Complex sentence: In 1949, the Communists established the People's Republic of China on the mainland, while the Nationalists retreated to Taiwan, and despite its vastly reduced territory, the Nationalist government continued to be recognized as the government of China by non-Communist states.
Split into simpler sentences: In 1949, the Communists established the People's Republic of China on the mainland, while the Nationalists retreated to Taiwan. Despite its vastly reduced territory, the Nationalist government continued to be recognized as the government of China by non-Communist states.