South Korea was not the only rising industrial power trying to imitate the success of the Japanese in East Asia. To the south on the island of Taiwan, the Republic of China began to do the same. After retreating to Taiwan following their defeat by the Communists, Chiang Kai-shek and his followers established a new capital at Taipei and set out to build a strong and prosperous nation based on Chinese traditions and the principles of Sun Yat-sen. The government, which continued to refer to itself as the Republic of China (ROC), contended that it remained the legitimate representative of the Chinese people and that it would eventually return in triumph to the mainland. The Nationalists had much more success on Taiwan than they had achieved on the mainland. In the relatively secure environment provided by a security treaty with the United States, signed in 1954, and the comforting presence of the U.S. Seventh Fleet in the Taiwan Strait, the ROC was able to concentrate on economic growth without worrying about a Communist invasion. The regime possessed a number of other advantages that it had not enjoyed in Nanjing. Fifty years of efficient Japanese rule had left behind a relatively modern economic infrastructure and an educated populace, although the island had absorbed considerable damage during World War II and much of its agricultural produce had been exported to Japan at low prices. With only a small population to deal with (about seven million in 1945), the ROC could make good use of foreign assistance and the efforts of its own energetic people to build a modern industrialized society. The government moved rapidly to create a solid agricultural base. A land reform program, more effectively designed and implemented than the one introduced in the early 1930s on the mainland, led to the reduction of rents, while landholdings over 3 acres were purchased by the government and resold to the tenants at reasonable prices. As in Meiji Japan, the previous owners were compensated by government bonds. The results were gratifying: food production doubled over the next generation and began to make up a substantial proportion of exports. In the meantime, the government strongly encouraged the development of local manufacturing and commerce. By the 1970s, Taiwan was one of the most dynamic industrial economies in East Asia. The agricultural proportion of the gross national product declined from 36 percent in 1952 to only 9 percent thirty years later. At first, the industrial and commercial sector was composed of relatively small firms engaged in exporting textiles and food products, but the 1960s saw a shift to heavy industry, including shipbuilding, steel, petrochemicals, and machinery, and a growing emphasis on exports. The government played a major role in the process, targeting strategic industries for support and investing in infrastructure. At the same time, as in Japan, the government stressed the importance of private enterprise and encouraged foreign investment and a high rate of internal savings. By the mid-1980s, more than three-quarters of the population lived in urban areas. In contrast to the People’s Republic of China (PRC) on the mainland, the ROC actively maintained Chinese tradition, promoting respect for Confucius and the ethical principles of the past, such as hard work, frugality, and filial piety. Although there was some corruption in both the government and the private sector, income differentials between the wealthy and the poor were generally less than elsewhere in the region, and the overall standard of living increased substantially. Health and sanitation improved, literacy rates were quite high, and an active family planning program reduced the rate of population growth. Nevertheless, the total population on the island increased to about twenty million in the mid-1980s. In one respect, however, Chiang Kai-shek had not changed: increasing prosperity did not lead to the democratization of the political process. The Nationalists continued to rule by emergency decree and refused to permit the formation of opposition political parties on the grounds that the danger of invasion from the mainland had not subsided. Propaganda material from the PRC was rigorously prohibited, and dissident activities (promoting either rapprochement with the mainland or the establishment of an independent Republic of Taiwan) were ruthlessly suppressed. Although representatives to the provincial government of the province of Taiwan were chosen in local elections, the central government (technically representing the entire population of China) was dominated by mainlanders who had fled to the island with Chiang in 1949. Some friction developed between the mainlanders (as the new arrivals were called), who numbered about two million, and the native Taiwanese; except for a few aboriginal peoples in the mountains, most of the natives were ethnic Chinese whose ancestors had emigrated to the island during the Qing dynasty. While the mainlanders were dominant in government and the professions, the native Taiwanese were prominent in commerce. Mainlanders tended to view the local population with a measure of condescension, and at least in the early years, intermarriage between members of the two groups was rare. Many Taiwanese remembered with anger the events of March 1947, when Nationalist troops had killed hundreds of Taiwanese demonstrators in Taipei. More than one thousand leading members of the local Taiwanese community were arrested and killed in the subsequent repression. By the 1980s, however, these fissures in Taiwanese society had begun to diminish; by that time, an ever-higher proportion of the population had been born on the island and identified themselves as Taiwanese. During the 1980s, the ROC slowly began to evolve toward a more representative form of government—a process that was facilitated by the death of Chiang Kai-shek in 1975. Chiang Ching-kuo (1909–1988), his son and successor, was less concerned about the danger from the mainland and more tolerant of free expression. On his death, he was succeeded as president by Lee Teng-hui (b. 1923), a native Taiwanese. By the end of the 1980s, democratization was under way, including elections and the formation of legal opposition parties. A national election in 1992 resulted in a bare majority for the Nationalists over strong opposition from the Democratic Progressive Party (DPP). But political liberalization had its dangers; some leading Democratic Progressives began to agitate for an independent Republic of Taiwan, a possibility that aroused concern within the Nationalist government in Taipei and frenzied hostility in the PRC. In the spring of 2000, DPP candidate Chen Shui-bian (b. 1950) won election to the presidency, ending half a century of Nationalist Party rule on Taiwan. His elevation to the position angered Beijing, which noted that in the past he had called for an independent Taiwanese state. Chen backed away from that position and called for the resumption of talks with PRC, but Chinese leaders remain suspicious of his intentions and reacted with hostility to U.S. plans to provide advanced military equipment to the island. Whether Taiwan will remain an independent state or be united with mainland is impossible to predict. Certainly, the outcome depends in good measure on developments in the PRC. During his visit to China in 1972, U.S. President Richard Nixon said that this was a question for the Chinese people to decide (see Chapter 7). In 1979, President Jimmy Carter abrogated the mutual security treaty between the United States and the ROCthat had been in force since 1954 and switched U.S. diplomatic recognition from the Republic of China to the PRC. But the United States continues to provide defensive military assistance to the Taiwanese armed forces and has made it clear that it supports self-determination for the people of Taiwan and that it expects the final resolution of the Chinese civil war to be by peaceful means. In the meantime, economic and cultural contacts between Taiwan and the mainland are steadily increasing, thus making the costs of any future military confrontation increasingly expensive for both sides. However, the Taiwanese have shown no inclination to accept the PRC’s offer of “one country, two systems,” under which the ROCwould accept the PRCas the legitimate government of China in return for autonomous control over the affairs of Taiwan.