page_title: History of Taiwan
section_title: Economic development
hierarchical_section_title: History of Taiwan / Republic of China rule / Economic development
caption_attribution_description: English: Bearer's check of 1,000,000 Old Taiwan dollars issued by Bank of Taiwan. In the earlier years of KMT rule, Taiwan suffered from severe inflation due to the corruption of Nationalist ROC government. The currency deflated so fast that the ruling government had to issue currency with denominations on the order of 1 million dollars. Authorities would later issue the New Taiwan Dollar to replace the deflated Taiwan Dollar in an exchange rate of one to four million. (These notes must be distinguished from the one's the Japanese Taiwan Ginkō issued under the same English name 1899-1945) Español: Billete de un millón de yuanes de 1949. La incapacidad para atajar la hiperinflación fue una de las causas del desprestigio del gobierno de la República de China 中文: 台幣壹佰萬圓整 TW$1000000 台灣銀行 本票 憑票即付 中華民國 卌八年 五月 廿八日
context_page_description: The history of the island of Taiwan dates back tens of thousands of years to the earliest known evidence of human habitation. The sudden appearance of a culture based on agriculture around 3000 BC is believed to reflect the arrival of the ancestors of today's Taiwanese indigenous peoples. The island was colonized by the Dutch in the 17th century, followed by an influx of Hoklo people including Hakka immigrants from the Fujian and Guangdong areas of mainland China, across the Taiwan Strait. The Spanish built a settlement in the north for a brief period but were driven out by the Dutch in 1642.
  In 1662, Koxinga, a loyalist of the Ming dynasty who had lost control of mainland China in 1644, defeated the Dutch and established a base of operations on the island. His forces were defeated by the Qing dynasty in 1683, and parts of Taiwan became increasingly integrated into the Qing empire. Following the First Sino-Japanese War in 1895, the Qing ceded the island, along with Penghu, to the Empire of Japan. Taiwan produced rice and sugar to be exported to the Empire of Japan, and also served as a base for the Japanese invasion of Southeast Asia and the Pacific during World War II.
context_section_description: In the immediate aftermath of World War II, post-war economic conditions compounded with the then-ongoing Chinese Civil War caused severe inflation across mainland China and in Taiwan, made worse by disastrous currency reforms and corruption. This gave way to the reconstruction process and new reforms.
  The KMT took control of Taiwan's monopolies that had been owned by the Japanese prior to World War II. They nationalized approximately 17% of Taiwan's GNP and voided Japanese bond certificates held by Taiwanese investors. These real estate holdings as well as American aid such as the China Aid Act and the Sino-American Joint Commission on Rural Reconstruction helped to ensure that Taiwan would recover quickly from war. The Kuomintang government also moved the entire gold reserve from the Chinese mainland to Taiwan, and used this reserve to back the newly issued New Taiwan dollar to stabilize the new currency and put a stop to hyperinflation.
  The KMT authorities implemented a far-reaching and highly successful land reform program on Taiwan during the 1950s. The 375 Rent Reduction Act alleviated tax burden on peasants and another act redistributed land among small farmers and compensated large landowners with commodities certificates and stock in state-owned industries. Although this left some large landowners impoverished, others turned their compensation into capital and started commercial and industrial enterprises. These entrepreneurs were to become Taiwan's first industrial capitalists. Together with businessmen who fled from mainland China, they once again revived Taiwan's prosperity previously ceased along with Japanese withdrawal and managed Taiwan's transition from an agricultural to a commercial, industrial economy.
  From 1950 to 1965, Taiwan received a total of $1.5 billion in economic aid and $2.4 billion in military aid from the United States. In 1965 all American aid ceased when Taiwan had established a solid financial base. Having accomplished that, ROC president Chiang Ching-kuo (the son of Chiang Kai-shek) started state projects such as the Ten Major Construction Projects that provided the infrastructure for building a strong export-driven economy. Taiwan has developed steadily into a major international trading power with more than $218 billion in two-way trade and one of the highest foreign exchange reserves in the world. Tremendous prosperity on the island was accompanied by economic and social stability. Taiwan's phenomenal economic development earned it a spot as one of the Four Asian Tigers.
caption: The Chinese Civil War led to severe inflation. Currency was issued in denominations of 1 million Old Taiwan dollars.
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