When President Chiang Ching-kuo left Taipei's Veterans General Hospital last week after a cataract operation, the Taiwan government was characteristically stingy with details about his health. Unlike President Reagan, whose battle with colon cancer was reported extensively, Chiang has the luxury of stepping out of--or into--the public spotlight whenever he pleases with little fear of protest. In fact, though his country is suffering a period of quiet political and economic unrest, the 75-year-old leader's personal popularity has remained remarkably intact. "The man is a symbol of stability, and he has managed to maintain his effectiveness as that symbol through difficult times," says one Western political observer, who then compared him to Ronald Reagan. "You might say Chiang is the Asian Teflon President."
That quality has helped him weather a recent ebbing of confidence in his government. First came the revelation last January that military intelligence officers played a role in the 1984 death of Henry Liu, a Chinese-American writer who was murdered in his California home. Vice Admiral Wang Hsi-ling, former head of the Defense Ministry's intelligence bureau, was convicted in June of plotting Liu's death. Along with two gangsters who carried out the murder, Wang was given a life sentence. The trials were unusually open for Taiwan, but many felt that the harsh punishment was intended largely to placate the U.S.
Another setback for the government came in February with the collapse of the Tenth Credit Cooperative, a major Taiwan savings and loan institution, and the Cathay Investment & Trust Co., linchpin of the mighty Cathay group (estimated 1984 assets: $2.5 billion). The cooperative's chairman, Tsai Chen-chou, had funneled more than $190 million from Tenth Credit to fund his own shaky business schemes. Many citizens feel that members of the ruling Kuomintang (K.M.T.) knew of the scandal but looked the other way. Indeed, Tsai and his half brother Tsai Chen-nan, chairman of the Cathay Investment & Trust Co., had been indulging in questionable practices since 1974, but government regulators moved in only after a run by depositors threatened to close Tenth Credit. By that time, hundreds of creditors had lost an estimated $320 million.
A number of Taiwan officials have lost their jobs as a result of the Cathay affair, but President Chiang denies that it has soiled Taiwan's good name. "I do not see any wavering of public confidence as a result of (the Cathay scandal)," he said in an interview with TIME (see box). "Actually the government benefits by taking measures to overhaul the financial system." An investigative committee of the Control Yuan, the government's watchdog agency, ! assigned blame for the scandal last month to Finance Minister J.K. Loh, who resigned within hours, and to Hsu Li-teh, who quit as Economics Minister last March.
The Cathay scandal came at a particularly inauspicious time for the Taiwanese economy. After a muscular 10.9% growth rate in 1984, economic activity in the first half of this year rose less than 6%. Productivity has risen almost 9% annually over the past decade, but that has not been nearly enough to keep pace with the average 16% increase in wages. "From these figures, you can see we really are in danger," says one of Taiwan's leading economic policymakers.