On December 8, 1949, the government of the Republic of China moved its capital from Beijing to the city of Taipei, on the island of Taiwan. This signaled the victory of Mao Zedong’s Communist forces over Chiang Kai-shek's Nationalists in the Chinese Civil War, following the establishment of the People’s Republic of China two months earlier. The Chinese Civil War started in the 1920s and lasted for more than two decades.
 
The competing governments of the People’s Republic of China (PRC) and the Republic of China (ROC) form the basis of the so-called “Two Chinas” issue. The PRC is a communist country withan economy that mixes socialist and capitalist elements. Historically, the nation had a command economy. The ROC, often just called “Taiwan,” is a democratic state with a capitalist economy. The Two Chinas issue is often called "cross-Strait" relations.
 
Most of the world officially recognizes the PRC as the government of China, with some nations also recognizing Taiwan’s sovereignty. The United States, which did not officially recognize the PRC until 1979, follows a one-China policy.

Noun

city where a region's government is located.

capitalism
Noun

economic system where the free exchange of goods and services is controlled by individuals and groups, not the state.

civil war
Noun

conflict between groups in the same country or nation.

command economy
Noun

system where production, investment, prices, and income are determined by the government.

communist
Noun

person or group of people who support communism, a type of economy where all property, including land, factories and companies, is held by the government.

democratic
Adjective

having to do with a government led by its citizens, who vote for policies and/or representatives.

establish
Verb

to form or officially organize.

government
Noun

system or order of a nation, state, or other political unit.

policy
Noun

set of actions or rules.

recognize
Verb

to identify or acknowledge.

signal
Verb

to communicate using signs.

Noun

system of organization or government where all property, industry, and capital is owned by the community, not individuals.

sovereignty
Noun

power or independence within a region.

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