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.