Mainland China has considered Taiwan a renegade province ever since communist forces drove the nationalists off the mainland in 1949.
China has repeatedly threatened to use military power against the island if it declares independence and has staged a series of naval exercises off the coast of Taiwan.
While a recent Pentagon report warns that China is considering further coercive moves, Beijing accuses the United States of fabricating a 'China threat' to continue arms sales to Taiwan.
Although cross-straits relations have improved in recent months, with Beijing and Taipei seeking closer business links, muted saber rattling continues.
1945-1949 Civil War
With the end of World War II Taiwan was handed over to the control of mainland China, under the Kuomintang (nationalist) government of General Chiang Kai-shek. The move brought to an end more than 50 years of Japanese control.
Chiang moved quickly to formalise the island's status as a province of China. On Taiwan itself liberation from Japanese rule was initially welcomed, but many quickly came to resent the corruption of the new government and what was seen as the exploitation of Taiwanese resources for mainland post-war reconstruction. Taiwanese industry, which had been closely tied to Japan, was redirected to supply the needs of the mainland and the island's economy slid into crisis. Unemployment soared and, as protests grew, a brutal crackdown took place in 1947.
In what became known as "the White Terror" an estimated 18,000 - 30,000 members of the island's native-born political and academic elite were executed as Chiang's government asserted its control. For decades afterwards the government insisted the action was a crackdown on communists and gangsters.
As the war with the Japanese came to an end, on the mainland the civil war with Mao Zedong's communist forces resumed more fiercely than ever with the communists increasingly gaining the upper hand. As defeat loomed hundreds of thousands of Chiang's soldiers defected to the communist side.
In October 1949 Chairman Mao's communists took control on the mainland and Chiang Kai-shek withdrew his Kuomintang army to Taiwan, taking with him China's entire gold reserves. More than 1.5 million refugees fled with him adding to resentment among native Taiwanese against what they saw as a mainland invasion.
In December Chiang declared Taipei the temporary capital of China, vowing that he would eventually "recover the mainland". He also issued a decree imposing perpetual martial law - an order not rescinded until 38 years later. As part of the claim to represent all China, all the institutions of mainland government were transferred to Taiwan, including the parliament, which had representatives for all mainland provinces.
Chiang's government imposed harsh restrictions on civil and political liberties, jailing or executing thousands of opponents and clamping down on the use of native Taiwanese dialects.
Initially the US kept well out of the stand-off between the two Chinas. But with the outbreak of the Korean War in 1950 and Chinese troops fighting in Korea, Taiwan was seen as part of the west's bulwark against communist expansionism. The US poured in money and military supplies. A planned communist invasion in 1950 was thwarted when President Truman ordered the US 7th Fleet into the Taiwan Straits.
Despite sporadic attacks from the mainland Taiwan enjoyed huge economic growth during the 1950s and early 60s, backed up by massive inflows of US funds and demand for its products.
Domestically President Chiang's rule became increasingly dictatorial, backed up by the military secret service, the Taiwan Garrison Command. Chiang's position was under challenge from two sides. On the one hand there was growing support for outright independence among the native Taiwanese, most of whom resented what they saw as minority rule by mainlanders. On the other, there was the ever-present threat of communist invasion.
As the Kuomintang government began to absorb a younger generation of mainlanders and native Taiwanese, the focus slowly began to shift from reconquest of the mainland to the development of the island itself. But much of the real power remained firmly in the hands of President Chiang and his son, Chiang Ching-kuo.
In the late 1960s Taiwan began to lose out to the shifting tide of Cold War politics. Washington and Beijing developed closer ties to counter what they saw as Soviet expansionism and it seemed that Taiwan was losing the support of its principal international backer.
In 1971 with international favour swinging towards Beijing, Taipei lost possession of China's seat on the UN Security Council to the mainland government. In disgust Chiang walked out of the UN.
US President Richard Nixon's historic visit to China in 1972 came as a further blow to Taiwan's prestige, paving the way for Washington and Beijing to establish diplomatic relations seven years later. Under its “one China” policy Beijing insists that countries wanting to establish diplomatic relations must automatically break off official ties with Taipei and during the 1970s other western countries and their allies followed Washington's lead.
In an effort to get around this, pro-Taiwan members of the US Congress passed the Taiwan Relations Act, allowing for the sale of defence equipment to Taiwan and providing vague guarantees for the island's security. Nonetheless as China made its way onto the world stage Taiwan was increasingly pushed off it.
In Taiwan itself, President Chiang died in 1975 and three years later his son replaced him as president, raising opposition alarm that the appointment heralded the start of a Chiang dynasty.
In 1979 opposition groups organised a protest rally in the southern city of Kaohsiung to mark International Human Rights Day.
Although the rally was crushed by scores of riot police the event came to be regarded by many as the catalyst that united Taiwan's opposition.
During the 1980s a series of financial scandals rocked the Kuomintang government and criticism grew of Taiwan's continued one-party rule. In 1985 Chiang opened talks with the domestic opposition and a year later Taiwan's first opposition party, the Democratic Progressive Party, was born.
During the 1980s the process of democratisation became increasingly brisk. The dropping of martial law in 1987 and the death of President Chiang Ching-kuo a year later opened the door to a new era of Taiwanese politics as Lee Teng-hui became the island's first native-born president.
In 1989 as pro-democracy protests swept China, Taiwan held its first elections in which parties other than the Kuomintang were allowed to stand. A year later surviving members of parliament representing provinces on the mainland were retired, ending Taipei's claim to be the government of all China.
As Taiwan's confidence increased it began to court diplomatic ties, offering trade and aid in return. Dialogue also developed with Beijing but moves towards Taiwan asserting its de facto independence drew angry reactions from the mainland. In 1995 relations threatened to boil over when President Lee's visit to the US and the build up to Taiwan's first democratic presidential elections sparked a tense military stand-off.
With President Lee re-elected by popular mandate in 1996, Taiwan's relations with the mainland continued on a rollercoaster ride. Economic links slowly expanded but Beijing remained edgy about Taiwan acting as an independent state. Any hint that Taiwan was moving towards independence produced warnings of military intervention.
A new rift between Taiwan and China was threatened by the election to the presidency in March 2000 of Chen Shui-bian of the pro-independence Democratic Progressive Party (DPP).
But Mr Chen, a former lawyer with a populist touch, took care not to antagonise Beijing during the election.
He promised not to declare independence so long as Beijing did not use force against Taiwan. He also pledged not to hold a referendum on independence or reunification and offered several concessions and gestures towards China, such as opening up direct trade links.
But China's leadership remained distrustful of Mr Chen's motives, regularly claiming his real ambition was full independence for the island.
The lack of progress with China, which continued to refuse to hold talks with Mr Chen, may have prompted him to take a harder line.
In August 2002 he made a veiled threat to hold a referendum and referred to China and Taiwan as each being a country on either side of the Taiwan Strait - "one side, one country".
A woman rides her bike past a row of Chinese tanks.
China is this month to carry out its largest military exercises of the year aimed at sending a 'substantial warning' to Taiwan separatists.
China has always seen Taiwan as a renegade province and Mr Chen's comments were seen by some as a coded call for formal independence.
Analysts said the comments appeared to have been designed to win the support of independence activists inside the DPP. But with China hanging on his every word, Mr Chen must have known his comments would infuriate Beijing too.
1949 - Communist forces led by Mao Zedong defeat Chiang Kai-shek's Nationalists, driving him and more than a million followers to Taiwan. Chiang sets up a government-in-exile and vows to "recover the mainland".
1954 - The U.S. signs a mutual-defense treaty with Taiwan.
1958 - China attacks the island of Quemoy, a base for about 100,000 Nationalist troops in the Taiwan Strait, in a bid to "liberate" Taiwan. The U.S. deploys the Seventh Fleet; the Chinese back off.
1971 - Taiwan is expelled from the United Nations and its seat given to China, following a secret visit to Beijing by the then U.S. Secretary of State Henry Kissinger.
1972 - U.S. President Richard Nixon visits China, paving the way for the resumption of full diplomatic relations between the two nations and leading to the end of formal U.S. ties with Taiwan.
1979 - The U.S. cuts formal links with Taiwan and agrees to abide by Beijing's "one China" policy
1987 - Taiwan lifts martial law after 38 years and allows its nationals to visit relatives in China for the first time
1988 - Lee Teng-hui becomes the island's first native Taiwanese President, and democratic reforms begin to take hold
1989 - China fears that Taiwan will declare a formal split after the pro-independence Democratic Progressive Party (DPP) fares well in parliamentary and local-government polls.
1993 - The first high-level talks between China and Taiwan take place in Singapore
1995 - A visit to the U.S. by President Lee prompts China to perform missile tests and military exercises in the Taiwan Strait just before the island's first presidential election by universal suffrage. Lee wins.
1999 - Lee infuriates Beijing by saying China and Taiwan enjoy a "special state-to-state relationship," implying that Taiwan is an independent sovereign nation.
2000 - DPP candidate Chen Shui-bian, also a native Taiwanese, is elected President, ending more than 50 years of Kuomintang rule.
2001 - Taiwan eases restrictions on its companies wanting to invest in China. Two journalists from the mainland's Xinhua News Agency become the first Chinese reporters to visit Taiwan under the island's new "open door" policy
2002 - President Chen defines the status quo as "one country on each side of the Taiwan Strait," sparking criticism from Beijing and his domestic opponents
2003 - A Taiwan airliner makes the first civilian flight to the mainland since 1949. Chen, meanwhile, announces plans for a referendum on election day on March 20, 2004, to ask voters whether the island should increase its defense budget and engage in dialogue with Beijing
2005 - Taiwanese and Chinese airlines fly the first nonstop charter flights between the two sides for the Chinese New Year.
Source: www.time.com, www.infomanage.com