| Abstract | On the eve of Hong Kong's reversion to Chinese sovereignty, confidence in Taiwan's economic and political future is buoyant. The stock market is strong, the economy is recovering and ever-important relations with China are stable if not improving. The situation is much different from March 1996, when China conducted military exercises north of the island in a bid to frighten residents and influence the country's first democratic presidential elections. The tensions hurt the economy and sparked an outflow of private capital. |
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