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The island of Taiwan, located off the coast of China, has long been an Asian trading hub. When Taiwan is mentioned, most westerners think only of the main island, but the term is also commonly used to refer to other small territories in the same area governed by China, such as Lanyu (Orchid Island), Green Island, the Pescadores, and Kinment and Matsu Islands. The main island of Taiwan is sometimes still called Formosa, a Portuguese word meaning "beautiful." The Portuguese sighted the island in 1544, but never colonized it.

There is evidence of human settlement on Taiwan dating back 30,000 years. However, the current "aboriginal" population consists of Malay and Polynesian descendants, whose language is classified by linguists as Austronesian. Han Chinese established a settlement in Penghu (the Pescadores) in the 1100s, but it was not until later that people other than aborigines began to live permanently on the main island of Taiwan.

In 1624, the Dutch established a commercial base on Taiwan and began to import Fujian laborers. Taiwan became a Dutch colony with its colonial capital at Tayoan City, currently known as Anping. Ming dynasty forces drove out the Dutch in 1662, led by Lord Zheng Chenggong, a pirate turned military commander. When the Ming dynasty fell, Zheng established his capital at Tainan and his family held the island until driven out in 1683 by forces of the Qing dynasty, who made the island a prefecture of Fujian.

Zheng's followers were exiled to the far regions of the Qing Empire, leaving approximately 7,000 Han on Taiwan. The Qing government, troubled by lawlessness and piracy on the island, issued a series of edicts to maintain order by managing immigration and respecting aboriginal land rights. However, immigrants from Fujian continued to enter Taiwan illegally as renters of large sections of aboriginal lands under contracts usually involving marriage. As more Chinese entered Taiwan, some aboriginals integrated into the new Chinese society, while others retreated into the mountains. Much of the present Taiwanese population is descended from these immigrants.

The Qing government upgraded Taiwan's status from a prefecture to a province in 1887, with its capital at Taipei. In 1895, after China lost the First Sino-Japanese War, Taiwan and the Pescadores became a Japanese colony under the Treaty of Shimonoseki. Taiwanese wishing to remain Chinese citizens were given two years to dispose of their property and return to China. In response, on May 25 1895, the Taiwanese declared themselves to be the Republic of Formosa, with the slogan of "Forever Qing." However, this resistance to impending Japanese rule was short-lived, as Japanese forces entered the capital and quelled the insurgency on October 21 1895.

The Japanese did not initially attempt to assimilate Taiwan culturally, but rather used the island as a source of raw materials for the growing Japanese military-industrial complex, extending railroads and infrastructure to facilitate logging and mining. The Japanese contributed greatly to the upgrading of public services such as schools and sanitation systems. However, the Taiwanese were treated as second-class citizens, and local resistance movements continued to fight the Japanese until 1920s.

After Japan's defeat by the Allies in 1945, the Japanese were ordered to surrender the island to China. However, due to a civil war between the Kuomintang and the Chinese Communists, the 1951 San Francisco Peace Treaty between the Allies and Japan left United States as the occupying force in Taiwan while leaving the identity of Taiwan's eventual ownership in limbo. In 1949, after losing mainland China to the Communists, the Kuomintang was forced into exile on Taiwan, calling it the Republic of China (as opposed to the People's Republic of China, mainland Communist China). Almost a million refugees from the Communist government followed.

The Kuomintang were initially viewed as liberators by the Taiwanese, but soon proved to be corrupt and dictatorial, forming a one-party government under martial law. Government of the island was liberalized from 1978 to 1988, and political opposition parties were permitted. Taiwan is now a multi-party democracy, the first in Chinese history.

China still claims the island as part of its territory, though it seems that Taiwan will be allowed, at least in the short term, to pursue its own policies as long as it pays lip service to eventual reunification with the mainland.