Introduction:
In 1895, military defeat forced China to cede Taiwan to Japan. Taiwan reverted to Chinese control after World War II. Following the Communist victory on the mainland in 1949, 2 million Nationalists fled to Taiwan and established a government using the 1946 constitution drawn up for all of China. Over the next five decades, the ruling authorities gradually democratized and incorporated the local population within the governing structure. In 2000, Taiwan underwent its first peaceful transfer of power from the Nationalist to the Democratic Progressive Party. Throughout this period, the island prospered and became one of East Asia's economic "Tigers." The dominant political issues continue to be the relationship between Taiwan and China - specifically the question of eventual unification - as well as domestic political and economic reform.

Location: Eastern Asia, islands bordering the East China Sea, Philippine Sea, South China Sea, and Taiwan Strait, north of the Philippines, off the southeastern coast of China

Population: 23,036,087 (July 2006 est.)

Languages: Mandarin Chinese (official), Taiwanese (Min), Hakka dialects

Country name: conventional long form: none
conventional short form: Taiwan
local long form: none
local short form: T'ai-wan
former: Formosa

Capital: name: Taipei
geographic coordinates: 25 03 N, 121 30 E
time difference: UTC+8 (13 hours ahead of Washington, DC during Standard Time)

Economy - overview:
Taiwan has a dynamic capitalist economy with gradually decreasing guidance of investment and foreign trade by government authorities. In keeping with this trend, some large, government-owned banks and industrial firms are being privatized. Exports have provided the primary impetus for industrialization. The island runs a trade surplus, and foreign reserves are the world's third largest. Despite restrictions cross-strait links, China has overtaken the US to become Taiwan's largest export market and, in 2006, its second-largest source of imports after Japan. China is also the island's number one destination for foreign direct investment. Strong trade performance in 2006 pushed Taiwan's GDP growth rate above 4%, and unemployment is below 4%. Consumer spending recovered following a slowdown early in 2006, when banks tightened lending to address a sharp increase in delinquent consumer debt.