The US initially abandoned support for the Chinese Nationalists but intervened during the Korean War (June 1950) on Taiwan's behalf.
President Truman dispatched the 7th Fleet into the Taiwan Strait to prevent hostilities between Taiwan and mainland China.
Treaties Affecting Taiwan
Treaty of San Francisco (28 April 1952) and Treaty of Taipei (5 August 1952):
Japan formally renounced all rights, claims, and title to Taiwan and the Penghu Islands.
All treaties signed between Japan and China prior to 1942 were also renounced.
Neither treaty specified to whom sovereignty over the islands should be transferred; there was no consensus between the US and UK on whether the Republic of China (ROC) or the People's Republic of China (PRC) was the legitimate government of China.
Sino-American Mutual Defense Treaty (1954)
Signed on December 2, 1954 (in effect March 1955):
Established military support if one country was attacked.
Its application was limited to the defense of Taiwan and the Pescadores; Kinmen and Matsu were excluded to discourage ROC military actions against the PRC.
Taiwan Strait Crisis (1958)
Crisis Overview:
The PRC shelled Kinmen and Matsu Islands.
The US employed nuclear brinkmanship and reaffirmed its policy of decreasing recognition of the PRC.
US missile bases were set up in countries surrounding China as a preventive measure.
Termination of Defense Treaty and Relations with the PRC
President Jimmy Carter terminated the Sino-American Mutual Defense Treaty upon establishing diplomatic relations with the PRC in 1979.
Taiwan Relations Act (1979):
Defined non-diplomatic relations between the US and Taiwan's governing authorities.
Created de facto diplomatic relations by endowing the American Institute in Taiwan with embassy-like powers.
Emphasized a policy of strategic ambiguity regarding military support for Taiwan in the event of a PRC attack.
Notably, it stated:
“The United States will make available to Taiwan such defense articles and defense services in such quantity as may be necessary to enable Taiwan to maintain a sufficient self-defense capability.”
“Will provide arms of a defensive character.”
PRC viewed the Act as interference in its internal affairs.
Change in Diplomatic Recognition
Most nations shifted diplomatic recognition from the ROC to the PRC.
Political Landscape (1949-1990s):
ROC was a one-party state, with the Kuomintang (KMT) prohibiting the establishment of other political parties.
Political Developments in Taiwan
Opposition Movement:
Times Political Review emerged as an opposition figure, identifying themselves as Tangwai (outside the party).
Kaohsiung Incident (1979):
Demonstration held by Formosa Magazine on human rights; resulted in clashes with police; activists were imprisoned.
This movement laid the groundwork for the Democratic Progressive Party (DPP).
Leadership of Chiang Ching-kuo
Chiang Ching-kuo (1978-1988):
Son of Chiang Kai-shek, served as President after being a premier from 1972-1978.
Initiated political liberalization in the mid-1980s.
In 1984, he appointed vice president Lee Teng-hui, marking a pivotal shift in Taiwanese politics.
Lifted martial law in 1986, signaling an end to decades of authoritarian rule.
Democratic Progression
After Chiang Ching-kuo:
Upon his death in January 1988, Lee Teng-hui succeeded as president and further pushed for democratization and localization of Taiwan's governance, promoting local culture over a pan-China viewpoint.
1991 Legislative Changes:
Members of the Legislative Yuan and National Assembly were forced to resign, conceding the reality that the ROC did not govern mainland China.
Elections and Democratic Milestones
Lee Teng-hui’s Presidency (1988-2000):
Re-elected in 1996, marking the first direct presidential elections in ROC history.
In 2000, Chen Shui-bian of the DPP was elected as the first non-KMT President.
Economic Context: The Asian Tigers
Taiwan labeled as one of the four “Asian Tigers” alongside Hong Kong, Singapore, and South Korea.
Economic Characteristics:
“Developmental dictatorship” framework: characterized by one-party rule and a state-led economy.
Common traits among Asian Tigers:
Former colonies with special economic status.
Meritocratic bureaucracy; substantial land reform; emphasis on high savings ratios.
Conducive to an export-driven economy; high literacy and skilled labor rates; Confucian cultural influence.
Globalization and access to American markets supported rapid economic growth.
Economic Foundation
Post-KMT Economic Policies (1949-1950):
A new currency area was created in Taiwan along with a price stabilization program that reduced inflation.
The US aid bolstered economic stabilization during the Korean War that culminated in successful price stabilization by 1952.
Initiatives such as the Joint Commission on Rural Reconstruction significantly stimulated agricultural growth.
Major Economic Projects
Ten Major Construction Projects (1974):
Implemented under Chiang Ching-kuo to build infrastructure, including ports, steel production, shipbuilding, and a nuclear plant, establishing foundations for an export-driven economy.
Technology Globalization:
Taiwanese technology firms (e.g., Acer, Asus, HTC, Foxconn) have become major players in global markets.
Economic Structure
Unlike South Korea and Japan, small and medium enterprises dominate the Taiwanese economy.
Economic downturn in 2001, following negative growth, was the only recession between 1947 and 2001.
Economic recovery occurred, achieving a growth rate of 4% from 2002 to 2006.
Joined WTO in 2002 as a Separate Customs Territory under the name Chinese Taipei.
Foreign Investment and Economic Performance
Taiwan has evolved into a significant foreign investor in the PRC, Thailand, Indonesia, the Philippines, Malaysia, and Vietnam (as of 2008, $150 billion).
Around 50,000 Taiwanese firms, employing approximately 1 million entrepreneurs and dependents, operate in mainland China.
By 2011, per-capita GNP reached $37,000 (PPP-adjusted).