Taiwan's people rushed to convert their money into US dollars yesterday, and braced themselves for further missile tests by China into the sea off the island's two main ports. But there was also relief that the mainland's first three test launches had not strayed into Taiwanese territory.
The Defence Ministry in Taipei said that three surface-to-surface M-9 missiles had landed in the sea early in the morning, coming down inside the two target "box" zones previously announced by Peking. They were the first to be unleashed during the exercises, which will continue until next Friday. Two missiles landed about 48 miles west of the southern port of Kaohsiung, and the other near the north-eastern port of Keelung where the target area extends to just 20 miles from the coast. The missiles were not carrying live warheads and had not flown over the island.
In Peking, the leadership stepped up the invective against Taiwan's President, Lee Teng-hui, the front-runner in the island's first democratic presidential elections on 23 March. Since Mr Lee's visit to the United States last June, the mainland has accused him of seeking independence for Taiwan. The Chinese President, Jiang Zemin, last night warned: "Our struggle will not stop for a single day so long as Taiwan authorities do not cease activities to split the motherland for a single day."
Mr Lee has said reunification remained the "ultimate goal" but that the time was "not right" while a Communist government remained in power on the mainland.
China's Foreign Minister, Qian Qichen, said: "The Taiwan compatriots don't have to panic over the pending military exercises by the People's Liberation Army. What they should really worry about is that the 'independence' seekers, with support from some international forces bent on splitting China, continue on their wrong path. That will be a real disaster."
Peking's military exercises are aimed at reducing voter support for Mr Lee, with China's leaders apparently ignoring the possibility that their strategy might have the opposite effect.
Throughout the day, Taiwan's ports resolutely remained open but radio stations broadcast repeated warnings to fishermen to stay away from the target zones. Amid a growing siege mentality, many banks were running out of US dollar notes, and were restricting purchases to $2,000 (pounds 1,300) as people queued to transfer money into a safer currency. The Bank of America said it would fly in more notes on Monday to meet the shortage. Shops saw brisk sales of rice and staple foods.
The Taiwan government tried hard to calm people's nerves, and lambasted the mainland for its "crude threats". The Defence Minister, Chiang Chung- ling, said the island would "fight" if there were an attack which violated its territorial waters. "But the 12-nautical-mile does not represent our bottom line," he added.
Government support for the stock market meant it actually gained more than 1 per cent yesterday. The central bank, which has the world's second largest foreign reserves, said it would continue to bolster the local currency. President Lee appealed for calm, and continued his election campaigning.
China conducted two series of missile tests last year, following Mr Lee's US visit in June, but the present exercises are taking place much closer to Taiwan's coastline. There has been widespread concern that a misfired missile could land in Taiwanese waters, or even on the island, triggering retaliation by Taiwan and a full-blown military conflict.
International condemnation was swift. In the most pointed gesture, Tokyo said it had sent a patrol boat to the area to secure the safety of navigation. The Prime Minister, Ryutaro Hashimoto said Peking's policy towards Taiwan was taking an "unfortunate direction".
The US said the tests were "provocative and reckless". In Washington, a State Department spokesman warned of unspecified "consequences" if the missiles went off course. The Defense Secretary, William Perry, said he and other White House officials protested strongly to Liu Huaqui, foreign affairs director of China's state council.
"I believe the message we communicated was very clear and straightforward," Mr Perry said. He added that the aircraft carrier Independence was about 200 miles north-east of Taiwan and a cruiser and destroyer were nearby.