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The Japanese after the Pacific War were required to return Taiwan to China and repatriate Japanese nationals. The Taiwan population was not consulted on their future. The Japanese turned over control to Nationalist troops. Damage to Taiwan's infrastructure was limited during the War. American air strikes had focused on military targets. And there was very limited industry on the island. The island was, however, affected by the war. The economy was tied into the Japanese economy and thus had to reajust. The Nationalists gave little attention to the island after taking control. The major action was to confiscate the property of the Japanese natiinals who were expelled and shipped basck to the Home Islands. The Nationalists formed Several large public corporations. At first, only limited numbers of Chinese moved to the island. Taiwan uunder Nationalist control experienced some violence and hyperinflation. The situation on Taiwan changed with the Communist victory on the Mainland (1948-49). Aftr losing the Chinese Civil War, Chiang Kai-check and the Nationalists retreated to Taiwan. Nationlist soldiers and refugees flooded onto the island. In ainle year, the popuilation increased an estimated 20 percent. The Chinese Communists did not have the naval and air capability to bridge the Taiwan Straits with awell armed force defending the island. Most of the ethnic Chinese from the Mainland settle in the cities. It was from this group that the Nationalist Government and public sector was formed. Most of the economy was still agricultural and dominated by the indigernous Taiwan population, but was still recovering from the loss of Japanese markets and now trade with China was no longer possible.
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