and Confucian analects as mutually reinforcing, and it would appear that Li was of a similarly syncretic bent. Ornate tripods of various shapes and sizes – or dings, as these classical Chinese religious vessels are known – occupy tables and cabinets around the room. Elsewhere, placards offer banal supplications to the Holy Father.

With its cheap kitchenware and plywood lazy Susan, the dining room, in particular, is the epitome of thrift. The information board in the bedroom notes the frugality for which Li was apparently known. Former Taipei Mayor Hau Lung-pin (郝龍斌), a classmate of Li's son, remarked upon this at the opening ceremony for the residence in 2010, saying the simplicity of the furnishings reflected Li's “prudent” character. It was while eating in the dining room in May 2001 that Li, then aged 91, suffered a fatal brain hemorrhage.

Despite almost half a century as a policymaker and adviser, during which time he wielded an arguably unparalleled influence on Taiwan's economic development, Li did not have a background in economics or finance. Following his graduation from NCU, he pursued a degree in physics at Cambridge, returning to China in 1934 as the war with Japan approached. For the next decade-and-a-half, Li was involved in industry.

Following the Nationalist government's flight to Taiwan, Li was appointed head of the Taiwan Shipbuilding Corporation in 1951 and made a member of the Industrial Development Commission two years later. It was at this latter body that Li first gained hands-on experience of policy formation. By the end of the decade, he was heading the Industrial Development and Investment Center under the Council for United States Aid, which was eventually to become the Council for Economic Planning and Development and, in 2014, the National Development Council. The aforementioned Cabinet positions followed.

While Li has received recognition from developmental economists, who cite Taiwan's case as an example of successful government intervention, the predominant laissez faire school of economists remain unconvinced. A 1998 feature in the Economist, for example, argues, “In a region where economic success is usually attributed to grand industrial policy and national champions, Taiwan has neither.”

Part of a series surveying Taiwan's economy, the piece continues, “When its government has tried to promote industries or create big conglomerates, it has usually failed.” The article concludes that central planning has had little to do with Taiwan's success. Instead, the creation of “an environment where the entrepreneurial potential of its people can be fully realized” has been key.

Yet this is surely to beg what is in question. After all, such an environment does not just spring up in every developing country.

In his introduction to Li's book “The Evolution of Policy Behind Taiwan's Development Success,” the economist Gustav Rainis suggests that certain facets of Chinese culture helped lay the ground for Taiwan's success. Yet, he also emphasizes the flexibility that policymakers demonstrated in changing tack when things were not working or had run their course. Dismantling the import-substitution system of the 1950s is the most obvious example of this.

Far from being stubborn interventionists who held Taiwan back, Li and his ilk called for less interference in the economy. Admittedly, they were evolutionary in their outlook, believing that “the simultaneous depoliticizing of the economic system on all fronts should not be viewed as a sudden burst of the dam” but rather “as slow but sure cumulative process.”

Nevertheless, Rainis contends that “a pragmatic liberalization effort, resolutely maintained, is thus much superior to the frequently encountered fluctuating policy patterns that alternate between periods of doctrinaire interventionism and periods of equally doctrinaire laissez-faire.” In his eyes, Taiwan got the balance just about right.

Reinforcing this view of Li as a pragmatic and adaptable thinker, Yu observes that Li believed in advancing through trial and error. Most importantly, Yu believes that mainstream economists have neglected the contributions of policymakers, holding that “human agency has no place in neoclassical mathematical models.”

Yet, completely discounting the role of “real-world planners and hands-on doers,” as Li called his breed, seems ridiculous. At the very least, they helped foster the environment for Taiwan's remarkable development. As such, the influence of Li Kuo-ting and his like is indelible.

Read more:
Ghosts of the Stronato: Asunción's Taiwanese Expats a Dying Breed
Taipei’s Little Burma and the Legacy of the KMT 'Jungle Generals'
Forgotten Hero: Remembering Sun Li-jen

Editor: Edward White