Slide 1 : China and Taiwan, while in practice maintaining a fragile "status quo" relationship,

periodically grow impatient with the diplomatic patchwork that has kept the island separate from the Communist mainland since 1949.

Slide 2 :
Particulars Also Known as CHINA Peoples Republic of China Communist Beijing Mandarin TAIWAN Republic of China Democratic Taipei City Taiwanese (70 %), Mandarin, Hakka (15%) Total- $ 5.039 trillion (22 ) New Taiwan Dollar
nd

Type of Government Capital Languages Spoken GDP (nominal) [2011 estimate] Currency

Total- $ 6.988 trillion (2 ) Renminbi Yuan

nd

Slide3:
After losing the civil war to Communist Chinese and fleeing to Taiwan in 1949, the nationalist Kuomintang (KMT) leaders of the Republic of China regarded the Communist Chinese government as illegitimate, claiming the mainland as rightfully their own. The Chinese Civil War was fought from 1927 to 1949. On one side were the Communists, who wanted to make China like the Soviet Union. They were backed by the Soviet Union, and they had the support of many poor people. On the others side were the Nationalists, who wanted to make China like theUnited States. They were also called the Kuomintang. They were backed by the United States and the United Kingdom, and they had the support of the richer people and the Chinese who lived in cities. More than a million people died in the Chinese Civil War. The Communists were led by Mao Zedong, and the Nationalists were led by Chiang Kai-shek. Sometimes the two groups stopped fighting and helped each other. One time this happened was when Japan invaded China during World War II. But soon they started fighting again. Eventually, in 1949, the Communists chased the Nationalists out of the biggest part of China, the mainland. The Nationalists came to an island called Taiwan, and stayed there. Mao named China the People's Republic of China and he became its leader until he died in 1976.

Slide4: Despite sporadic attacks from the mainland Taiwan enjoyed huge economic growth
during the 1950s and early 60s, backed up by massive inflows of US funds and demand for its products. Domestically President Chiang's rule became increasingly dictatorial, backed up by the military secret service, the Taiwan Garrison Command. Chiang's position was under challenge from two sides. On the one hand there was growing support for outright independence among the native Taiwanese, most of whom resented what they saw as minority rule by mainlanders. On the other, there was the ever-present threat of communist invasion.

As the Kuomintang government began to absorb a younger generation of mainlanders and native Taiwanese, the focus slowly began to shift from reconquest of the mainland to the development of the island itself. But much of the real power remained firmly in the hands of President Chiang and his son, Chiang Ching-kuo. In the late 1960s Taiwan began to lose out to the shifting tide of Cold War politics. Washington and Beijing developed closer ties to counter what they saw as Soviet expansionism and it seemed that Taiwan was losing the support of its principal international backer. In 1971 with international favour swinging towards Beijing, Taipei lost possession of China's seat on the UN Security Council to the mainland government. In disgust Chiang walked out of the UN.

Slide 5 : US President Richard Nixon's historic visit to China in 1972 came as a further blow
to Taiwan's prestige, paving the way for Washington and Beijing to establish diplomatic relations seven years later. Under its one China policy Beijing insists that countries wanting to establish diplomatic relations must automatically break off official ties with Taipei and during the 1970s other western countries and their allies followed Washington's lead. In an effort to get around this, pro-Taiwan members of the US Congress passed the Taiwan Relations Act, allowing for the sale of defence equipment to Taiwan and providing vague guarantees for the island's security. Nonetheless as China made its way onto the world stage Taiwan was increasingly pushed off it. In Taiwan itself, President Chiang died in 1975 and three years later his son replaced him as president, raising opposition alarm that the appointment heralded the start of a Chiang dynasty. In 1979 opposition groups organised a protest rally in the southern city of Kaohsiung to mark International Human Rights Day. Although the rally was crushed by scores of riot police the event came to be regarded by many as the catalyst that united Taiwan's opposition. During the 1980s a series of financial scandals rocked the Kuomintang government and criticism grew of Taiwan's continued one-party rule. In 1985 Chiang opened talks with the domestic opposition and a year later Taiwan's first opposition party, the Democratic Progressive Party, was born. One China Policy-- The one-China policy holds that there is but one China and that Taiwan is part of China. The leaders of both countries have long subscribed to the one-China policy--each insisting on their own government's legitimacy--but the Taiwanese position has eroded over the past few decades as the People's Republic has gained international prominence. Taiwan's softened position is spelled out in its 1991 Guidelines for National Unification, which insists only that a unified China must be "democratic" and "free," not necessarily led by Taiwan. The People's Republic position remains fundamentally unchange

Slide 6 : 1986-1999 Path to Democracy

During the 1980s the process of democratisation became increasingly brisk. The dropping of martial law in 1987 and the death of President Chiang Ching-kuo a year later opened the door to a new era of Taiwanese politics as Lee Teng-hui became the island's first native-born president. In 1989 as pro-democracy protests swept China, Taiwan held its first elections in which parties other than the Kuomintang were allowed to stand. A year later surviving members of parliament representing provinces on the mainland were retired, ending Taipei's claim to be the government of all China.

As Taiwan's confidence increased it began to court diplomatic ties, offering trade and aid in return. Dialogue also developed with Beijing but moves towards Taiwan asserting its de facto independence drew angry reactions from the mainland. In 1995 relations threatened to boil over when President Lee's visit to the US and the build up to Taiwan's first democratic presidential elections sparked a tense military stand-off. With President Lee re-elected by popular mandate in 1996, Taiwan's relations with the mainland continued on a rollercoaster ride. Economic links slowly expanded but Beijing remained edgy about Taiwan acting as an independent state. Any hint that Taiwan was moving towards independence produced warnings of military intervention.

Slide 7 n 8 n 9: 2000-2002 Independence Dilemma

A new rift between Taiwan and China was threatened by the election to the presidency in March 2000 of Chen Shui-bian of the pro-independence Democratic Progressive Party (DPP). But Mr Chen, a former lawyer with a populist touch, took care not to antagonise Beijing during the election. He promised not to declare independence so long as Beijing did not use force against Taiwan. He also pledged not to hold a referendum on independence or reunification and offered several concessions and gestures towards China, such as opening up direct trade links. But China's leadership remained distrustful of Mr Chen's motives, regularly claiming his real ambition was full independence for the island. The lack of progress with China, which continued to refuse to hold talks with Mr Chen, may have prompted him to take a harder line. In August 2002 he made a veiled threat to hold a referendum and referred to China and Taiwan as each being a country on either side of the Taiwan Strait - "one side, one country".

Slide 10 : Meanwhile, Economic Ties Thrive

Despite intermittent diplomatic friction, the cross-strait economic relationship has blossomed. China entered the World Trade Organization (WTO) in 2001 and, within a month, Taiwan entered as "Chinese Taipei." Bilateral trade between China and Taiwan in 2007 reached $102 billion, up from $8 billion in 1991 (PDF) . China is Taiwan's largest trading partner; in 2007, 30 percent of Taiwan's exports were sold to China. Likewise, Taiwan ranks in the top ten of China's trading partners. Taiwanese businesses have invested an estimated $150 billion in the mainland since 1988. In 2009, Taiwan opened up one hundred of its industries to mainland investments. China and Taiwan have also agreed to allow banks, insurers, and other financial service providers to invest and work in both markets. Negotiations between the two for an Economic Cooperation Framework Agreement that will ease trade restrictions even further are scheduled for late 2009. The year 2009 also marked the increase of direct flights between China and Taiwan to 270 per week from 108. Moreover, Taiwan increased its daily quota of visitors from China to three thousand, a ten-fold increase. SLIDE 11: The United States officially recognizes only one China --including Taiwan -- and urges a peaceful resolution to the Taiwan question. However, Washington is also bound by the 1979 Taiwan Relations Act to aid in Taiwan 's defense, including selling the island the weapons it needs

to defend itself against China. Experts say the United States is walking a fine line between China 's growing influence and the historical U.S. relationship with Taiwan. "Bush had to stand up for freedom and democracy and all the other values he constantly talks about, without picking a fight with China that nobody really wants," says David Kang, an Asia expert and visiting professor at Stanford University's Shorenstein APARC. Bush stressed in his speech that "there should be no unilateral attempts to change the status quo by either side.