Taiwan was called the Republic of China for the past fifty years, but is now trying to change its official name to Taiwan. Along with the name change, the identity of the Taiwanese people also changes. Changing a nation's identity never happens without political interference; however, the political decisions of the Taiwanese government are also linked to its economic policies. In this article, I will attempt to resolve the complex relationships between Taiwan's changing national identity, political and economic policies, along with its relations with its counterpart, the People's Republic of China. Before we get into the analysis of the current situation, let's review the history of Taiwan and the intertwined relationship between the PRC and the Republic of China. The island of Taiwan was seen as a significant place by only a few emperors throughout Chinese history. It has officially become part of Chinese territory since the Ming Dynasty in the 17th century, after Dutch settlers were expelled from the island. Taiwan was then conquered by Japan in 1895, when the “Treaty of Shimonoseki” was signed after the defeat of the Qing army in the First Sino-Japanese War. Then the Republic of China regained Taiwan from Japanese control in 1945, when Japan surrendered at the end of World War II. In early 1949, when the Chinese Nationalist Kuomintang Party (KMT) was defeated by the Chinese Communist Party (CCP) during the Chinese Civil War, the KMT retreated to the island of Taiwan, which was the only territory left under its control of the Republic of China. (ROC) control. Over the past two decades, the Republic of China has struggled to maintain its international influence while seeking to establish or strengthen a new national identity, Taiw...... at the center of the paper...... Regional Stability, Palgrave Macmillan 2012 .National Statistics, Department of Statistics of the Executive Yuan. 2011. National Statistics, Republic of China, www. tradingeconomics.com, accessed 10/12/2013Ng, Yuzin Chiautong, Historical and Legal Aspects of the International Status of Taiwan (Formosa), World United Formosans for Independence (Tokyo), 1972. "Population of Taiwan", china.com. cn, accessed 12/12/2013Rios, Xulio, “The Development of Mainland China-Taiwan Relations During Hu Jintao's Tenure: From the Anti-Session Law to the Application of the ECFA.” Taiwan Fellowship Program 2012, Ministry of Foreign Affairs, Republic of China. 2012Rosen, Daniel and Zhi Wang, “Deepening China-Taiwan Relations through the Economic Cooperation Framework Agreement,” Peterson Institute for International Economics, No. PB10-16. 2010.