section_path: History/Republic of China (1945–present)/Martial law era (1949–1987)
section_name: Martial law era (1949–1987)
paragraph_text: Martial law era (1949–1987)
  
  Martial law, declared on Taiwan in May 1949, continued to be in effect until 1987, and was used to suppress political opposition. During the White Terror, as the period is known, 140,000 people were imprisoned or executed for being perceived as anti-KMT or pro-Communist. Many citizens were arrested, tortured, imprisoned or executed for their real or perceived link to the Chinese Communist Party. Since these people were mainly from the intellectual and social elite, an entire generation of political and social leaders was destroyed.
  
  Following the eruption of the Korean War, US President Harry S. Truman dispatched the United States Seventh Fleet into the Taiwan Strait to prevent hostilities between the ROC and the PRC. The United States also passed the Sino-American Mutual Defense Treaty and the Formosa Resolution of 1955, granting substantial foreign aid to the KMT regime between 1951 and 1965. The US foreign aid stabilized prices in Taiwan by 1952. The KMT government instituted many laws and land reforms that it had never effectively enacted on mainland China. Economic development was encouraged by American aid and programs such as the Joint Commission on Rural Reconstruction, which turned the agricultural sector into the basis for later growth. Under the combined stimulus of the land reform and the agricultural development programs, agricultural production increased at an average annual rate of 4 percent from 1952 to 1959. The government also implemented a policy of import substitution industrialization, attempting to produce imported goods domestically. The policy promoted the development of textile, food, and other labor-intensive industries.
  
  As the Chinese Civil War continued, the government built up military fortifications throughout Taiwan. Veterans built the Central Cross-Island Highway through the Taroko Gorge in the 1950s. During the Second Taiwan Strait Crisis in 1958, Nike Hercules missiles were added to the formation of missile batteries throughout the island.
  
  During the 1960s and 1970s, the ROC maintained an authoritarian, single-party government under the Kuomintang's Dang Guo system while its economy became industrialized and technology-oriented. This rapid economic growth, known as the Taiwan Miracle, occurred following a strategy of prioritizing agriculture, light industries, and heavy industries, in that order. Export-oriented industrialization was achieved by tax rebate for exports, removal of import restriction, moving from multiple exchange rate to single exchange rate system, and depreciation of the New Taiwan dollar. Infrastructure projects such as the Sun Yat-sen Freeway, Taoyuan International Airport, Taichung Harbor, and Jinshan Nuclear Power Plant were launched, while the rise of steel, petrochemical, and shipbuilding industries in southern Taiwan saw the transformation of Kaohsiung into a special municipality on par with Taipei. In the 1970s, Taiwan became the second fastest growing economy in Asia. Real growth in GDP averaged over 10 percent. In 1978, the combination of tax incentives and a cheap, well-trained labor force attracted investments of over $1.9 billion from overseas Chinese, the United States, and Japan. By 1980, foreign trade reached $39 billion per year and generated a surplus of $46.5 million. Along with Hong Kong, Singapore, and South Korea, Taiwan became known as one of the Four Asian Tigers.
  
  Because of the Cold War, most Western nations and the United Nations regarded the ROC as the sole legitimate government of China until the 1970s. Eventually, especially after the expulsion in the United Nations, most nations switched diplomatic recognition to the PRC. Until the 1970s, the ROC government was regarded by Western critics as undemocratic for upholding martial law, severely repressing any political opposition, and controlling the media. The KMT did not allow the creation of new parties and competitive democratic elections did not exist.
  
  From the late 1970s to the 1990s, Taiwan underwent political and social reforms that transformed it into a democracy. Chiang Ching-kuo, Chiang Kai-shek's son, served as premier from 1972 and rose to the presidency in 1978. He sought to move more authority to " bensheng ren " (residents of Taiwan before Japan's surrender and their descendants). Pro-democracy activists Tangwai emerged as the opposition. In 1979, the Kaohsiung Incident took place in Kaohsiung on Human Rights Day. Although the protest was rapidly crushed by the authorities, it is considered as the main event that united Taiwan's opposition.
  
  In 1984, Chiang Ching-kuo selected Lee Teng-hui as his vice-president. After the Democratic Progressive Party (DPP) was (illegally) founded as the first opposition party in Taiwan to counter the KMT in 1986, Chiang announced that he would allow the formation of new parties. On 15 July 1987, Chiang lifted martial law on the main island of Taiwan.