NERVOUS investors dumped Taipei stocks and Taiwanese living close to mainland China rushed to buy canned food, but their political leaders stood firm after Beijing yesterday announced new missile exercises on Taiwan's doorstep.
The Taipei bourse fell 1.3 per cent after China's official news agency, Xinhua, made the announcement. Analysts said the fall could have been greater if a government stabilisation fund bad not intervened.
But Taiwan's leaders were uncowed, warning of retaliation if a missile hit the island and urging the world not to stand by passively as China stepped up its intimidation.
"If any of the missiles land within our 12 nautical mile territorial waters, we will strike back immediately," opposition MP Yen Chin-fu quoted Defence Minister Chiang Chung-ling as telling a parliamentary meeting.
"The defence minister also told us that if [the missiles] hit our territory, we can strike back at any specific point in mainland China," Mr Yen said.
Premier Lien Chan declared "China should immediately stop its provocative actions, other wise it should be held responsible for any unfortunate consequences that follow."
Foreign ministry spokesman Rock Leng said "The move seriously violates the world trend of replacing confrontation with peace and jeopardises peace in the Asia and Pacific region."
President Lee Teng-hui said China was conducting the exercise, the fourth in eight months, as "it is afraid of [Taiwan's] first democratic presidential elections."
Mr Lee's trip to the United States last June a visit deemed by Beijing as promoting Taiwan's independence enraged China, which increased its military threats against Taiwan. China has warned that if Taiwan declares independence, it will send forces to the island.
One missile splash zone identified by Beijing is located between 20 to 40 nautical miles off Taiwan's north east coast, near the port of Keelung, meaning that part of it lies within the island's 24 nautical mile economic zone.
The other is located between 30-50 nautical miles off Kaohsiung port along the south west coast.
The defence ministry said before the Lunar New Year on February 19th, Taiwan's military had already stepped up combat readiness and strengthened forces in outlying islands. It said China was also making preparations for military exercises in Pingtan, Dongshan and Nanao islands along the south east coast of Fujian province.
The medium range surface to air Sky Bow missile will also be deployed on Penghu, on the first day of the Chinese exercises, the China Times Express said.
In the defence outpost of Kinmen, which faces the south western Chinese city of Xianmen, a witness said families were stocking up on rice and other necessities.
The United Daily News in Matsu reported that nearly half the 30 residents of Wuchiu, a Taiwan held islet just miles from Pingtan, have fled to Taiwan.