The island of Taiwan (excluding the Pescadores) was first populated by Austronesian people. It was colonized by the Dutch in the 17th century, followed by an influx of Han Chinese including Hakka immigrants from areas of Fujian and Guangdong of mainland China, across the Taiwan Strait. The Spanish also built a settlement in the north for a brief period, but were driven out by the Dutch in 1642.
In 1662, Koxinga (Zheng Cheng-gong), a Ming Dynasty loyalist, defeated the Dutch and established a base of operations on the island. Zheng's forces were later defeated by the Qing Dynasty in 1683. From then, parts of Taiwan became increasingly integrated into the Qing Empire before it ceded the island to Japan in 1895 following the First Sino-Japanese War. Taiwan produced rice and sugar to be exported to Japan and also served as a base for the Japanese colonial expansion into Southeast Asia and the Pacific during World War II. Japanese imperial education was implemented in Taiwan and many Taiwanese also fought for Japan during the war.
Following World War II, the Republic of China, under the Kuomintang (KMT) became the governing polity on Taiwan. In 1949, after losing control of mainland China following the Chinese civil war, the ROC government under the KMT withdrew to Taiwan and Chiang Kai-shek declared martial law. Japan formally renounced all territorial rights to Taiwan in 1952 in the San Francisco Peace Treaty. The KMT ruled Taiwan as a single-party state for forty years, until democratic reforms were mandated during the final year of authoritarian rule under Chiang Ching-kuo. The reforms were promulgated under Chiang's successor, Lee Teng-hui, which culminated in the first ever direct presidential election in 1996. In 2000, Chen Shui-bian was elected the president, becoming the first non-KMT president on Taiwan. The 2008 election of President Ma Ying-jeou marked the second peaceful transfer of power, this time back to the KMT.
Taiwan is estimated by anthropologists to have been populated for approximately 30,000 years. Little is known about the original inhabitants, but distinctive jadeware, and corded pottery of the Changpin, Beinan and Tapenkeng (Dapenkeng) cultures show a marked diversity in the island's early inhabitants. Hemp fibre imprints have been found in pottery shards over 10,000 years old in Taiwan. Today's Taiwan's aboriginal peoples are classified as belonging to the Austronesian ethno-linguistic group of people, a linguistic group that stretches as far west as Madagascar, and even as far as Easter Island in the east and to New Zealand in the south with Hawaii as the northern most point. Austronesian culture on Taiwan begins about 4,000 B.C.
Taiwanese Aborigines or Aboriginal peoples (Taiwanese Pe̍h-oē-jī: gôan-chū-bîn, literally "original inhabitants") are the indigenous peoples of Taiwan. Their ancestors are believed to have been living on the islands for approximately 8,000 years before major Han Chinese immigration began in the 1600s. The Taiwanese Aborigines are Austronesian peoples, with linguistic and genetic ties to other Austronesian ethnic groups, such as peoples of the Philippines, Malaysia, Indonesia and Oceania. Taiwan's Austronesian speakers were traditionally distributed over much of the island's rugged central mountain range and concentrated in villages along the alluvial plains. Today, the bulk of the contemporary Taiwanese Aborigine population reside in the mountains and the cities. The issue of an ethnic identity unconnected to the Asian mainland has become one thread in the discourse regarding the political identity of Taiwan. The total population of Aborigines on Taiwan is around 458,000 as of January 2006, which is approximately 2% of Taiwan's population.
For centuries Taiwan's Aboriginal peoples experienced economic competition and military conflict with a series of conquering peoples. As a result of these intercultural dynamics, as well as more dispassionate economic processes, many of these tribes have been linguistically and culturally assimilated. The result has been varying degrees of language death and loss of original cultural identity. For example, of the approximately 26 known languages of the Taiwanese Aborigines (collectively referred to as the Formosan languages), at least ten are extinct, another five are moribund and several others are to some degree endangered. These languages are of unique historical significance, since most historical linguists consider Taiwan as the original homeland of the Austronesian language family.
Today the indigenous peoples of Taiwan face economic and social barriers, including a high unemployment rate and substandard education. They have been actively seeking a higher degree of self-determination and economic development since the early 1980s. In 1996 the Council of Indigenous Peoples was promoted to a ministry-level rank within the Executive Yuan. A revival of ethnic pride has been expressed in many ways by aborigines, including incorporating elements of their culture into commercially successful pop music. Efforts are underway by indigenous communities to revive traditional cultural practices and preserve their languages. The aboriginal tribes have also become extensively involved in the tourism and eco-tourism industries.
Dutch traders, in search of an Asian base first arrived on the island in 1623 to use the island as a base for Dutch commerce with Japan and the coastal areas of China. The Spanish and allies established a settlement at Santissima Trinidad, building Fort San Salvador on the northwest coast of Taiwan near Keelung in 1626 which they occupied until 1642 when they were driven out by a joint Dutch-Aborigine invasion force. They also built a fort in Tamsui (1628) but had already abandoned it by 1638. The Dutch later erected Fort Anthonio on the site in 1642, which still stands (now part of the Fort San Domingo museum complex). The Dutch East India Company (VOC) administered the island and its predominantly aboriginal population until 1662, setting up a tax system, schools to teach romanized script of aboriginal languages and evangelizing. Although its control was mainly limited to the western plain of the island, the Dutch systems were adopted by succeeding occupiers. The first influx of migrants from coastal Fujian came during the Dutch period, in which merchants and traders from the mainland Chinese coast sought to purchase hunting licenses from the Dutch or hide out in aboriginal villages to escape the Qing authorities. Most of the immigrants were young single males who were discouraged from staying on the island often referred to by Han as "The Gate of Hell" for its reputation in taking the lives of sailors and explorers.
The Dutch originally sought to use their castle Zeelandia at Tayowan as a trading base between Japan and China, but soon realized the potential of the huge deer populations that roamed in herds of thousands along the alluvial plains of Taiwan's western regions. Deer were in high demand by the Japanese who were willing to pay top dollar for use of the hides in samurai armor. Other parts of the deer were sold to Han traders for meat and medical use. The Dutch paid aborigines for the deer brought to them and tried to manage the deer stocks to keep up with demand. The Dutch also employed Han to farm sugarcane and rice for export, some of these rice and sugarcane reached as far as the markets of Persia. Unfortunately the deer the aborigines had relied on for their livelihoods began to disappear forcing the aborigines to adopt new means of survival. The Dutch built a second administrative castle on the main island of Taiwan in 1633 and set out to earnestly turn Taiwan into a Dutch colony. The first order of business was to punish villages that had violently opposed the Dutch and unite the aborigines in allegiance with the VOC. The first punitive expedition was against the villages of Baccloan and Mattauw, north of Saccam near Tayowan. The Mattauw campaign had been easier than expected and the tribe submitted after having their village razed by fire. The campaign also served as a threat to other villages from Tirossen (modern Chiayi) to Lonkjiaow (Heng Chun). The 1636 punitive attack on Lamay Island (Hsiao Liuchiu) in response to the killing of the shipwrecked crew of the Beverwijck and the Golden Lion ended ten years later with the entire aboriginal population of 1100 removed from the island including 327 Lamayans killed in a cave, having been trapped there by the Dutch and suffocated in the fumes and smoke pumped into the cave by the Dutch and their allied aborigines from Saccam, Soulang and Pangsoya. The men were forced into slavery in Batavia (Java) and the women and children became servants and wives for the Dutch officers. The events on Lamay changed the course of Dutch rule to work closer with allied aborigines, though there remained plans to depopulate the outlying islands.
Koxinga was born to Zheng Zhilong, a Chinese merchant and pirate, and Tagawa Matsu, a Japanese woman, in 1624 in Hirado, Nagasaki Prefecture, Japan. He was raised there until seven and moved to Quanzhou, in the Fujian province of China. In a family made wealthy from shipping and piracy, Koxinga inherited his father's trade networks, which stretched from Nagasaki to Macao. Following the Manchu advance on Fujian, Koxinga retreated from his stronghold in Amoy (Xiamen) and besieged Taiwan in the hope of establishing a strategic base to marshal his troops to retake his base at Amoy. In 1662, following a nine month siege, Koxinga captured the Dutch fortress Zeelandia and Taiwan became his base (see Kingdom of Tungning). Concurrently the last Ming pretender had been captured and killed by General Wu Sangui, extinguishing any hope Koxinga may have had of re-establishing the Ming Empire. He died four months thereafter in a fit of madness after learning of the cruel killings of his father and brother at the hands of the Manchus. Other accounts are more simple, attributing Koxinga's death to a case of malaria.
Despite the expense of the military and diplomatic campaign that brought Taiwan into the imperial realm, the general sentiment in Beijing was ambivalent. The point of the campaign had been to destroy the Zheng-family regime, not to conquer the island. Qing Emperor Kangxi expressed the sentiment that Taiwan was "the size of a pellet; taking it is no gain; not taking it is no loss" (彈丸之地。得之無所加，不得無所損). His ministers counseled that the island was "a ball of mud beyond the sea, adding nothing to the breadth of China" (海外泥丸，不足為中國加廣), and advocated removing all the Chinese to mainland China and abandoning the island. It was only the campaigning of admiral Shi Lang and other supporters that convinced the Emperor not to abandon Taiwan. Koxinga's followers were forced to depart from Taiwan to the more unpleasant parts of Qing controlled land. By 1682 there were only 7000 Chinese left on Taiwan as they had intermarried with aboriginal women and had property in Taiwan. The Koxinga reign had continued the tax systems of the Dutch, established schools and religious temples.
The Qing authorities tried to limit immigration to Taiwan and barred families from traveling to Taiwan to ensure the immigrants would return to their families and ancestral graves. Illegal immigration continued, but many of the men had few prospects in war weary Fujian and thus married locally, resulting in the idiom "Chinese grandfather no Chinese grandmother" (有唐山公無唐山媽). The Qing tried to protect aboriginal land claims, but also sought to turn them into tax paying subjects. Chinese and tax paying aborigines were barred from entering the wilderness which covered most of the island for the fear of raising the ire of the non taxpaying, highland aborigines and inciting rebellion. A border was constructed along the western plain, built using pits and mounds of earth, called "earth cows", to discourage illegal land reclamation.
From 1683 to around 1760, the Qing government limited immigration to Taiwan. Such restriction was relaxed following the 1760s and by 1811 there were more than two million Chinese immigrants on Taiwan. In 1875 the Taipei government (台北府) was established, under the jurisdiction of Fujian province. Also, there had been various conflicts between Chinese immigrants. Most conflicts were between Han from Fujian and Han from Guangdong, between people from different areas of Fujian, between Han and Hakka settlers, or simply between people of different surnames engaged in clan feuds. Because of the strong provincial loyalties held by these immigrants, the Qing government felt Taiwan was somewhat difficult to govern. Taiwan was also plagued from foreign invasions. In 1840 Keelung was invaded by the British in the Opium War, in 1884 the French invaded as a part of the Sino-French War. Because of these incursions, the Qing government began constructing a series of coastal defense and on 12 October 1885 Taiwan was made a province, with Liu Mingchuan serving as the first governor. He divided Taiwan into eleven counties and tried to improve relations with the aborigines. He also developed a railway from Taipei to Hsinchu, established a mine in Keelung, and built an arsenal to improve Taiwan's defensive capability against foreigners.
Following a shipwreck of a Ryūkyūan vessel on the southeastern tip of Taiwan in winter of 1871, in which the heads of 54 crew members were taken by the aboriginal Taiwanese Paiwan people in Mutan village (牡丹社), the Japanese sought to use this incident as a pretext to formally annex the Ryūkyū Kingdom as a Japanese prefecture and expand into Taiwan. According to records from Japanese documents, Mao Changxi (毛昶熙) and Dong Xun (董恂), the Chinese (Qing) ministers at Zongli Yamen (總理衙門) who handled the complaints from Japanese envoy Yanagihara Sakimitsu (柳原前光) replied first that they had heard only of a massacre of Ryūkyūans, not of Japanese, and quickly noted that Ryūkyū was under Chinese suzerainty, therefore this issue was not Japan's business. In addition, the governor-general of the Qing province Fujian had rescued the survivors of the massacre and returned them safely to Ryūkyū. The Qing authorities explained that there were two kinds of aborigines on Taiwan: those governed by the Qing, and those unnaturalized "raw barbarians... beyond the reach of Qing government and customs." They indirectly hinted that foreigners traveling in those areas settled by indigenous people must exercise caution. After the Yanagihara-Yamen interview, the Japanese said that the Qing government had not opposed Japan's claims to sovereignty over the Ryūkyū Islands, disclaimed any jurisdiction over Aboriginal Taiwanese, and had indeed consented to Japan's expedition to Taiwan; however, these claims were unfounded. The Qing Dynasty made it clear to the Japanese that Taiwan was definitely within Qing jurisdiction, even though part of that island's aboriginal population was not yet under the influence of Chinese culture. The Qing also pointed to similar cases all over the world where an aboriginal population within a national boundary was not under the influence of the dominant culture of that country.
The Japanese nevertheless launched an expedition with a force of 2000 soldiers in 1874. The number of casualties for the Paiwan was about 30, and that for the Japanese was 543 (12 Japanese soldiers were killed in battle and 531 by disease). Eventually, the Japanese withdrew as about Qing Dynasty sent 3 divisions of forces (9000 soldiers) to reinforce Taiwan. The Okinawan affair was more of a trial balloon sent up by the Japanese to test the situation on Taiwan for a possible colonization campaign of their own. This caused the Qing to re-think the importance of Taiwan in their maritime defense strategy and greater importance was placed on gaining control over the wilderness regions.
On the eve of the Sino-Japanese War about 45 percent of the island was administered under direct Qing administration while the remaining was lightly populated by Aborigines. In a population of around 2.5 million, about 2.3 million were Han and the remaining two hundred thousand were classified as members of various indigenous tribes.
As part of the settlement for losing the Sino-Japanese War, The Qing empire ceded the island of Taiwan and the Pescadores to Japan on 17 April 1895, according to the terms of the Treaty of Shimonoseki. The loss of Taiwan would become a rallying point for the Chinese nationalist movement in the years that followed. At this point in history, because the vast majority of people on Taiwan had roots in mainland China, brought Chinese culture and custom, people in Taiwan regarded themselves as Chinese.
Japan had sought to claim sovereignty over Taiwan (known to them as Takasago Koku) since 1592, when Toyotomi Hideyoshi undertook a policy of overseas expansion and extending Japanese influence southward, to the west, was invaded and an attempt to invade Taiwan and subsequent invasion attempts were to be unsuccessful due mainly to disease and attacks by aborigines on the island. In 1609, the Tokugawa Shogunate sent Haruno Arima on an exploratory mission of the island. In 1616, Murayama Toan led an unsuccessful invasion of the island. The Mudan Incident of 1871 occurred when an Okinawan vessel shipwrecked on the southern tip of Taiwan and the crew of 54 were beheaded by Paiwan Aborigines. When Japan sought compensation from Qing China, the court rejected compensation on the account that they didn't have jurisdiction over the island. This was to lead to Japan testing the situation for colonizing the island and in 1874 an expedition force of 3,000 (or 2,000) troops were sent to the island, but were not able to take it. It was not until the defeat of the Chinese navy during the First Sino-Japanese War in 1894-95 was Japan to finally realize possession of Taiwan and the shifting of Asian dominance from China to Japan. The Treaty of Shimonoseki was signed on 17 April 1895, ceding Taiwan and the Pescadores over to Japan, which would rule the island for 50 years until its defeat in World War II.
After receiving sovereignty of Taiwan, the Japanese feared military resistance from both Taiwanese and Aborigines who followed the establishment by the local elite of the short-lived Republic of Formosa. Taiwan's elite hoped that by declaring themselves a republic the world would not stand by and allow a sovereign state to be invaded by the Japanese, thereby allying with the Qing. The plan quickly turned to chaos as standard Green troops and ethnic Yue soldiers took to looting and pillage. Given the choice between chaos at the hands of Chinese or submission to the Japanese, the Taipei elite sent Koo Hsien-jung to Keelung to invite the advancing Japanese forces to proceed to Taipei and restore order.
Armed resistance was sporadic, yet at times fierce, but was largely crushed by 1902, although relatively minor rebellions occurred in subsequent years, including the Ta-pa-ni incident of 1915 in Tainan county. Nonviolent means of resistance began to take place of armed rebellions and the most prominent organization was the Taiwanese Cultural Association (台灣文化協會), founded in 1921. Taiwanese resistance was caused by several different factors. Some were goaded by Chinese nationalism, while others contained nascent Taiwanese self-determination. Rebellions were often caused by a combination of the effects of unequal colonial policies on local elites and extant millenarian beliefs of the local Taiwanese and plains Aborigines. Aboriginal resistance to the heavy-handed Japanese policies of acculturation and pacification lasted up until the early 1930s. The last major Aboriginal rebellion, the Musha Uprising (Wushe Uprising) in late 1930 by the Atayal people angry over their treatment while laboring in the burdensome job of camphor extraction, launched the last headhunting party in which over 150 Japanese officials were killed and beheaded during the opening ceremonies of a school. The uprising, led by Mona Rudao, was crushed by 2,000-3,000 Japanese troops and Aboriginal auxiliaries with the help of poison gas.
Japanese colonization of the island fell under three stages. It began with an oppressive period of crackdown and paternalistic rule, then a dōka (同化) period of aims to treat all people (races) alike proclaimed by Taiwanese Nationalists who were inspired by the Self-Determination of Nations (民族自決) proposed by Woodrow Wilson after World War I, and finally, during World War II, a period of kōminka (皇民化), a policy which aimed to turn Taiwanese into loyal subjects of the Japanese emperor.
Reaction to Japanese rule among the Taiwanese populace differed. Some felt that the safety of personal life and property was of utmost importance and went along with the Japanese colonial authorities. The second group of Taiwanese were eager to become imperial subjects, believing that such action would lead to equal status with Japanese nationals. The third group was influenced Taiwan independence and tried to get rid of the Japanese colonials to establish a native Taiwanese rule. The fourth group on the other hand were influenced by Chinese nationalism and fought for the return of Taiwan to Chinese rule. From 1897 onwards the latter group staged many rebellions, the most famous one being led by Luo Fuxing (羅福星), who was arrested and executed along with two hundred of his comrades in 1913. Luo himself was a member of the Tongmenghui, an organization founded by Sun Yat-sen and was the precursor to the Kuomintang.
Initial infrastructural development took place quickly. The Bank of Taiwan was established in 1899 to encourage Japanese private sectors, including Mitsubishi and the Mitsui Group, to invest in Taiwan. In 1900, the third Taiwan Governor-General passed a budget which initiated the building of Taiwan's railroad system from Kiro (Keelung) to Takao (Kaohsiung). By 1905 the island had electric power supplied by water power in Sun-Moon Lake, and in subsequent years Taiwan was considered the second-most developed region of East Asia (after Japan). By 1905, Taiwan was financially self-sufficient and had been weaned off of subsidies from Japan's central government.
Under the governor Shimpei Goto's rule, many major public works projects were completed. The Taiwan rail system connecting the south and the north and the modernizations of Kiro (Keelung) and Takao (Kaohsiung) ports were completed to facilitate transport and shipping of raw material and agricultural products. Exports increased by fourfold. 55% of agricultural land was covered by dam-supported irrigation systems. Food production had increased fourfold and sugar cane production had increased 15-fold between 1895 to 1925 and Taiwan became a major foodbasket serving Japan's industrial economy. The health care system was widely established and infectious diseases were almost completely eradicated. The average lifespan for a Taiwanese resident would become 60 years by 1945.
In October 1935, the Governor-General of Taiwan held an "Exposition to Commemorate the 40th Anniversary of the Beginning of Administration in Taiwan," which served as a showcase for the achievements of Taiwan's modernization process under Japanese rule. This attracted worldwide attention, including the Republic of China's KMT regime which sent the Japanese-educated Chen Yi to attend the affair. He expressed his admiration about the efficiency of Japanese government in developing Taiwan, and commented on how lucky the Taiwanese were to live under such effective administration. Somewhat ironically, Chen Yi would later become the ROC's first Chief Executive of Taiwan, who would be infamous for the corruption that occurred under his watch.
The later period of Japanese rule saw a local elite educated and organized. During the 1930s several home rule groups were created at a time when others around the world sought to end colonialism. In 1935, the Taiwanese elected their first group of local legislators. By March 1945, the Japanese legislative branch hastily modified election laws to allow Taiwanese representation in the Japanese Diet.
As Japan embarked on full-scale war in China in 1937, it expanded Taiwan's industrial capacity to manufacture war material. By 1939, industrial production had exceeded agricultural production in Taiwan. At the same time, the "kominka" imperialization project was put under way to instill the "Japanese Spirit" in Taiwanese residents, and ensure the Taiwanese would remain loyal subjects of the Japanese Emperor ready to make sacrifices during wartime. Measures including Japanese-language education, the option of adopting Japanese names, and the worship of Japanese religion were instituted. In 1943, 94% of the children received 6-year compulsory education. From 1937 to 1945, 126,750 Taiwanese joined and served in the military of the Japanese Empire, while a further 80,433 were conscripted between 1942 to 1945. Of the sum total, 30,304, or 15%, died in Japan's war in Asia.
'Taiwan played a significant part in the system of Japanese prisoner of war camps that extended across South-East Asia between 1942 and 1945.' Allied POW's, as well as 'women and children as young as seven or eight years old,' were brutally enslaved at various locations like at the copper mine northwest of Kiro (now Keelung), sadistically supervised by Taiwanese and Japanese. '...it was found that, while the Japanese were invariably proud to give their name and rank, Taiwanese soldiers and 'hanchos' invariably concealed their names...some Taiwanese citizens...were willing participants in war crimes of various degrees of infamy...young males were to an extent highly nipponized; in fact a proportion in the 1930s are reported to have been actively hoping for a Japanese victory in China...One of the most tragic events of the whole Pacific war took place in Takao (now Kaohsiung). This was the bombing of the prison ship Enoura Maru in Takao (now Kaohsiung) harbour on January 9th 1945.'
The Imperial Japanese Navy operated heavily out of Taiwan. The "South Strike Group" was based out of the Taihoku Imperial University (now National Taiwan University) in Taiwan. Many of the Japanese forces participating in the Aerial Battle of Taiwan-Okinawa were based in Taiwan. Important Japanese military bases and industrial centers throughout Taiwan, like Takao (now Kaohsiung), were targets of heavy American bombing.
In 1942, after the United States entered in war against Japan and on the side of China, the Chinese government under the KMT renounced all treaties signed with Japan before that date and made Taiwan's return to China (as with Manchuria) one of the wartime objectives. In the Cairo Conference of 1943, the Allied Powers declared the return of Taiwan to China as one of several Allied demands. In 1945, Japan unconditionally surrendered and ended its rule in Taiwan.
The Republic of China proclaimed October 25, 1945 as "Taiwan Retrocession Day." This is the day in which the Japanese troops surrendered. The validity of the proclamation is subject to some debate, with some supporters of Taiwan independence arguing that it is invalid, and that the date only marks the beginning of military occupation that persists to the present. During the immediate postwar period, the Kuomintang (KMT) administration on Taiwan was repressive and extremely corrupt compared with the previous Japanese rule, leading to local discontent. Anti-mainlander violence flared on February 28, 1947, prompted by an incident in which a cigarette seller was injured and a passerby was indiscriminately shot dead by Nationalist authorities. During the ensuing crackdown by the KMT administration in what became known as the 228 incident, hundreds or thousands of people were killed, and the incident became a taboo topic of discussion for the entire martial law era.
From the 1930s onward a civil war was underway in mainland China between Chiang Kai-shek's ROC government and the Communist Party of China led by Mao Zedong. When the civil war ended in 1949, 2 million refugees, predominantly from the Nationalist government, military, and business community, fled to Taiwan. On October 1, 1949 the People's Republic of China (P.R.C.) was founded in mainland China by the victorious communists; several months before, Chiang Kai-shek had established a provisional ROC capital in Taipei and moved his government there from Nanjing. Under Nationalist rule, the mainlanders dominated the government and civil services.
Chiang Kai-shek died, in April 1975, and was succeeded to the presidency by Yen Chia-kan while his son Chiang Ching-kuo succeeded to the leadership of the Kuomintang (opting to take the title "Chairman" rather than the elder Chiang's title of "Director-General"). He set the stage that led to incredible economic successes of the territories starting in the mid 1980's. In 1987, Chiang ended martial law and allowed family visits to mainland China. His administration saw a gradual loosening of political controls and opponents of the Nationalists were no longer forbidden to hold meetings or publish papers. Opposition political parties, though still illegal, were allowed to form. When the Democratic Progressive Party was established in 1986, President Chiang decided against dissolving the group or persecuting its leaders, but its candidates officially ran in elections as independents in the Tangwai movement.
In an effort of bringing more Taiwan-born citizens into government services, Chiang Ching-kuo hand-picked Lee Teng-hui as vice-president of the Republic of China, first-in-the-line of succession to the presidency. However, it is unclear whether he was in favor of having Lee succeeding him as Chairman of the Nationalist Party.
In the immediate aftermath of World War II, post-war economic conditions compounded with the then-ongoing Chinese Civil War caused severe inflation across mainland China and in Taiwan, made worse by disastrous currency reforms and corruption. This gave way to the reconstruction process and new reforms.
The KMT took control of Taiwan's monopolies that had been owned by the Japanese during colonial period. Approximately 91% of Taiwan's GNP was nationalized. Also, Taiwanese investors lost their claim to the Japanese bond certificates they possessed. These real estate holdings as well as American aid such as the China Aid Act and the Chinese-American Joint Commission on Rural Reconstruction helped to ensure that Taiwan would recover quickly from war. The Kuomintang government also moved the entire gold reserve from the Chinese mainland to Taiwan, and used this reserve to back the newly-issued New Taiwan Dollar to stabilize the new currency and put a stop to hyperinflation.
The KMT authorities implemented a far-reaching and highly successful land reform program on Taiwan during the 1950s. The 375 Rent Reduction Act alleviated tax burden on peasants and another act redistributed land among small farmers and compensated large landowners with commodities certificates and stock in state-owned industries. Although this left some large landowners impoverished, others turned their compensation into capital and started commercial and industrial enterprises. These entrepreneurs were to become Taiwan's first industrial capitalists. Together with businessmen who fled from mainland China, they once again revived Taiwan's prosperity previously ceased along with Japanese withdrawal and managed Taiwan's transition from an agricultural to a commercial, industrial economy.
From 1950 to 1965, Taiwan received a total of $1.5 billion in economic aid and $2.4 billion in military aid from the United States. In 1965 all American aid ceased when Taiwan had established a solid financial base. Having accomplished that, the government then adopted policies for building a strong export-driven economy, with state projects such as the Ten Major Construction Projects that provided the infrastructure required for such ventures. Taiwan has developed steadily into a major international trading power with more than $218 billion in two-way trade and one of the highest foreign exchange reserves in the world. Tremendous prosperity on the island was accompanied by economic and social stability. Taiwan's phenomenal economic development earned it a spot as one of the Four Asian Tigers.
The late 1970s and early 1980s were a turbulent time for Taiwanese as many of the people who had originally been oppressed and left behind by economic changes became members of the Taiwan's new middle class. Free enterprise had allowed native Taiwanese to gain a powerful bargaining chip in their demands for respect for their basic human rights. The Kaohsiung Incident would be a major turning point for democracy in Taiwan.
Taiwan also faced setbacks in the international sphere. In 1971, the ROC government walked out of the United Nations shortly before it recognized the PRC government in Beijing as the legitimate holder of China's seat in the United Nations. The ROC had been offered dual representation, but Chiang Kai-shek demanded to retain a seat on the UN Security Council, which was not acceptable to the PRC. Chiang expressed his decision in his famous "the sky is not big enough for two suns" speech. In October 1971, Resolution 2758 was passed by the UN General Assembly and "the representatives of Chiang Kai-shek" (and thus the ROC) were expelled from the UN and replaced as "China" by the PRC. In 1979, the United States switched recognition from Taipei to Beijing.
Chiang Kai-shek was succeeded by his son Chiang Ching-kuo. When the younger Chiang came to power he began to liberalize the system. In 1986, the Democratic Progressive Party was formed. This organization was formed illegally, and inaugurated as the first party in opposition to Taiwan. This was formed to counter the KMT. Martial law was lifted one year later by Chiang Ching-kuo. Chiang selected Lee Teng-hui, a Taiwanese born technocrat to be his Vice President. The move followed other reforms giving more power to Taiwanese born citizens and calmed anti-KMT sentiments during a period in which many other Asian autocracies were being shaken by People Power movements.
Chiang Ching-kou died in 1988. Chiang Ching-Kuo successor as President Lee Teng-hui continued to hand more government authority over to Taiwanese born citizens. He also began to democratize the government. Taiwan underwent a process of localization, under Lee. In this localization process local culture and history was promoted over a pan-China viewpoint. Lee's reforms included printing banknotes from the Central Bank instead of the usual Provincial Bank of Taiwan, and he also largely suspended the operation of the Taiwan Provincial Government.In 1991 the Legislative Yuan and National Assembly elected in 1947 were forced to resign. This groups was originally created to represent mainland China constituencies. Also lifted were the restrictions on the use of Taiwanese languages in the broadcast media and in schools.
However, Lee failed to crack down on the massive corruption that developed under authoritarian KMT party rule. Many KMT loyalists feel Lee betrayed the ROC by taking reforms too far, while other Taiwanese feel he did not take reforms far enough.
Lee ran as the incumbent in Taiwan's first direct presidential election in 1996 against DPP candidate and former dissident, Peng Min-ming. This election prompted the PRC to conduct a series of missile tests in the Taiwan Strait to intimidate the Taiwanese electorate so that electorates would vote for other pro-unification candidates, Chen Li-an and Lin Yang-kang. The aggressive tactic prompted U.S. President Clinton to invoke the Taiwan Relations Act and dispatch two aircraft carrier battle groups into the region off Taiwan's southern coast to monitor the situation, and PRC's missile tests were forced to end earlier than planned. This incident is known as the 1996 Taiwan Straits Crisis.
One of Lee's final acts as president was to declare on German radio that the ROC and the PRC have a special state to state relationship. Lee's statement was met with the PRC's People's Army conducting military drills in Fujian and a frightening island-wide blackout in Taiwan, causing many to fear an attack.
In 2004, President Chen was re-elected to a second four year term after an apparent assassination attempt which occurred the day before the election. Two shots were fired, one grazing the President's belly, the other grazing the vice president's knee. Police investigators have said that the most likely suspect is believed to have been Chen Yi-hsiung, but Pan-Blue supporters have argued that the attack was staged in order to gain sympathy votes.
In 2007, President Chen proposed a policy of Four Wants and One Without, which in substances states that Taiwan wants independence; Taiwan wants the rectification of its name; Taiwan wants a new constitution; Taiwan wants development; and Taiwanese politics is without the question of left or right, but only the question of unification or independence. The reception of this proposed policy in Taiwanese general public was unclear. It, however, was met with a cold reception by both the PRC and the United States. The PRC Foreign Minister emphasised that the Anti-Secession Law was not a piece of unenforceable legislation, while the US Department of State spokesman Sean McCormack described Chen's policy as "unhelpful".
The KMT retook the office of president when Ma Ying-jeou was elected in March 2008. The party also retained control of the legislature.