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10. The press reported on 2 July that Quantas was to form a subsidiary airline Australia Asia Airlines to fly between Sydney and Taipei starting in November. The new airline plans to rent a Boeing 767 from Quantas for a weekly flight, which will operate under a commercial agreement rather than a governmental air services agreement. Australia already has a formal air service with China. This arrangement will be seen by the Taiwan authorities as another breakthrough and a further success for their flexible diplomacy. pursuance of its new policies, Taiwan has announced that it hopes to apply to rejoin the GATT by the end of the year.
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11. The ruling Kuomintang (KMT) and the main Opposition Party the Democratic Progressive Party (DPP) both held primary elections on 23 July (for the December national elections). They were a qualified success for the KMT, turnout was 43.6% of party members. The man in charge of organising them, John Kuan Deputy Secretary General of KMT, said that the public response had been good although he was not fully satisfied. The results are not binding on the KMT's selection of candidates, although the Party leadership did promise that it would give due consideration to the results when making the final selection. There were a few embarrassments. Lee Huan with some difficulty persuaded his son, Lee Ching-hua, to step down from his candidancy in order to avoid the impression that the Lee family were becomming too powerful. In Taichung the attempt by the KMT to improve its candidature by persuading the unpopular incumbent to step aside backfired when the chosen replacement candidate lost. Also the press in one area managed to unearth a set of voting instructions from a military commander to his troops, proving what had often been suspected to be the case about the KMTS influence on military voting patterns. Basically however it was local politics as usual. The DPP had a rather larger turnout of 70% (their votes are binding), but not that many seats were actually contested. Nonetheless there were a few embarrassingly unresolveable problems notably in the failure to effect any compromise in Yunlin and Miaoli counties, where the elections have been postponed. The DPP held its Plenum at the end of July which attempted to restore Party unity. The election of a new Chairman was postponed until after the national elections to avoid potential trouble. Ju Gaojeng, a candidate in Yunlin, announced that he would withdraw from the primary and run independently, but this did not mollify his opponents.
12.
A revised Banking Law was passed on 11 July to provide some welcome reform in the banking sector. It will allow more competition to the four large state-run commercial banks which have proved pretty ineffective in their operation. It will open the ways
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