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. 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. Beijing, in turn, regards Taiwan as a renegade province, and has tried repeatedly to persuade the island to negotiate a return to the fold. The KMT returned to power in 2008 after being in opposition for eight years. During this time President Chen Shui-bian and his Democratic Progressive Party (DPP) had engaged in policy that widely departed from the KMT, invigorating efforts to seek Taiwan's sovereignty. Current President Ma Ying-jeou takes a decidedly more conciliatory approach; shortly after taking office he declared a "diplomatic truce" with China. Since then, Taiwan's relations with the mainland have improved.
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“One China” Principle
The two sides sharply disagree on Taiwan's de jure political status. The People's Republic of China asserts that there is only "One China" and Taiwan is an inalienable part of it. Beijing says Taiwan is bound by the consensus reached in 1992 between the representatives of both governments in Hong Kong. Referred to as the 1992 Consensus, it states that there is only one China, but China and Taiwan can interpret that principle however they wish. Taiwan's former president Chen Shui-bian, however, rejected the very existence of the consensus. The KMT accepts it as a starting point for negotiations.
In 1979, the United States reestablished relations with Beijing and signed a joint communiqué that reasserted the One China policy. According to it, "the Government of the United States of America acknowledges the Chinese position that there is but one China and Taiwan is part of China." At that time, President Jimmy Carter terminated diplomatic relations with the ROC government in Taiwan. Just months later, the Taiwan Relations Act of 1979 affirmed U.S. support for the island's democratic system. That essential conflict has been the source of intermittent friction ever since. When Beijing judges these principles have been violated or even stretched a bit, it makes its displeasure known. Over the years, U.S. arms sales to Taiwan have frequently led to U.S.-China friction and an upsurge in bellicose rhetoric across the strait. Another CRS report (PDF) looks at the agreements and communiqués that have shaped the U.S.-China-Taiwan dynamic over the years.
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Military Situation
China has deployed ballistic missiles along the Taiwan Strait and continues to modernize both its missile forces and its amphibious assault capabilities. Taiwan continues to purchase weapons abroad, primarily from the United States. Between 2000 and 2007, Taiwan received $8.4 billion in arms deliveries (PDF) from world wide sources. The United States has consistently been a significant source of Taiwan's arms purchases: From 2003 to 2006, $4.1 billion of Taiwan's arms purchases were procured from the United States.

Taiwan's strategic security rests heavily on the implied guarantees offered by the United States over the years--guarantees made more concrete than ever during the administration of George W. Bush, who pledged in 2002 to "do what it takes to help Taiwan defend herself, and the Chinese must understand that." China has consistently protested U.S. arms sales to Taiwan. According to Shirley A. Kan, a specialist in Asian security affairs at the Congressional Research Service, between 2007 and 2008 the United States effectively froze arms sales (PDF) to Taiwan, but the Bush administration refused to publicly acknowledge the suspension. The unofficial freeze ended in October 2008 when the United States agreed to sell Taiwan $6.4 billion in military equipment. In protest, China immediately suspended military contacts with the United States. It decided to resume military contacts (VOA)with the United States in July 2009.
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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.
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Significance of the Rapprochement
In another move signaling the more placid relations between China and Taiwan, in May 2009 the Chinese government did not object to Taiwan's participation as an observer at the World Health Assembly, the governing body of the World Health Organization, albeit under the name "Chinese Taipei." This marked the first time Taiwan was granted observer status at a United Nations body since it lost its seat to China in 1971.
Continuing the conciliatory trend, President Ma has called for increased cultural and educational exchanges with China. He also continues to vow that Taiwan will not move toward political unification with China, while at the same time insisting that Taiwan will not declare independence. Ma's course is in line with public sentiment; polls suggest 75 to 80 percent of people in Taiwan want their government to preserve the status quo (Foreign Policy).
On the mainland, Chinese President Hu Jintao has backed away from the aggressive language of his predecessors. While unification remains the ultimate goal, President Hu has toned down demands for Taiwan's return and seems satisfied to continue on the current path of increased economic and cultural integration, say experts. Taiwan expert Raymond Burghardt says "both sides have essentially agreed to deal with the easy issues first such as trade and transportation, and leave the hard stuff such as Taiwan's international representation for later." Burghardt predicts the current rapprochement will continue but will not proceed into the poltical realm toward unification with China or independence for Taiwan.
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History of the Conflict
Taiwan, an island of 23 million off China's southern coast, was ceded to Japan in 1895 and governed as a Japanese colony until 1945 (Japan formally relinquished that claim in 1952).* After 1945, a brief period of U.S. military occupation followed. In 1949, Chiang Kai-shek's Nationalist Party, which had governed China for decades and attended post-war conferences as China's representatives, fled to Taiwan after losing the civil war to the Communists. But Chiang insisted his Kuomintang (KMT) or "Nationalist" party continued to represent the people of the mainland. Washington and most of the Western powers that had been allied with Chiang's government during the war against Japan affirmed that stance by refusing to recognize the Communist government in Beijing.
Chiang's party, the KMT, defined itself as the alternative to Communist rule and hoped one day to return to power in Beijing. However, Washington's unwillingness to recognize the Communist government in Beijing began to fray in 1971, when diplomacy during the Nixon administration led to changes in U.S. policy that ultimately resulted in formal recognition of the People's Republic of China in 1979. (See "One China Principle" for details of the implications of this decision).
Meanwhile, the KMT governed Taiwan from 1949 to 2000, often harshly, under martial law. Discriminatory laws against Taiwanese who had inhabited the island before 1949 and repression of political dissent was common. After nearly forty years, martial law was lifted in 1987. The KMT has historically seen Taiwan as a part of "One China" and does not support Taiwanese independence. After 2000, the KMT often found itself in opposition to parties representing Taiwanese who had been living on the island before 1949 and their descendants. But the KMT, ridden with its own internal factionalism, remains powerful and strongly opposed to moves toward independence for the island. The KMT won both the legislative and presidential elections in 2008.
The KMT's chief rival, the Democratic Progressive Party (DPP), was founded in 1986 to counter the KMT, and only became legal in 1989 after a longtime ban on opposition parties was dropped. The DPP envisions Taiwan as an independent nation, separate from China. Taiwanese sovereignty is the first and most prominent issue on the party's platform.
*Editor's Note: An earlier version of this backgrounder misstated Japan's role between 1895 and 1952.
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The Independence Movement in Taiwan
Although many in Taiwan back the idea of independence, polls suggest they still stop well short of wanting to risk violence. Younger Taiwanese, in particular, tend to be pragmatic and open minded about cross-strait relations.
Since the KMT was elected to power in 2008, President Ma's rapprochement with Beijing hasincited pro-independence protests. Ma presents greater economic integration with China to the Taiwanese public as a way to boost the economy, but the effects of the global economic recession felt severely in Taiwan have undermined a great deal of the public's support for his policies. However, some analysts say Taiwan's recession would be more severe were it not for increased trade with China. They predict the economic benefits (TIME) from increased trade with China in the long run will lead to increased public support for closer economic ties with the mainland.
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A Place in the Sun—and the UN
Taiwan considers its relations with the international community essential if it is to survive independent of the Communist mainland. Despite Taiwan's efforts to woo support, more than thirty countries have switched diplomatic relations to Beijing since the United States transferred its diplomatic relations from Taiwan to China in 1979. About two dozen governments still maintain full diplomatic ties with the Taiwane