The island maintains its provincial-level government. The Kuomintang declares it will use force to retake the mainland, and reestablish itself as the national government in Beijing. Cross-strait relations are frozen for decades. Both sides implement regulations restricting movement of people and goods across the Taiwan Strait, and most exchanges are conducted via British Hong Kong. The 1950-1953 Korean War begins.
China backs North Korea against South Korea supported by the United States.
Washington slaps a trade embargo on China that lasts for two decades. For security reasons, Taiwan becomes a fully-fledged ally of the United States. Washington switches diplomatic recognition of China from Taipei to Beijing. The U.S. Congress passes the Taiwan Relations Act. While guaranteeing Taiwan's security, the document remains vague as to how the U.S. would provide this protection.