In the Treaty of Shimoneseki, signed at the end of the Sino-Japanese war in 1895, Japan wins control of the island of Taiwan in perpetuity. For the next 50 years Japan develops a strong infrastructure of transportation, education, and industry in Taiwan, while compelling citizens to adopt Japanese language and customs.
At the Cairo Conference, Chinese Nationalist leader Chiang Kai-shek lays claim to Taiwan in the postwar world. Allied powers assent to the plan, and the Cairo Declaration is signed without any input from the Taiwanese people.
At war's end China and Japan sign an agreement allowing Chinese troops to "temporarily occupy Taiwan on behalf of the Allied forces." Mainlanders begin to pour into Taiwan. There is initial mistrust on both sides: Mainland Chinese seem poor and undisciplined, while the people in Taiwan dress, speak, and act like the Japanese.
Nationalist leaders from mainland China quickly and brutally take over Taiwan. Tensions erupt in the February 28 Incident of 1947, as leading students, lawyers, and doctors are rounded up and executed. Nearly 20,000 people are arrested, imprisoned, tortured, and killed. Thousands more will be rounded up and killed in the ensuing "White Terror," which lasts all year.
Nearly two million refugees from mainland China flood Taiwan, which becomes the base of Nationalist government. The Nationalists place the island under martial law while making plans to retake China in five years. Overpopulated, with few natural resources and a discredited government, many consider Taiwan an economic basket case.
With the onset of the Korean War, the survival of "Free China" becomes important to American strategic interests. The U.S. Navy arrives to patrol the Taiwan Strait. More than $4 billion in aid floods into Taiwan. Land-reform projects place land into the hands of those who till it, making the agricultural sector efficient and productive.
In 1954 China shells Quemoy and Matsu, two small islands near mainland China but held by Taiwan. Both sides prepare for war. The United States and Taiwan sign a Mutual Defense Treaty, in which America commits itself to the defense of Taiwan. Matador missiles are delivered in 1957. Intelligence agreements make Taiwan a major base for U.S. information-gathering on mainland China.
Factories are set up or expanded as Taiwan enters its industrial era. Key industries include textiles and sporting goods. An "economic miracle" is fueled by factors that include foreign capital and trade, strong business-government cooperation, low taxes, planners who believe in a free market economy, and a high savings rate. American aid ends in 1964.
To stem Taiwan's significant brain drain, six graduate research centers in the fields of mathematics, physics, engineering, chemistry, biology, and agriculture are established. Expatriate Taiwanese are recruited to staff these institutions.
Industrial focus shifts from textiles to high-technology products like electronics and telecommunications. President Chiang Kai-shek dies in 1975 and is succeeded by his son, Chiang Ching-kuo. The increasingly isolated government initiates the process of "Taiwanization," looking inward instead of outward for support.
Taiwan is the most industrialized nation in East Asia, second only to Japan. Many nations break diplomatic ties to recognize Beijing, but maintain economic ties. The U.S. transfers its embassy to China in 1979 and cancels the defense treaty of 1954. Heightened internal security leads to the Kaohsiung Incident, a brutal repression of human rights marches that sparks an underground opposition party.
As diplomatic ties with the United States end, economic and cultural ties increase. McDonald's restaurants open in 1984, followed closely by American music and baseball. Educational and cultural exchanges between the Taiwanese capital Taipei and Washington increase.
In September 1986 the Democratic Progressive Party, previously operating underground, is officially recognized. Martial law is lifted in July 1987, and the following January new political parties and a free press begin to operate. Chiang Ching-kuo dies in January 1988.
By 1991 the Nationalist claim to rule all of China is officially dropped. Aging Nationalist legislators, elected on the mainland in 1947, are finally sent into retirement. Taiwan invests heavily in projects to strengthen bilateral ties with the United States, such as the Taiwan Chinese Information and Culture Center in New York City.
Competing impulses govern Taiwan's self-image and its views of the world. Its wealth seems to assure it a place in the international community, but China's rising international influence keeps it vulnerable and uncertain about its future, even as Taiwan's economic ties with China increase.
Taiwan holds its first-ever national elections. Nationalist Lee Teng-hui is elected to continue, the first native Taiwanese president. Beijing deploys 150,000 troops to a coastal area near Taiwan and begins a series of missile tests aimed at intimidating separatist movements. American aircraft carriers arrive and prevent further escalation of crisis.
Political and social life grow more open. When President Chen Shui-bian is sworn in to office in May 2000, it marks the end of the Nationalist Party's 50-year rule. The next year Taiwan joins the World Trade Organization, along with China. Trade ties between the two grow despite periodic political standoffs. The global economic slowdown hits export-dependent Taiwan with recession.
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