After the government moved to Formosa (T’aiwan), Chiang Kai-shek resumed power on 1 March 1950. The capital was established in T’aipei.
In the early 1950s, the nationalists still occupied, in addition to Formosa, also the island of Hainan, the archipelago of the Chusan islands, the archipelago of the Tachen, some islands along the coast of Fuchien (Quemoy or Chinmen, Matsu, etc..). On the continent, numerous groups of stragglers still led a feeble resistance, favored by the vastness of the territory and the lack of communication routes. In May 1950 the Communists attacked and occupied Hainan and the Chusan archipelago. During 1951 the last pockets of nationalist resistance on the continent were cleared by the communists who could boast of having liquidated 242,000 nationalist rebels in a single province, that of Kuanghsi. There remained hotbeds of resistance in the most inaccessible regions of Yünnan, where a nationalist general, Li Mi, it lasted for some time causing complications and incidents on the border with Burma; but in the end he too had to abandon the game and return to Formosa. In 1955 the nationalists had to evacuate the Tachen Islands, but since then, despite the violent attacks by the Communists on the other coastal islands, they have managed to maintain their remaining positions. This increased resilience was a consequence of the reorganization of the nationalist state, the downsizing of its armed forces, the better use of US aid, and the lesser hold of Communist propaganda among the Chinese in Formosa.
According to Loverists, the government of nationalist China (Nationalist Republic of China, in Chinese Chung – hua Min – kuo) had to solve the problem of the enormous increase in the population of Formosa, due not only to natural causes (birth rate: about 4.3 per cent), but also to the influx of refugees from the continent. The population has risen from 6,497,734 residents in 1947 to 9,390,381 in 1956. On the one hand, this influx of immigrants has altered the ethnic composition of the island in favor of the Chinese element, while the aborigines are fatally sinized; on the other hand, it imposed the maintenance of a large bureaucracy and army in order to give employment to the refugees. Therefore, at present there are two administrations in Formosa: the provincial one, limited only to the territories actually controlled by the nationalists; and the national one, although small in numbers, except for some ministries, such as Foreign Affairs, Defense, etc. The Provincial Government is made up of a Council, at the head of which is a governor. The heads of departments corresponding to our ministries are chosen from among the members of the Council: finance, agriculture, communications, social affairs, police, hygiene, information, accounting and statistics, personnel, food, supplies, education, reconstruction, social affairs. Next to the Council is the Provisional Provincial Assembly, made up of 66 members elected every three years. food, supplies, education, reconstruction, social affairs. Next to the Council is the Provisional Provincial Assembly, made up of 66 members elected every three years. food, supplies, education, reconstruction, social affairs. Next to the Council is the Provisional Provincial Assembly, made up of 66 members elected every three years.
Above this provincial administration, quite efficient and chosen with relatively democratic criteria, the bureaucratic organization of a government that once had to administer 600 million people and which now manages only ten is burdened. The form of government is still that devised by Sun Wen (Sun Yat-sen): a mixture of presidential system and cabinet system (see App. II, 1, p. 586). Due to the events, elections for the National Assembly were no longer held, the composition of which has remained unchanged since 1946. Despite the provisions of art. 46 of the Constitution, which provides that the president remains in office for six years and can only be re-elected a second time, Chiang Kai-shek has had his presidential term confirmed for the third time (1948, 1954, 1960).
The Nationalist army, which in 1950 numbered about 600,000 men, was recently reorganized, thanks to aid granted by the United States, and was reduced in number, while increasing its firepower. In defense against the Communist attacks in the spring-summer of 1958 he was assisted by the presence of the units of the US 7th Fleet in the waters of Formosa.
In the field of foreign policy, the nationalist government has been tenacious advocates of its existence, trying to strengthen relations with those states that have not yet recognized Beijing, but which, on the other hand, do not maintain diplomatic representations in T’aipei. Relations were particularly close with those more openly anti-communist states, such as Korea, Japan, Thailand, Spain and, of course, the United States. At the UN, the seat reserved for the representative of China is still occupied by the nationalist delegate.
Finances. – The economy of the nationalist community, that is, that of the island of Formosa (T’aiwan), is largely based on agriculture, whose income covers 30% of the gross national product; the industrial sector, including mines and energy sources, contributes 25% and the commerce sector just under 20%. The island has a mixed economy, public and private; the participation of state-owned enterprises is valued in about two-fifths of all economic activities. National income rose from NT $ 6 billion in 1950 to $ 33 billion in 1958; the gross national product went from 11 billion in 1951 to 42 billion in 1958. Still between 1951 and 1958, private consumption went from 7 to 29 billion, investments from 1.6 to 6 billion. The state budget usually has a deficit,
The current currency is the New T’aiwan Dollar (New T’aiwan Dollar), introduced by the Chinese government in 1949, and pegged to the United States dollar; the exchange rate, in 1959, fluctuated between 36.08 and 39.75 NT dollars for one US dollar. From 10 August 1959 a new exchange system was established, according to which exporters can receive either currency at the exchange rate official of 36.08 NT dollars for one US dollar, or marketable certificates for the full amount (approximately 40 dollars for 1 US dollar). Circulating mass, including bank deposits, rose from NT $ 629 million in 1950 to $ 5,981 million in 1958; bank savings rose from NT $ 32 to 3,476 million over the same period.
In addition to the Bank of T’aiwan, the issuing institution and the central bank, there are five other government-controlled institutions on the island, namely three commercial banks (the First Commercial Bank, the Hua Nan Commercial Bank and the Chang Hua Commercial Bank), and two agricultural banks (the Land Bank and the Cooperative Bank). There is also a special institution (Central Trust of China) which has the task of financing the government and state enterprises in exports and other foreign relations.
The Chinese government implemented, between 1952 and 1956, a first four-year development plan, with the main purpose of enhancing the production of fertilizers and energy sources, improving agricultural incomes, increasing exports, encouraging private investment, to decrease the budget deficit. The second four-year plan, begun in 1957, envisages production increases in some sectors of up to 42%, as well as an increase in exports of 41%. Private investment will be particularly favored, especially in the industrial sector. US assistance has played a leading role in the expansion of the Chinese economy since 1950. The aid programs are essentially those provided for by the Mutual Security Act, administered by the International Cooperation Administration (ICA), the Development Loan Fund and the Agricultural Trade Development and Assistance Act. These three programs involve an average total funding of US $ 120-140 million that America provides annually to the Chinese government of the island of Formosa for its economic development. From the beginning to 1957, American aid exceeded US $ 600 million.