Taiwan was not a colony and could defend itself. The resounding defeat of the Nationalist Party in local elections in November, giving the opposition Democratic Progressive Party (which calls for Taiwan's independence) jurisdiction over more than 70 percent of the population at the local level, caused Taiwan's independence to become a matter of concern not only for the ruling party but also for Beijing and Washington. Leaders in the People's Republic of China blamed the United States for encouraging independence sentiment in Taiwan. Americans viewed this as the natural outcome of democratization and something that China had to live with. The Clinton Administration, however, sent a number of former and standing officials to Taiwan to warn the DPP and to try to prevent a crisis.
In the meantime, Taiwan weathered the storm of the so-called Asian economic meltdown, experiencing quite normal economic growth in 1998, though its currency floated downward a bit. Economic problems elsewhere, in fact, made Taipei look good, provided opportunities for investment elsewhere in the region, and thereby yielded some foreign policy gains. Economic stability, among other factors, including the fact talks with Beijing were put back on track and the fact that the United States encouraged such talks, seems to explain the Nationalist Party's good performance in the December 1998 election. The ruling party made gains in the lawmaking body of government and captured the Taipei mayorship from the opposition Democratic Progressive Party.
Crucial questions remain, however: Is President Lee Teng-hui leading Taiwan toward separation from China or toward unification? Does Taiwan's democratization mean that it will remain or should be sovereign and independent? Or will economic forces promote linkages that will bring Beijing and Taipei together into one China in the form of some kind of federation? Or will Beijing resort to military force to resolve the "Taiwan issue"? If so, will the United States intervene? What role will the international community play? Will efforts to change Taiwan's political system work? Can stability be maintained? What will be the nature of its future polity and its politics?