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Taiwan is an island off the coast of mainland China in the Pacific Ocean. Also known as Formosa and Peng Lai, it was first known to the Europeans through a Portuguese ship spotting it and giving it the name of Ilha Formosa (Beautiful Island). It is believed that indigenous Taiwanese population first arrived there during the late Ice Ages, and the island has seen a steady stream of Chinese settlers ever since.
After its discovery by the Portuguese, the island was disputed by the Spanish and the Dutch, with the latter eventually prevailing. Then in 1661, a Ming loyalist named Zheng Chenggong (a.k.a. Guoxingye, "Bearer of the Nation's Name", which was transliterated as Koxinga) assembled a fleet and expelled the Dutch, hoping to turn Formosa into a base for the reconquest of the mainland from the Qing.
But in 1683, the new dynasty claimed the island, and ruled it until they lost the First Sino-Japanese War. The Japanese held Taiwan from 1895 until the end of World War II, after which it fell into the hands of China's Nationalist government. When they lost the Chinese Civil War to the communists, the dictator Chiang Kai-shek and the other Nationalists fled to the island. Mao had plans to follow Chang and capture Taiwan in 1949, but the United States sent an aircraft carrier to dissuade that. Since then Taiwan maintained a quasi-sovereign status thanks to the protection of the United States. It was placed under martial law from 1949 to the 1980s, when Chiang's son and successor, Chiang Ching-kuo, followed by the first actually 'Taiwanese' president, Japanese Army veteran Lee Teung-Hui, began to democratize the nation's political system, turning it from a one-party state to a multi-party democracy. Also around this time, the incredibly wealthy government-in-exile (the ruling nationalist party, Kuomintang, personally had holdings worth around $10 billion US, a consequence of capitalist police state rule) started to lose control: while Taiwan would become one of the Four Great Asian Tigers, Taipei itself lost most international recognition as the government of all of China (only apartheid South Africa remained an ally).
Starting in the late Eighties/early Nineties, the opposition parties gained more voice in the public arena, especially given the Nationalist party's rampant corruption issues. (The Nationalists were never particularly popular in Taiwan outside of the party, since they were seen to be ignoring "native" Taiwanese interests... never mind that indigenous Taiwanese had been confined to reservations long before the Nationalists arrived). As pressure mounted, the Nationalist party began removing restrictions on free speech and free press, and Congress began the long, arduous process of amending the constitution to correct the most obvious inequities.
In the Late Nineties, the left-leaning pan-Green coalition won the Presidency, launching Taiwan back into the realm of international politics as then-President Chen Shui-bian began proclaiming that Taiwan was seeking its independence from China; previous to this, both Taiwan and mainland China had laid claim to all of China despite neither having formal diplomatic or economic relations with each other until the early 2000s. Still, when no serious move towards independence materialized, combined with a general economic downturn linked to Japan's economic bubble burst and rumbles of even worse corruption began to surface. Since 2008, changing political fortunes inflicted a catastrophic blow on the pan-Green coalition (including the DPP), with the pan-Blues (led by the KMT) winning a supermajority in the legislature and regaining the presidency. In particular, a return of the 80s-style capitalist supercorruption among leading political figures, including DPP President Chen (who had already met his term limits, and was arrested on said charges) hurt the DPP's reputation substantially.
A quirk that Taiwan is infamous for is the fist fights between its parliamentarians. The Taiwanese even had a word for it, called Legislative Brawling (立委群毆). Needless to say, this earned the Taiwanese parliament a notorious reputation, at some point, according to detractors, the parliamentarians even stage fights merely to maintain the reputation and garner attention.
Unique among most of Japan's neighbors, the relationship between Japan and Taiwan has been generally positive and easygoing, with relatively few bitter grudges stemming from the Japanese occupation, especially considering that Taiwan was spared most of the horrors of the Second Sino Japanese War. It saw no significant land battles (though hundreds of thousands of Taiwanese fought in the Imperial Japanese Army, and the island was devastated by American bombing which destroyed more than 90% of its industrial and electric output). The Japanese occupation ended after WW2 when the Allies handed over Taiwan to the Republic of China, but decades of corrupt rule and Secret Police arrests and executions—called the "White Terror"—under the Chinese ended up creating a popular nostalgia for the time when Taiwan was a colony of the Japanese Empire. During the tyranny of Chiang Kai-shek's evacuated government, hundreds of thousands of Taiwanese were first involved in a violent uprising (following the infamous 228 Incident in Taipei), or targeted in subsequent terror period, being arrested, executed or otherwise "disappeared", usually for being accused of communist sympathizers, in the longest period of martial law in modern history.
The period of Japanese rule has since left a few cultural marks. Among these are the integration of certain Japanese phrases into the local vernacular, including Oba San (strictly in the sense of "older woman"), and some Japanese foods. Japanese pop culture also has a strong presence, especially in the forms of music and manga, and a few Japanese television channels (including NHK) are available. The older generation will sometimes speak Japanese among themselves instead of Mandarin or Taiwanese.
Mandarin is the standard spoken language these days. About 70% of residents also speak Taiwanese Hokkien, commonly known as Taiwanese, which is a Hokkien dialect of Min Nan, where most of the Taiwanese came from. Hakka or Ke Jia Hua is also spoken by a substantial minority. The aboriginals' languages belong to the entirely different Austronesian language family; it's widely considered to be the ancestral homeland or near-homeland of the family, as it harbors about nine different subfamilies of the family, with the tenth family being the Malayo-Polynesian family (which includes Malay, Indonesian, and a large number of Polynesian languages including Maori, Tongan, Samoan, and Hawaiian). English is widely taught but proficiency is highly variable.
For Taiwanese Live-Action TV series, please click here.
Taiwan and its inhabitants in fiction:
The Taiwanese flag 
The red field symbolizes livelihood and fraternity, as well as the blood of those who fell in the uprisings against the Qing Dynasty; at the canton is the Blue Sky with a White Sun  , the symbol of the Kuomintang, whose blue field symbolizes nationalism and liberty; at its center is the Sun with twelve rays, each signifying the months of the year and the twelve Chinese hours (2 modern hours) in a day, symbolizing progress, colored white to symbolize democracy and equality.
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alternative title(s): Taiwan
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