Fears of worsening relations with China if a pro-independence candidate wins Saturday's presidential elections caused the Taiwan stock market to suffer its worst ever single-day fall yesterday, with shares tumbling by 6.6 per cent.
While the Finance Minister, Mr Paul Chiu, reassured investors that major state funds had been deployed to stop a free-fall, opposition party candidates accused the Nationalist government of manipulating the market to frighten voters.
Three candidates are running neck and neck in the presidential election, and the Nationalist hopeful, Vice-President Lien Chan, is struggling to maintain his party's 51-year grip on power. Mr Lien blamed the pro-independence candidate, Mr Chen Shuibian, for the fall in the Taiwan stock market, which saw the index of leading shares drop yesterday by 618 points to 8,812.
"Everybody knows who is endangering national stability and development", he told reporters.
Mr Chen, the candidate of Taiwan's main opposition Democratic Progressive Party (DPP), accused the Nationalists of "sacrificing the interests of our people and stock investors for the sake of the election". He told a rally in northern Taipei county that it was "heartbreaking and regrettable to see the Nationalists ignoring the interests of civilians and stock investors."
To roars of approval Mr Chen said the stock index would rise above 10,000 points if he was elected. Nevertheless, the former Taipei mayor is vulnerable to Chinese pressure on nervous voters and has distanced himself from his earlier outspoken support for independence.
He has insisted throughout the campaign that he is "a peacemaker, not a troublemaker". Indeed, he has promised not to hold a referendum on independence, not to change the island's official name from the Republic of China to the Republic of Taiwan, and not to amend the constitution to reflect the reality of "two Chinas" - all measures which would infuriate Beijing.
China regards Taiwan as a renegade province, and last month stepped up pressure on its political leaders, warning that it would use military force if Taiwan delayed unity talks under the principle of one China.
Mr Lien, Mr Chen and a breakaway Nationalist candidate, Mr James Soong, are locked in a three-way race, but about a quarter of the electorate has yet to make up their minds on how to vote in Saturday's election. Mr Soong also blamed the Nationalist government for not stopping the market plunge. "Look at what the Nationalists have done to this country and to the stock market," he told supporters at a rally in Taipei county. "Confidence in the Nationalists is bankrupt."
The Chinese threat may be designed to promote the campaign of Mr Soong, the most sympathetic of the three candidates to overtures from Beijing, but ironically it is also giving ammunition to the Nationalist Party.
The Nationalists have broadcast TV advertisements warning that if Mr Chen is elected, war could erupt. It shows recruits marching in ranks while grimly singing "goodbye, goodbye, goodbye". In reply, Mr Chen, the only candidate with a son of military age, has placed advertisements in newspapers declaring: "No parents want their children to go to war", alongside a picture of the young law student performing push-ups in army fatigues.