when did the Cold War end? One obvious choice: June 1987, when US President Ronald Reagan stood in front of the Berlin Wall that separated communist East Germany from capitalist West Germany and famously challenged the Soviet leader Mikhail Gorbachev to "tear down this wall." Yet at about the same time as Reagan's telegenic dare, far from the glare of the cameras, a less sensational but perhaps more significant barrier was crumbling: the one separating communist China from capitalist Taiwan.
Nowhere, perhaps, was the Cold War better represented than in the division of the Chinese nation into two blocs separated not only by water but by ideology -- by communism and capitalism at their most strident.
Starting in 1949, more than a million mainland Chinese retreated to Taiwan with Chiang Kai-shek, leader of the Westernbacked Nationalist Party, leading to a longrunning civil war with the Chinese Communist Party. Military tensions between the countries ran high well into the 1980s. In the center of Taipei, giant placards proclaimed the national goal: "Retake the mainland!"
But starting the same year as Reagan's memorable speech, shared economic interests and history would lead to a gradual thaw between the two places that would dramatically accelerate China's economic reintegration with capitalist countries.
It wasn't the Taiwanese military but rather a political decision that transformed Taiwan-China economic and cultural relations. In 1987, Taiwan's Nationalist government lifted martial law and eased restrictions on contact with the mainland. Many of the exiles who helped Taiwan prosper and grow had been forced to leave families and friends behind when they fled the mainland. As these restrictions were lifted, a massive increase in flows of capital, products and eventually people between Taiwan and China resulted.
Political decisions on both sides has- tened the reunion. Taiwan's comparative advantage in human and material resources and Chinese demand for those resources created strange bedfellows. As China's economic reforms advanced in the 1980s, more and more mainland consumers demanded goods -- such as fast food and pop music -that the Taiwanese were best able to provide. As Taiwan's industrial sector became less competitive internationally, its deindustrializing economy needed to find new markets and its workers new jobs.
The profit motive led the way; manufacturers and business owners followed. As a consequence, China has since received more than $100 billion in Taiwanese investment. This has funded tens of thousands of projects all over China, even in Nanchang, the birthplace of the communist state. Today, more than 70,000 Taiwanese companies have investments in the mainland. Trade between the two countries now breaks records yearly and has amounted to more than $2 trillion since 1987. In 2002, China replaced the USas the top market for Taiwanese goods. This is all the more remarkable considering the size of Taiwan