I think Taiwan's economy needs an overall structural readjustment. Our new model focuses on innovation and research. This is different from our growth model in the past, which was centered on the manufacturing industry.

If China do take economic measures to apply pressure to Taiwan, they will have to think about the price that they are going to pay. Because the surrounding countries will be looking very carefully at what measures China will take against Taiwan.

I think that my emergence as a leader is closely related to the development of Taiwan's democracy. Taiwan's democracy was a gradual development. It was done from the bottom up. Therefore a lot of the more successful political leaders come from civil society, those that are closer to the grass-roots level of the public.

China is still our largest trading partner however, complementarity between our economies is decreasing. We had the ability to organize a manufacturing process, and then we moved our manufacturing capability to China to make use of their labor pool.

I think that Chairman Xi Jinping's courage tackling corruption is an important matter in the development of Chinese society. I also look forward to him showing a bit more flexibility in dealing with cross-strait relations. I hope that he can appreciate that Taiwan is a democratic society in which the leader has to follow the will of the people.

I am not clear what the U.S. means when they use the term entity. For us here in Taiwan, we believe that we are a country, a democratic country.

Taiwan is the Republic of China, the Republic of China is Taiwan.

Over past period, we have handled relations with China very carefully. We do not take provocative measures, we make sure that there are no surprises, and we hope that through channels of communication, we can gradually build up trust.