Bloomberg Businessweek

Frayed in Taiwan

As Hong Kong boils, Taiwan chooses between two visions of its future
A pro-independence flag flies in the Ximending district of Taipei

As seats of state power go, Taiwan’s Legislative Yuan is jarringly humble. The parliament building, erected a century ago as an all-girls high school, occupies a rectangle of low-rise buildings in the center of Taipei, set back from the street behind a low fence. It was renovated only lightly for its current use: Aides work in what were once classrooms, and the former principal’s office now belongs to the parliamentary speaker. There are far too few offices for all 113 members, so many work out of even more utilitarian buildings nearby.

Taiwan is hardly a modest polity. Its population of approximately 23 million is roughly equal to Australia’s, and, with almost $600 billion in gross domestic product, its economy is comparable to Argentina’s. Neither of those countries, though, had a foundational figure quite like Chiang Kai-shek, who reigned as a virtual dictator from 1949 until his death in 1975. The Generalissimo, as he was often called, arrived on the island once known as Formosa under duress, thrust from China after Communist armies led by Mao Zedong defeated the forces of Chiang’s Nationalist Party, or Kuomintang. The civil war never officially ended, and for the rest of his life Chiang considered the Taiwanese state—which is still officially known as the Republic of China—to be a government in exile, waiting for the inevitable day it would reconquer the mainland. There was no point in building anything grand for Taiwan’s legislators: That could wait for Chiang’s triumphant return to Nanjing, the Nationalist capital.

Much has changed in Taiwan since Chiang’s day, but this liminal quality has never really gone away. By almost any functional standard, it’s a sovereign country, with a president, a military, a central bank, passports, and all the other trappings of a state. But almost nobody who matters in international politics officially recognizes it as one. Taiwan isn’t a member of the United Nations, the International Monetary Fund, or the World Bank. Its formal diplomatic relations are mostly limited to a smattering of microstates in the Pacific and the Caribbean. Even the U.S., its primary ally, has no embassy in Taipei, instead funding an arm’s-length American Institute that happens to issue visas and employ Marines.

While this arrangement is undoubtedly awkward, it’s served Taiwan well. By treading carefully on the subject of formal independence, the island has been able

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