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Although the Nationalist government temporarily allied with the Communists in 1936 (Chang Hsueh-liang, former general from Manchuria who lost his home to the Japanese in 1931, captured Chiang Kai-shek in 1936 and forced him to ally with the Communists to form a "United Front" against Japanese invasion), Chiang never sincerely wanted to ally with the Communists and to share power. As soon as the war against Japan came to an end, civil war broke out in 1945. The Communists exercised primarily guerrilla warfare to tie down the main forces of the Nationalists, and focused on land reform in the countryside to win over the hearts of the peasants. After much of northwestern China was taken by them, the Communists moved east into the cities and waged several major battles against the Nationalists, finally forcing the latter to back down and flee to Taiwan in several phases between 1948-1950. On Oct.1, 1949, Communist leader Mao Zedong pronounced the establishment of the People's Republic of China in Beijing, ending Nationalist rule on mainland China. From then on, Taiwan came to be called the Republic of China.

Although the relationship between the U.S. and Communist China deteriorated in 1950 after the onset of the Korean War, it is interesting that there were moments during WWII when some members of the U.S. government advocated that the U.S. abandon support to Chiang Kai-shek and switch to the Communists. Those who criticized the Chiang Kai-shek regime for its corruption included the so-called “China hands" in the U.S. Foreign Service: John Service, John Davies, and reporter Theodore White. The U.S. general sent to assist Chiang Kai-shek after U.S. declared war on Japan, Joe Stilwell, had a very sore relationship with Chiang. In 1945, the U.S. sent a so-called "Dixie Mission" to Yenan, Shaanxi Province, center of Communist occupied areas, to teach them how to use U.S. weapons and considered whether to ally with the Communists. Although Nationalist corruption had little impact on president Franklin Roosevelt’s policy toward China because of wartime need, it influenced Truman’s decision not to send Chiang any new support after the war was over. There were, of course, supporters of Chiang's regime in the U.S., one prominent one being Henry Luce, founder of Time and Life.

In the second half of 1945, because of U.S. concern of the possible alliance between the Chinese Communists and the Soviet Union, they decided to support Chiang's regime despite his corruption. The hostile Stillwell was replaced by the Chiang-friendly Wedemeyer. Still, the U.S. wanted to help negotiate between the Communists and the Nationalists. Patrick Hurley, the man chosen to do the job, however, was hostile to the Communists and had no diplomatic experience. He failed to persuade the two sides to avoid a civil war.

After 1949, some members of the U.S.State Department used Truman’s policy to argue that China was “lost” because of the failure of the U.S. to militarily intervene in the Chinese civil war. One reason Truman did not intervene was because he disliked Chiang Kai-shek personally. The Truman administration did not finalize on its policy toward Communist China until the Korean War (1950-1953) broke out and the Chinese sent troops across the Yalu River separating China and Korea.  China believed the U.S. wanted to use Korea as a springboard to overtake Communist China.  As the war went on, and the U.S. tightened its relationship with Taiwan, it strengthened the Chinese belief that the U.S. conspired against Communist China and wanted to help restore the

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