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Transition to democracy

After Chiang Ching-kuo's death in 1988, Lee Teng-hui became the first president of the ROC born in Taiwan. Lee's administration oversaw a period of democratization in which the Temporary Provisions against the Communist Rebellion were abolished and the Additional Articles of the Constitution were introduced. Congressional representation was allocated to only the Taiwan Area, and Taiwan underwent a process of localization in which Taiwanese culture and history were promoted over a pan-China viewpoint while assimilationist policies were replaced with support for multiculturalism. In 1996, Lee was re-elected in the first direct presidential election. During Lee's administration, both he and his party were involved in corruption controversies that came to be known as " black gold " politics.

Chen Shui-bian of the DPP was elected as the first non-KMT president in 2000. However, Chen lacked legislative majority. The opposition KMT developed the Pan-Blue Coalition with other parties, mustering a slim majority over the DPP-led Pan-Green Coalition. Polarized politics emerged in Taiwan with the Pan-Blue preference for eventual Chinese unification, while the Pan-Green prefers Taiwanese independence.

Chen's reference to " One Country on Each Side " of the Taiwan Strait undercut cross-Strait relations in 2002. He pushed for the first national referendum on cross-Strait relations, and called for an end to the National Unification Council. State-run companies began dropping "China" references in their names and including "Taiwan". In 2008, referendums asked whether Taiwan should join the UN. This act alienated moderate constituents who supported the status quo, as well as those with cross-strait economic ties. It also created tension with the mainland and disagreements with the United States. Chen's administration was also dogged by public concerns over reduced economic growth, legislative gridlock, and corruption investigations.

The KMT's nominee Ma Ying-jeou won the 2008 presidential election on a platform of increased economic growth and better ties with the PRC under a policy of " mutual non-denial ". Under Ma, Taiwan and China opened up direct flights and cargo shipments. The PRC government even made the atypical decision to not demand that Taiwan be barred from the annual World Health Assembly. Ma also made an official apology for the White Terror. However, closer economic ties with China raised concerns about its political consequences. In 2014, university students occupied the Legislative Yuan and prevented the ratification of the Cross-Strait Service Trade Agreement in what became known as the Sunflower Student Movement. The movement gave rise to youth-based third parties such as the New Power Party, and is viewed to have contributed to the DPP's victories in the 2016 presidential and legislative elections, the latter of which resulted in the first DPP legislative majority in Taiwanese history. In January 2024, William Lai Ching-te of the ruling Democratic Progressive Party won Taiwan's presidential elections. However, no party won a majority in the simultaneous Taiwan's legislative election for the first time since 2004, meaning 51 seats for the Democratic Progressive Party (DPP), 52 seats for the Kuomintang (KMT), and the Taiwan People's Party (TPP) secured eight seats.