In reality, the threat facing the island nation may not be missile might from across the strait as much as the economics of manufacturing which feeds Taiwan's dependence on trade.

The government of Taiwan, anxious to show off its "miracle" of economics and democracy provided transportation and accommodations for this report.

There's no doubt this place is an economic miracle, cleaner, brighter and even more bustling than obvious during a private visit just over eight years ago and beyond comparison to the somewhat ragged Taipei of the late 1960s.

Now this mountain-ringed city has the world's tallest building, Taipei 101, towering over its nearby civic center almost as if it were a solitary exclamation point protruding skyward from the urbanity below spelling "Success!"

But, as it is with the tropical weather, there are clouds on the horizon.

Shuttled from briefing to briefing in impressive offices with state of the art audio-visual presentations, a rosy picture is painted for correspondents of the economy and the vibrant democracy Taiwan has been enjoying. But the message is pounded home; the island is threatened by Beijing.

Taiwan, nearly isolated in the international community, wants support from more than the couple dozen nations with which it has diplomatic recognition and recently announced yet another initiative to gain support in the United Nations, from which it was expelled and replaced by the PRC in 1971.

This week Beijing, which sees Taiwan as a renegade province, made it clear Taipei has no business looking for help in the world organization and said China would block the attempt by Taiwan's allies.

In March, Beijing enacted an anti-secession law that authorizes non-peaceful means against any entity attempting to secede from China.

This was in reaction to rumblings by a minority in Taiwan to declare independence. But the present government maintains such a move is unnecessary since it already is a sovereign nation, albeit not recognized by many countries.

So, the military threat hangs over Taiwan.

It's regarded as so real, an air raid drill set for earlier in the week in an area outside the capital city was postponed because of a typhoon passing near the island until later this week.

Although Vice President Annette Liu has vowed Taiwan would not get into an arms race with China, despite the more than 700 missiles, some analysts wonder if maybe China is trying to goad Taipei into one. That could break the bank.

Taipei's defense spending has been fairly static while, Taiwan officials say, Beijing's defense budget has increased by double digit percentages for several years.

Moving from a very positive briefing on Taiwan's full-speed-ahead information technology industry at the showcase Hsinchu Science Park and a spacious auditorium-style briefing room about an hour south of the capital to a non-descript building on a Taipei side-street, another concern was voiced.

Not that what caused the concern - job flight - wasn't mentioned elsewhere, it was just in a cramped conference room of the Taiwan Institute of Economic Research think tank we got around to talking about it and fair trade agreements.

Unemployment is estimated at about 4.2 percent in Taiwan, actually down from last year's 4.5 percent. It's more than the usual concern over unemployment because the jobs are going to China, in many cases, and maybe a million of them.

If that isn't bad enough businesses have been migrating to China, too, because it's more efficient to manufacture there, said Maio Chen a research fellow, pointing out it began in the 1990s with personal computers and monitors. "It's had profound consequences."

He explained when many of these older businesses move to the cheaper labor market, they stop paying taxes in Taiwan and they and their employees stop spending money as well.

There is still a problem with newer companies, such as in the science park. They get a five-year break on paying taxes. No tax revenue there.

Taiwan owners frequently move their families with the companies and put profits back into the firms to finance expansion.

"Taiwan's economy might get hurt," the economist said. "There seems not much money is coming back because they don't think there is much good investment opportunity here."

He applauds Taiwan's recent moves for free trade agreements, such as the one with Guatemala, seen as opening the door to Latin America, where Taiwan has an eye on expanding trade, as does China.

"The biggest free trade agreement is Association of Southeast Asian Nations," said Chen, referring to yet another group from which Taiwan is excluded.

Should China, Japan and South Korea join in with ASEAN in an FTA, he said, "it would mean all goods, no taxes (or duties); then Taiwan would really be at a disadvantage."

It would make Taiwan uncompetitive in two of its three major export markets, Japan and China, he said.

That could further exacerbate the trend of Taiwan companies shifting to China to survive and have direct effect on Taiwan's economic survival.

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