Cold War Economic Ideology and US Aid to Taiwan, 1950-1965

This project examines the puzzle of the ideological contradiction for why the United States justified giving large amounts of economic aid intended to develop capitalism and private sector free enterprise for the authoritarian Republic of China (ROC) government’s socialist style public sector economy on the island of Taiwan during the cold war period 1950-1965. The $1.4 billion in US foreign economic aid to the Chinese Nationalist led ROC government in Taiwan during this 15-year period was a seemingly disproportionate amount compared to its small size and type of authoritarian regime compared to other aid recipients. This project appraises the extent that Washington used the US cold war containment strategy’s foreign economic aid concepts to justify economic aid to Taiwan. The historiological method applies a political economy inspired interpretative approach using capitalist economic ideology as the focal point for appraising how Washington justified US economic aid to Taiwan. The method synthesizes a blended framework of American diplomatic, ideological, economic, and the foreign aid subfields of historical inquiry within the broader context of United States-Taiwan cold war relations. The findings suggest US economic aid did not result in creating a private sector in Taiwan during the period, but rather soon afterwards. Whether US economic aid resulted in creating a liberal capitalistic-ideology based economic model in Taiwan can be argued as mostly irrelevant given the US containment strategy’s necessities to showcase economic success. The main causes justifying US aid to Taiwan were the outbreak of the Korean War in 1950 and Washington’s need to counter new Soviet and Chinese Communist foreign economic aid initiatives during 1952-1956. As a result, Washington justifiably, but disingenuously declared Taiwan a “victory” for capitalistic ideology versus Communist inspired socialist-style economic expansionism