Chiang Kai-shek led his defeated nationalist forces from mainland China to Taiwan in 1949 where he re-established the Republic of China, claiming that his government was the sole legitimate authority in China. China, in turn, regards Taiwan as a renegade province with no rights to self- determination.
With western, particularly United States support, the fiction of Taiwanese rule over China was maintained for two decades. However in 1971, Chiang Kai-shek's refusal to accept the People's Republic of China's admission to the United Nations resulted in Taiwan's expulsion. In 1979 the US withdrew diplomatic recognition and ended the mutual defence treaty. This effectively plunged Taiwan into diplomatic isolation.
Chiang Kai-shek's government was brutal in its suppression of Taiwanese resistance, laying the seeds of bitter divisions between the indigenous population and the new comers.
However, his son Chiang Ching-kuo, who assumed the presidency after his father's death, realised that the nationalist's hardline policies were no longer viable. He believed they would only be able to retain power by introducing a degree of political liberalisation - somewhat comparable to the economic liberalisation which allowed the economy to boom.
In 1987 martial law was lifted. Taiwan has embraced democracy, abandoning the reality of a system constructed to rule the whole of China. Both governments in Peking and Taipei are committed to the reunification of China but progress towards reintegration is leaden.