A Bastion Created, A Regime Reformed, An Economy Reengineered, 1949–1970

When the Nationalist government retreated to Taiwan in December 1949, its demise seemed imminent. Li Tsung-jen, the acting president, flew to New York seeking medical treatment for a gastric ulcer. ¹ Most of the Nationalist armies were either lost on the battlefield or had surrendered to the Chinese Communists. ² After repeated defeats, the remaining officials, soldiers, and members of the Nationalist Party (Kuomintang, or KMT) that made the journey across the Taiwan strait suffered from low morale. Internationally, the Republic of China (ROC) lost its position as one of the four great powers. Only Korea decided to transfer its embassy to Taiwan, while others either followed the Soviet Union in recognizing the People’s Republic of China (PRC) or like the United States, waited until the dust settled before deciding which government to recognize. The following two decades might be considered the most trying period for Taiwan as the Nationalist government tried to rebuild its strength by laying the foundation for what would become the “Taiwan miracle.”