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.