In December 1979, the United States government "de-recognized" Taiwan and stopped using tax dollars to prop up the Chiang regime. Contrary to what one might expect, after the U.S. turned off the money spigot, Taiwan's economic miracle began.
In 1987, martial law officially ended, but other repressive laws were put in place so that the KMT wouldn’t suffer post-partum depression. Lee Teng-hui, a native Taiwanese, (pictured at left) became vice president. Virtually all positions of power in Taiwan, though, remained in the hands of Chinese.
The pan-blue parties—that is, the KMT, a splinter group called the New Party, and a largely one-man show calling itself the People First Party—seemed to accept that it had shot itself in the foot. It spent the next four years blocking the new president’s efforts, even those that the KMT had championed when it occupied the presidency. Apart from these childish antics, the KMT bided its time until the 2004 election. It vowed not to make the same mistake twice.
Then yet another unthinkable event occurred: Chen Sui-bian was re-elected by an outright majority.