Taiwan is bounded to the north by the East China Sea, which separates it from the Ryukyu Islands, Okinawa, and mainland Japan; to the east by the Pacific Ocean; to the south by the Bashi Channel, which separates it from the Philippines; and to the west by the Taiwan (Formosa) Strait, which separates it from the China mainland.

The coastline on the west is simple and straight, bordered with low sand dunes and lagoons. Deepwater ports are situated at Chi-lung (Keelung), at the northern tip of the island, and at Kao-hsiung, on the southwestern coast.

The crest of the Chung-yang Shan-mo (Chung-yang Range) (Central Range) lies east of and parallel to the island's axis. Scores of peaks rise to about 10,000 feet, the highest being Yü Shan (13,113 feet 【3,997 metres】) in the south-central part of the island. Around the mountainous area are numerous independent hills with an average height of 5,000 feet.

The rivers, nearly all of which rise in the Chung-yang Shan-mo, are short and subject to extreme seasonal variations in flow. Lacking steady currents, most rivers are unreliable for irrigation or hydroelectric power generation. Late-summer typhoons, however, bring torrential rains that are liable to cause floods, especially in the plains, necessitating an extensive system of dikes. The principal rivers are the Tan-shui Ho in the northwest, the Cho-shui Hsi, in the west, and the Kao-p'ing Hsi in the south. Alluvial soil on the plains and in the valleys covers about one-fourth of the island and is its chief resource. The upland soils, subject to drastic erosion, are leached, acid, and infertile.

Taiwan straddles the tropical and subtropical zones and has warm summers and mild winters. The climate is moderated by the warm waters of the Kuroshio (Japan Current). The summer is long, lasting from April until November (200 days or more). In cold months the mean monthly temperature is about 59 °F (about 15 °C). Beginning with April, the mean monthly temperature is above 68 °F (20 °C). The highest mean monthly temperature, 86 °F (30 °C), is reached from June to September. Lowland Taiwan is frost-free while the central mountains are covered with snow in winter.

Mean annual precipitation is 102 inches (2,580 millimetres), although in some years the precipitation in summer alone may exceed 200 inches in some parts of the islands. The upland area receives more rain than the lowlands, and the east receives more than the west. In addition, rainfall is heavier in the north, where winters are drizzly, than in the south, where winters are sunny. Most typhoons and, therefore, most precipitation are concentrated in the months of July, August, and September.

There are green plants on the plains all the year round, and more than half of Taiwan is covered by forests. As the climate varies with elevation, so does the natural vegetation. Stands of mixed bamboo, palm, and tropical evergreen grow in the lowlands; subtropical evergreen forests, including camphor laurel, are found from 2,000 to 6,000 feet; broad-leaved evergreen forests of the temperate zone are represented by cedars, cypress, junipers, rhododendrons, maples, and cryptomeria (Japanese cedar) from 6,000 to 8,000 feet; and coniferous forests are found above 7,500 feet.

Animal life, similar to that of the southern Chinese mainland, includes deer, wild boars, bears, monkeys, goats, wildcats, and panthers. Birds include pheasant, geese, flycatchers, kingfishers, larks, and many other species. Fish abound in the coastal areas.

Urbanization was the dominant settlement pattern of the 20th century. There has been a noticeable migration from rural areas to towns, especially since mid-century, when the urban population increased from less than half to more than three-fourths of the total population. Three major urban areas have developed: Taipei and its port of Chi-lung in the north and the two port cities of Kao-hsiun in the south and Tʾai-chung in the west.

The original inhabitants of Taiwan were Malayo-Polynesian aborigines. Taiwan's indigenous peoples have historically been referred to in terms of their language groups, the largest of which are the Ami, Atayal, and Paiwan. Chinese immigrants largely displaced or assimilated the plains aborigines and carried on a protracted conflict with the mountain aborigines, who were subdued only by the Japanese. The aborigines, nearly all of whom now live in the foothills and highlands, constitute about 2 percent of the population. Although several aboriginal dialects and many tribal customs have been retained, the people have increasingly become assimilated, linguistically and culturally, into modern Taiwanese society. Nonetheless, many indigenous groups increased their political activity in the early 21st century, with 14 gaining official recognition as of 2008.

The great majority of the population—those now called Taiwanese—are descendants of the original immigrants from the Chinese provinces of Fukien and Kwangtung. The Hokkien from southern Fukien constitute the largest of the immigrant groups; their dialect of Chinese is often called the Taiwanese dialect. The Hakka, originally from northern Kwangtung, also have a distinct dialect.

The most recent addition to Taiwan's population are the predominantly Mandarin-speaking Nationalist adherents, who came to Taiwan from all parts of China in the late 1940s. These “mainlanders” still compose about 15 percent of the population. Because of their prominence in the Nationalist government, Mandarin has become the principal language of Taiwan.

Numerous religions have been introduced into Taiwan from many parts of the world. The Chinese brought their religions, principally Buddhism and Taoism. In 1622 the Dutch introduced Protestant Christianity; two years later the Spanish brought Roman Catholicism to the island. In addition, Confucianism has immensely influenced the Chinese people of Taiwan in ethics, morality, and academic thinking. Religion, however, is not a divisive factor on Taiwan. The Chinese tend to be eclectic about religion, many practicing a little of several kinds.

The principal religions in Taiwan, in addition to the forms of worship of the aborigines, are Taoism and Buddhism. Christians constitute a small but significant percentage of the population; about three-fifths are Protestant and the rest Roman Catholic. There are also a large number of Muslims, most of whom live in the larger cities.

The population of Taiwan tripled in the first half of the 20th century. From mid-century, however, the rate of growth steadily declined from about 4 percent to less than 2 percent per year. Modern health measures had lowered the death rate, and Nationalist land reform temporarily raised the birthrate by expanding rural opportunities. In response to growing urban opportunities, however, families soon began concentrating more resources on fewer children. In addition, the government actively promoted family planning and birth control.

The family has long been the most important organizing unit in traditional Taiwanese society. Based on the Confucian precepts of filial piety and ancestor worship, the patrilineal extended family performs many of the savings, investment, and production functions of Western corporations and provides many of the social services assumed by Western governments. The family owns property, pools its resources, and diversifies the occupations of its members, thus maximizing the returns and spreading the risks across the multiple branches and generations.

During the 20th century Taiwan's economy has been transformed from agricultural to industrial, and the island's postwar economic development has been one of the most spectacular of any developing country. In constant prices, gross national product increased more than 10 times between the mid-1950s and mid-1980s. The major reason was vigorous export promotion in an expanding global economy. Per capita product and personal income quintupled, while a relatively equal distribution of income became more equitable. The major reasons were the initially broad distribution of ownership of land and capital and the high returns to labour, first in agriculture and later in the export industries. The obligation to increase and repay family resources has motivated the individual Chinese and has produced much of the rapid growth of Taiwan's economy. This growth has proceeded in three phases. The first (c. 1905–55) was the modernization of agriculture and the development of other primary or extractive industries. The second (c. 1935–85) was the development of modern secondary manufacturing industries. The third (since 1965) began the modernization of service industries.

Although more than 50 kinds of minerals have been found in Taiwan, total mineral resources are modest. In the north, copper, gold, iron, sulfur, and pyrite exist in only token amounts. In the east, limestone, marble, and dolomite are abundant, although their exploitation contributes little to the economy. Coal reserves are rapidly becoming exhausted. Petroleum and natural gas exist in small quantities on shore, but the continental shelf may contain extensive reserves, particularly of natural gas. Forests are most abundant in the high mountains, but their inaccessability makes exploitation uneconomical.

Until the mid-20th century Taiwan's best assets were its fertile soils, tropical climate, and large agricultural labour force. Agriculture provided the logical starting point for economic development after World War II. Since about 1970, however, rising agricultural costs have made agricultural exports uncompetitive, and Taiwan has had to rely increasingly on food imports.

One-quarter of Taiwan's total area is arable, and all available land is fully cultivated, including sloping areas, dry riverbeds, and reclaimed tidal lands. The single most important crop is rice, with which more than one-half of the total cultivated area and most of the irrigated portion is planted. More than two-thirds of the paddy fields are double-cropped. The Japanese introduced improved strains of rice, chemical fertilizers, and modern irrigation methods, and the Nationalists continued to modernize rice production. Rice yields per acre have therefore increased dramatically, although this has created an oversupply.

Sugarcane, tea, and fresh bananas, once principal exports, are still important domestically. Other fruits, such as pineapples, litchis, longans, oranges, grapes, and strawberries, abound. Most vegetables—including mushrooms and asparagus, which are canned for export—are produced in the central and southern regions.

With many mountains, Taiwan has abundant timber. Inaccessibility, low quality, and high costs limit production, however, and have made it necessary to import lumber. In addition, overcutting and inadequate reforestation measures have caused erosion and destructive floods.

With the exception of eels and snails, which are high-value exports, fishery production is mostly for domestic consumption. The warm currents off the east coast provide good deep-sea fishing grounds, especially for tuna.

Petroleum has replaced coal as the major energy source. Domestic natural gas also is produced. The quarrying of marble and dolomite is increasing as rail connections are improved. Salt is produced by solar evaporation along the southwestern coast.

Northern Taiwan once produced some coal, but its poor reserves are now exhausted. Heavy rainfall and high mountains hold great hydroelectric potential, but most economical sites have been exploited, and hydropower provides a declining proportion of the energy supply. In the 1960s and '70s the principal growth in energy sources came from thermal electric power generation using imported petroleum. Rising oil costs and national defense needs, however, accelerated the development of nuclear electric power. By the 1980s three nuclear plants accounted for one-third of Taiwan's installed capacity and about one-half of actual generation.

In the 1950s and '60s Taiwan's comparative trade advantage lay in its abundant cheap labour supply. Consequently, labour-intensive light industry predominated, producing such nondurable consumer goods as foodstuffs and textiles, at first largely for domestic consumption but after 1960 increasingly for export. By the 1960s and '70s investment had shifted to more capital-intensive heavy industries turning out consumer durables (appliances, vehicles), producer nondurables (steel, petrochemicals), and producer durables (machinery, ships). Some capital-intensive industries, particularly those run by state firms, have proved unprofitable, but the government maintains them to supply the private sector and to bolster national defense. In the 1970s labour became scarce and wages increased, making Taiwan's labour-intensive exports less competitive. Consequently, both government and private business accelerated efforts to develop skill-intensive high-technology industries such as those producing specialty chemicals, pharmaceuticals, precision instruments, sophisticated electronics, and information-processing systems.

Because of Taiwan's limited resources and intermediate technology, its manufactures long depended heavily on imported materials, equipment, and technology (particularly from Japan and the United States). Moreover, because of the limited domestic market, Taiwan's manufactures also depended heavily on exports (particularly to the United States). Thus until the mid-1980s Taiwan balanced a chronic trade deficit with Japan against a chronic trade surplus with the United States. In the 1980s Taiwan attempted to diversify its trade with Europe and the Third World.

By the late 20th century manufactured goods accounted for more than 95 percent of all exports, led by electronic products and appliances, articles of clothing, footwear, textile yarns and fabrics, toys and sporting goods, and metal products. Imports were highly diversified, consisting of a variety of consumer goods and raw materials, including petroleum and petroleum products, electronic products, nonelectrical machinery, and chemicals.

Since the mid-1970s there has been an accelerating shift from traditional personal services (small shops and restaurants) to modern personal services (department stores and hotels) and modern commercial services (finance and communications). Commerce and services became internationalized as Taiwan handled a larger proportion of its own trade, imported foreign services such as fast food, and exported services such as construction management and computer programming. Nevertheless, most private businesses remained family firms, most of them small. The cultural importance of the family has made Taiwan's economy lean and flexible, but it also has inhibited an increase in the scale and modernization of accounting, finance, advertising, and trade.

Since 1945 the state has played a dominant economic role, although a private sector also has functioned. Since about 1975 private business increasingly charted its own course, often ahead of government initiatives and often in collaboration with foreign firms. Economic development has since acquired much momentum of its own. The government continues, however, to run key industries (electricity, steel, petroleum), construct basic infrastructure (railways, highways, waterways), oversee the financial system (both government and private banks), and initiate the development of new sectors by facilitating the transfer of technology and by disseminating market information.

Taxes in Taiwan include income, legacy, commodity, stamp, stock, farm, land, increment on land value, and business taxes. They are levied according to a progressive rate; people with small incomes pay little tax.

The Chinese Federation of Labour (CFL) is a nationwide organization of industrial and craft unions. Other national labour organizations include those for seamen, railway workers, and postal workers. There are local unions in all factories, transportation and public utility units, and occupational and vocational groups.

The primary internal transport links are the well-developed highway and railway networks, although domestic air travel is also important. The principal roads consist of a highway running around the perimeter of the island; three east–west highways crossing the island in the northern, middle, and southern regions; and a north–south expressway connecting the major west coast cities. Passenger-bus transportation is provided between large cities and small towns throughout the island. Few people own cars, but many have motorcycles. The railway system of Taiwan consists of a trunk line that roughly parallels the north–south expressway and a smaller line along the east side of the island that extends to the southeastern port of T'ai-tung; the construction of a line in the south will complete the encirclement of the island. The major domestic air routes are between Taipei and the larger cities.

External transport links are by sea and air. The international seaports are Chi-lung, Kao-hsiung, T'ai-chung, Su-ao, and Hua-lien. Chi-lung, Kao-hsiung, and T'ai-chung have good facilities for anchoring large ships; Hua-lien has facilities that are somewhat more limited. The Chiang Kai-shek Airport at T'ao-yüan is the facility for international air travel in northern Taiwan. The southern part of the island is served by the international airport at Kao-hsiung.

For centuries Taiwan has been ruled by outsiders—Imperial Chinese bureaucrats, colonial Japanese administrators, and, most recently, Nationalist Party (Kuomintang; KMT) refugees from the Chinese mainland. In 1949, with the success of the communist rebellion in mainland China, the KMT retreated to Taiwan and set up office. For most of the post-World War II period (1945–90), the Nationalist government's claim to rule Taiwan was predicated on its claim to rule all of China, and so-called temporary emergency measures in effect led to the creation of an authoritarian regime in Taiwan based on martial law. By the 1990s, however, the Nationalist party-state had largely shifted its focus to Taiwan, restaffing its leadership with Taiwanese and submitting itself to election, and the government began initiating liberalization measures. Some groups on Taiwan agitated for independence, but such calls were met with considerable opposition from the government of the People's Republic of China (China).

Formally, the KMT applied to postwar Taiwan the constitution they had drawn up in 1947 for all of China. This eclectic document includes elements from traditional China (personnel and investigative councils), from Western parliamentarism (a cabinet and premier approved by the legislative body), and from Western presidentialism (a president elected by a National Assembly). The 1947 constitution permits democracy, guarantees civil liberties, and promotes political participation and cultural development.

The central government also includes five constitutionally mandated councils (yüans): Legislative, Executive, Judicial, Examination, and Control. The Legislative Yuan, the membership structure of which parallels that of the National Assembly, enacts legislation. The Executive Yuan, the cabinet, is headed by a premier, who is appointed by the president but is nominally answerable to the Legislative Yuan. The Judicial Yuan oversees the court system. The Examination Yuan fulfills the functions of a civil service commission, and the Control Yuan oversees government administration.

The constitution also provides for provincial and local administrative institutions. The island of Taiwan and the cities of Taipei and Kao-hsiung have provincial status. At the local level are 16 counties (hsien) and five municipalities (shih), which, according to the constitution, are self-governing. In reality, however, they have had little autonomy from the national government.

In practice, for most of the period since 1949, Taiwan has been ruled by a dictator who led three sectors: an external and internal security apparatus, a quasi-Leninist party, and a technocratic government. The dictator's position as “paramount leader” was the most important, tying together institutional sectors through personal networks. The security sector was the ultimate foundation of the regime, reinforced by a large military budget. The KMT was the arena for promoting personnel and deciding policy. For more than four decades the National Assembly consisted mostly of the same representatives that had been elected on the mainland in 1948, supplemented by minority additions periodically elected by Taiwan. The KMT held regular elections for representatives to the community, local, and provincial offices, but these posts had little power. The government managed the economy with a success that became an example among developing countries and which facilitated Taiwanese acceptance of Nationalist rule.

Beginning in 1986, responding to opposition and public demands, the KMT began allowing increased liberalization of government. The KMT abolished martial law in 1987 and legalized the formation of opposition political parties; opposition candidates, notably those of the Democratic Progressive Party (DPP), began winning seats in the legislature. In 1991 the KMT rescinded the emergency provisions and forced all original mainland national representatives to retire. A National Security Council was created. With the presidential and parliamentary elections of 2000 and 2001, respectively, the DPP became the first party to oust the KMT from the government. In 2008, however, both the presidency and control of the legislature (with more than a two-thirds majority) returned to the KMT.

The military and security forces have had considerable power, particularly during the decades of martial law. The armed forces include the air force, army, navy, combined service force, military police, and garrison force.

Both the Chinese government and the Chinese family have long believed in investing heavily in education, in the postwar period increasingly for girls as well as for boys. In the past, educational opportunities usually were open only to the elite. The Japanese during the early 20th century, when they ruled the island, began to extend primary education to ordinary Taiwanese in an effort to train loyal citizens and literate workers. Taiwan now has one of the best-educated populations in Asia, second only to that of Japan. The preferred educational route is through liberal arts, looking to a career in government, or through professional training at a prestigious university. As postwar economic development gathered momentum, however, both government and families have also recognized the value of commercial and technical education.

Education is compulsory for nine years (six years of primary school and three years of middle school); secondary education includes senior high schools and vocational schools. There are also preschool education and social education, including adult education and special education. There are over 100 institutions of higher education, more than two-thirds of them private. Among the major public ones are the National Taiwan University (founded 1928) at Taipei, National Cheng Kung University (1931) at T'ai-nan, National Chung Hsing University (1961) at T'ai-chung, and National Sun Yat-sen University (1980) at Kao-hsiung.

Modern health practices were instituted early in the 20th century by the Japanese and were further developed by the Nationalist government. The Japanese largely eliminated tropical diseases—which until then had been a principal barrier to development in Taiwan—by installing water- and sewage-treatment plants and by training and equipping medical personnel. Taiwan now has a well-developed hospital system and medical profession. Life expectancy and infant-mortality rates are about the same as in most Western countries.

The overall economic growth and the Chinese custom of families caring for their elderly and unemployed members have kept government welfare spending low, but, because the birth rate is decreasing as the number of elderly is increasing, concern has been growing about the Chinese family's ability to provide social security in the future. The government has thus been instituting social insurance programs covering an increasing percentage of the population.

The rapid growth of Taiwan's large urban centres has resulted in housing shortages, which generally have been met by private developers. The government has built some apartments that have then been sold to the public by means of long-term, low-interest loans. In addition, the government has provided free housing for the poor.

The people of Taiwan enjoy a rich heritage of traditional Chinese culture and a lively fusion of modern Chinese and Western cultures. The government attempts to preserve and revitalize such traditional arts as painting, calligraphy, ceramics, and music by sponsoring concerts, classes, and competitions. The National Palace Museum in Taipei houses an immense collection of ancient Chinese paintings and books, pottery, porcelain, curios, and sculptures. Elements of traditional popular culture include Chinese opera, Taiwanese opera and puppet theatre, and Chinese and aboriginal folk dances. All major mainland regional cuisines are represented, particularly in Taipei.

Beginning in the 1970s, the government gave increasing attention to cultural development, establishing art museums and performance centres in the major cities and libraries and cultural centres in an increasing number of localities. Exhibitions and performances by foreign painters, photographers, musicians, and dancers are frequent. Foreign-trained artists have brought a contemporary touch to their work. International trends in clothing and life-styles quickly reach Taiwan, which makes many fashionable Western-style consumer goods for export. Domestic television has long carried many foreign programs, and liberalization of import restrictions in the 1980s brought an invasion of foreign fast food, cosmetics, and other items. Both traditional Chinese exercises and modern Western sports such as baseball are popular. In addition, several national parks have been created in wilderness areas.

There are about 30 daily newspapers and thousands of periodicals, many of the latter house organs of various organizations. The government sets general guidelines for the political and cultural content of newspapers and periodicals and has powers of confiscation and suspension. There are three television stations and about 30 radio broadcasting companies with more than 180 stations.

Taiwan was known to the Chinese as early as the 3rd century AD, but settlement by the Chinese was not significant until the first quarter of the 17th century after recurrent famines in Fukien Province encouraged emigration of Fukienese from the mainland. Before then the island was a base of operations for Chinese and Japanese pirates. The Portuguese, who first visited the island in 1590 and named it Ilha Formosa (“Beautiful Island”), made several unsuccessful attempts at settlement. The Dutch and Spaniards established more lasting settlements, the Dutch at An-p'ing in southwestern Taiwan in 1624, the Spaniards in 1626 at Chi-lung in the north. Until 1646, when the Dutch seized the Spanish settlements, northern Taiwan was under Spanish domination, the south under Dutch control. The Dutch were expelled in 1661 by Cheng Ch'eng-kung (Zheng Chenggong), a man of mixed Chinese-Japanese parentage and a supporter of the defeated Ming emperors, who used the island as a centre of opposition to the Ch'ing (Manchu) regime.

In 1683, 20 years after Cheng Ch'eng-kung's death, the island fell to the Ch'ing and became part of Fukien Province. Meanwhile, sizable migrations of refugees, Ming supporters, had increased the population to about 200,000. As migrants streamed in from southeastern China, large areas in the north were settled. T'ai-nan (then called T'ai-wan) was the capital. By 1842 the population was estimated at 2,500,000, and both rice and sugar had become important exports to mainland China. In 1858 the Treaty of T'ien-ching (Tientsin) designated two Taiwan ports as treaty ports, T'ai-nan and Tan-shui, the latter a river port, long used as a port of call under the Spanish and Dutch, and downstream from the growing city of Taipei. Tea became an important export crop, and the island's trade centre shifted to the north, particularly to Tan-shui, where British trading companies established their headquarters.

Japan's continued interest in the island was reflected in a Japanese punitive expedition of 1874 ostensibly to protect the lives of Ryukyu fishermen along the island's coasts. The French blockaded the island during the undeclared Sino-French war of 1884–85 and occupied Chi-lung for a short period. In 1886 Taiwan became a separate province of China with a legal capital at T'ai-chung and a temporary capital at Taipei, which became the legal capital in 1894.

In 1895, as a result of the Treaty of Shimonoseki (Shimonoseki, Treaty of) after the Sino-Japanese War, China ceded Taiwan and the Pescadores Islands to Japan, and the Japanese occupied Taipei in June of that year over the violent opposition of the Taiwanese population. For several months a Republic of Taiwan was in existence, but it was overcome by Japanese forces. The Japanese also faced the hostility of the aborigines, some of whom remained uncontrolled until the outbreak of the Pacific war. Taiwan was developed as a supplier of rice and sugar for Japan. Irrigation projects, agricultural extension services, and improvements in transportation and power supplies led to rapid increases in Taiwan's gross domestic product. Japanese policy was oriented toward the Japanization of the Taiwanese; Japanese was the language of instruction in a widespread basic educational system, and even after the end of World War II Japanese remained a lingua franca among the various Chinese dialect groups. In the 1930s Japanese economic policy shifted toward the development of industries based on relatively cheap hydroelectric power. Nevertheless, rice and sugar remained the basis of Taiwan's prewar export trade, almost all of which was directed toward Japan. Imports consisted largely of diverse manufactures from Japan. During World War II, Taiwan was a major staging area for Japan's invasion of Southeast Asia.

Taiwan's history after World War II falls roughly into two periods: one from 1945 to about 1970, when the Nationalist government's position had considerable international support, especially from the United States; and one since 1970, when the major focus of international diplomatic attention shifted to the People's Republic of China (China).

As a result of the Cairo agreement of 1943, Taiwan was turned over to the Chinese Nationalist government on Oct. 25, 1945, after the defeat of Japan. Many Taiwanese welcomed liberation from Japanese control, but much to their chagrin, the Nationalists' objectives toward Taiwan were essentially to maintain Japanese colonial institutions—substituting mainlanders for Japanese—and to exploit the island for rebuilding the war-torn mainland. When in early 1947 the Taiwanese urban middle class protested, the mainlanders massacred thousands of them. Thirty years would pass before a new generation of Taiwanese political leaders emerged and mass Taiwanese resentment subsided.

In 1949–50, following the victories of the Chinese communists on the mainland, a stream of Nationalist troops, government officials, and other refugees poured onto the island. Final defeat for Chiang Kai-shek's Nationalists seemed only a matter of time. Little outside assistance was forthcoming, and the United States, among others, appeared determined to allow the civil war to run its course toward the eventual destruction of the KMT and the incorporation of Taiwan into the People's Republic. The People's Liberation Army, however, placed priority on mopping up holdout Nationalist units on the mainland and on establishing authority in Tibet. And because Beijing (Peking) lacked substantial capability to land its forces on Taiwan or even on such lesser remaining Nationalist-held islands as Quemoy (Quemoy Island) and Matsu (Matsu Island) close by the mainland, there was no immediate prospect of Chiang's final defeat. He survived until the outbreak of the Korean War provided a decisive respite.

When North Korean troops invaded South Korea in June 1950, U.S. Pres. Harry S. Truman, assuming Beijing's complicity in the action from the outset, interposed the U.S. 7th Fleet between Taiwan and the mainland; during the conflict the United States increased its economic and military aid to Taipei. In the first of several major crises over Quemoy and Matsu, following the Korean War, the United States incorporated the Republic of China into its Pacific defense system. A mutual defense treaty signed in December 1954 pledged the United States to the defense of Taiwan and the neighbouring Pescadores Islands.

After the Bandung Conference in April 1955, there was substantial hope that Beijing might limit its tactics to the “peaceful liberation” of Taiwan. During the initial stages of talks that began in August 1955 between the United States and China, it seemed that this hope might be formalized in a treaty mutually renouncing the use or threat of force in the Taiwan area. These talks broke down, however, and by 1958 Beijing had adopted a more militant approach. In August 1958 Beijing resumed an artillery bombardment of Quemoy and issued an ultimatum demanding the surrender of the island's Nationalist garrison, an ultimatum broken by the interposition of U.S. naval power and the behind-the-scenes withdrawal of Soviet support.

U.S. support was important in the consolidation and rejuvenation of the KMT (Nationalist Party) and its governmental organs. There was a dramatic increase in industrial and commercial construction on Taiwan and a significant improvement in communications and educational facilities. The KMT began incorporating members who were younger, better educated, more widely traveled, and much less likely to have been selected because of political connections alone.

In its first two decades on Taiwan, the KMT began to lose some of its original militancy. Memories of defeat provided the basis for much Nationalist solidarity during the 1950s and early '60s, and most officials, at least publicly, believed that their presence on the island would be temporary. As younger mainlanders and Taiwanese rose to positions of authority, however, and as the pain of defeat faded, Taiwan itself became more the focus of attention.

Yet, the strongest voices associated with Chiang and his son and political heir, Chiang Ching-kuo, continued to insist on the inevitability of reconquest of the mainland. The approved scenario held that reconquest would originate in an uprising in China, followed by popular demand for a Nationalist return. The certainty of this view waned over the years, but in the mid-1960s the intensification of the Vietnam War and the upheaval on the mainland during the Cultural Revolution revived the hopes of many in the KMT. Thus, economic modernization, despite its success, was never considered as the main goal. Modernization would provide the necessary basis, it was argued, to build up power and international prestige and to assure support from allies—all required for the eventual counterattack.

The key to external support was the United States, the policy of which was indicated by its position toward the seating question at the United Nations. Until 1970 the United States was able to postpone consideration of resolutions to replace Taipei's representatives with those of Beijing. U.S. firmness at the United Nations and other evidence of U.S. fidelity—as well as the reluctance of many independent countries in Africa and Asia to recognize Beijing—made Chiang's government confident that its international position was reasonably secure.

During the 1960s this spirit of confidence and lessening of tension was reinforced by an increased American demand for Taiwanese goods, which transformed Taiwan from an aid client of the United States to a trading partner. The economic boom also aided the KMT: the growing Taiwanese interest in collective political demands—including a secret separatist movement that was actively suppressed by the KMT—was transformed into a pursuit of individual economic advancement. Chiang Kai-shek began to turn over the supervision of domestic affairs to his son, who became deputy premier in 1969 and premier in 1972; after his father's death in April 1975 he became chairman of the KMT and in 1978 president of Taiwan.

Domestically, the transition in the 1970s from Chiang Kai-shek to Chiang Ching-kuo as president was accompanied by a gradual shift from a more autocratic to a more populist style of authoritarianism. Chiang Ching-kuo's political associates recruited more Taiwanese into higher positions in the KMT and the military, and the President made frequent visits to all parts of Taiwan.

Between 1969 and 1971, U.S. restrictions on trade and travel by Americans to China were eased, and the United States began to explore alternatives to opposing Beijing's representation in the United Nations. Meanwhile, a number of countries severed diplomatic relations with Taipei, and in 1971 Taiwan was ousted from the United Nations and the People's Republic seated. U.S. Pres. Richard M. Nixon (Nixon, Richard M.) visited Beijing in 1972, and the following year the United States established quasi-diplomatic relations with the People's Republic.

For Taipei, the new U.S.–China diplomacy came as a devastating setback. Nationalist officials began to prepare the island for greater international isolation, but a stalemate in U.S.–China relations during the mid-1970s provided a temporary reprieve for the island. That reprieve appeared to be over on Jan. 1, 1979, with U.S. establishment of formal diplomatic relations with the People's Republic of China. In the normalization agreement the United States accepted an end to all official U.S. defense ties with Taiwan and acknowledged the position that there is but one China and that Taiwan is part of China. It thus precluded itself from any future support for an independent Taiwan. Subsequently, however, the U.S. Congress passed the Taiwan Relations Act, authorizing continued social and economic ties with Taiwan. The United States also unilaterally stated that it would continue to sell defensive arms to Taiwan, a move that complicated U.S.–China talks concerning greater defense cooperation.

In the early 1980s the KMT rejected overtures from the People's Republic for negotiations toward eventual reunification. Domestically, financial scandals jolted the KMT, as evidence emerged that rich Taiwanese businessmen wielded influence over KMT officials and could neutralize government regulators. Chiang Ching-kuo opened communications with the Chinese communist mainland and with domestic political opposition in 1985. The opposition formed the Democratic Progressive Party (DPP) in 1986, and in 1987 the KMT lifted martial law, which had been in effect since 1949. The government began permitting visits to the Chinese mainland; scholars, journalists, businesspeople, tourists, and people visiting relatives traveled to the People's Republic.

In January 1988 Chiang Ching-kuo died. His chosen successor, Vice Pres. Lee Teng-hui, became Taiwan's first Taiwanese president. Despite the struggle between conservatives and progressives within the KMT, political democratization continued. Control of the KMT party organization began passing from central party career cadres to local Taiwanese politicians. The DPP suffered internal conflict between moderates aiming to win elections and radicals advocating Taiwanese independence. Nevertheless, a significant minority of the Taiwanese public supported the DPP. Taiwan's legislative and local elections in December 1989 were the first in which parties other than the KMT were allowed to participate.

With the collapse of the Soviet Union and of communist governments in eastern Europe in the early 1990s and the resulting dramatic changes in world diplomacy and the balance of power, Taiwan's relations with the United States improved to some extent. Taiwan asserted its de facto autonomy through a pragmatic diplomacy but also began normalizing relations with the People's Republic of China by establishing organs for managing ongoing economic and social intercourse and for negotiating possible eventual reunification. The advent of political liberalization in Taiwan focused renewed attention on social problems and fostered a cultural renaissance.

Taiwan's economic ties with mainland China grew dramatically after 1990, both in terms of the amount of investment money flowing from Taiwan to the mainland and in overall cross-straits trade; by 2005 the People's Republic had become Taiwan's most important trading partner. However, the rise of the DPP as a political force in Taiwan also led to strained relations with the mainland, which became more pronounced after DPP leader Chen Shui-bian (Ch'en Shui-pian) was elected president of Taiwan in 2000. The DPP also went on to win control of the Legislative Yuan the following year, the first time that the KMT had been fully ousted from power in the government. By 2004, though, the KMT and its allies had regained a majority of legislative seats, and in the 2008 parliamentary elections the party won convincingly over the DPP, garnering nearly three-fourths of the seats. Later that year, the KMT reclaimed full control of the government with the election of party leader Ma Ying-jeou to the presidency.