1949 - KMT Taiwan
Early in 1949 Chiang Kai-shek, when his forces were being pushed back on the mainland, decided to prepare a final defensive position from which to continue the struggle. He had the navy and the remnants of the air force rebased on Taiwan and sent troops to prepare to defend the island. In December 1949, when it became evident that further defense on the mainland was impossible, the Nationalist government and many of its best troops were transported to Taiwan, and the seat of the Republic of China was set up in Taipei.
Immediately upon establishing his seat of government on Taiwan in 1949, President Chiang Kai-shek launched a program of economic reforms. The most basic reforms occurred in agriculture. Rent was reduced from a customary 50 percent or more to 371/2 percent of the major annual crop for the island's tenants, who made up 40 percent of all farmers. Government-owned land was put up for sale at modest price, and abundant technical aid was made available to farmers (see ch. 18, Agriculture).
Large-scale land redistribution was begun in January 1953. Large landowners were compensated partly in bonds redeemable over a 20year period and partly in government stocks. Thus, many former landlords became industrialists, and many have prospered since (see ch. 19, Industry). Considerable technical and financial aid also has gone into forestry, fishing, manufacturing, and commerce. Industrial production increased more than threefold in the decade after 1952, and per capita income in 1966 was six times that of 15 years earlier (see ch. 17, Character and Structure of the Economy).
After North Korea invaded the South and Chinese troops entered the conflict and engaged in combat with United States troops which were repulsing the North Koreans in the name of the United Nations, the United States Seventh Fleet was ordered into the Formosa Straits to prevent a Communist invasion of Taiwan. At the same time the Republic of China became a recipient of massive United States military and economic aid.
After the end of the conflict in Korea, Communist China set out to consolidate its control over areas still in the hands of Chiang Kaishek's forces. In September 1954 the Communists announced an all-out drive to capture Taiwan and the other islands under the control of the Republic of China. In February 1955, after having drafted nearly half a million additional men into its armed forces, Communist China captured the Tachen and Nanchi Island groups after the United States helped to evacuate the defenders. This was followed by an attack on the Matsu islands which was halted by the Nationalist troops and by a United States show of force.
In August 1958, after consultations in Peiping with the Premier and Defense Minister of the Soviet Union, the Communist Chinese government launched a severe week-long attack on the Quemoy Islands (opposite Amoy on the mainland), bombarding them at the rate of up to 60,000 shells per day. On August 28 the Communists announced their intention of landing on these islands as well as on Taiwan. In the meantime, the United States amassed in the Western Pacific a powerful fleet, and talks between the United States and Communist Chinese ambassadors were resumed at Warsaw. Before the crisis subsided, Premier Khrushchev threatened to unleash Soviet nuclear weapons against the United States if the latter were to use such weapons against Communist China. Calm was restored after the United States publicly clarified its commitment to the Republic of China. This was done by United States Secretary of State John Foster Dulles on September 4, 1958, when he stated, "The United States is bound by treaty to defend Taiwan from armed attack, and the President is authorized by joint resolution of Congress to employ the armed forces of the United States for securing and protecting of related positions such as Quemoy and Matsu."
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