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Achievements by the Qing administration were disrupted when Taiwan was ceded to Japan in 1895, under the terms of the Treaty of Shimonoseki. When Japanese troops formally entered Taipei on June 6 of that year, armed resistance broke out. By the time resistance was broken in October, over 7,000 Chinese soldiers had sacrificed and civilian casualties numbered in the thousands.

Unlike the Dutch, who in the 17th century colonized Taiwan more for immediate commercial gains, the Japanese at the start of the 20th century gave priority to establishing effective political control over the island. Thus, the Japanese policeman, rather than the Protestant missionary of Dutch times, became the most important tool in the exercise of colonial aims.

During its 50-year rule of Taiwan, Japan developed programs designed to supply the Japanese empire with agricultural products, create demand for Japanese industrial products, and provide living space for emigrants from an increasingly overpopulated home country. In short, Japan was intent on building an industrial homeland and an agricultural Taiwan.

The period of Japanese colonization can be roughly divided into three periods. The first, from 1895 to 1918, involved establishing administrative mechanisms and militarily suppressing armed resistance by local Chinese and indigenous peoples. During this period, the Japanese introduced strict police controls, carried out a thorough land survey, standardized measurements and currencies, monopolized the manufacture and sale of important products (such as salt, sugar, and pineapple), began collecting census data, and made an ethnological study of the island's indigenous peoples.

During the second period from 1918 to 1937, Japan consolidated its hold over Taiwan. Compulsory Japanese education and cultural assimilation were emphasized, which attempted to cut the link between Taiwan and Chinese culture, while economic development was promoted to transform the island into a secure stepping stone from which Japan could launch its southward aggression.

The third period, which started in 1937 and lasted until 1945, entailed the naturalization of Taiwan residents as Japanese. The Chinese on Taiwan were forced to adopt Japanese names, wear Japanese-style clothing, eat Japanese food, and observe Japanese religious rites. Chinese dialects and customs were effectively discouraged. Heavy industry and foreign trade was strongly emphasized during this period, coinciding with the Second World War.

During Japanese suppressive rule, resistance against alien rule never ceased on the island. One of the largest revolts, the Tapani Incident of 1915, resulted in the deaths of more than 10,000 Taiwanese. Liberation from colonial rule would only come with the total defeat of Japan in 1945. In that year, the average income of Taiwanese was less than 100 USD per year.

Republic of China (1911-1949, on mainland)
People's Republic of China (1949-)
pre-1895 Taiwan
Japanese Colonized Taiwan (1895-1945)
Taiwan, Republic of China (1945-)
History of the first series of RMB (1947-1955)
History of the second series of RMB (1955-1964)
History of the third series of RMB (1962-1987)
History of the fourth series of RMB (1987-1999)
History of the fifth series of RMB (1999-)
Monetary History of Taiwan, Part 1 (-1945)
Monetary History of Taiwan, Part 2 (1945-)
Story of the Old TWD
Monetary History of Hong Kong (1859-)
Monetary History of Macau (1905-)
History and Monetary History of Tachen Islands (1950-1955)

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