IN the aftermath of a watershed election, Taiwan is moving to unlock itself from history and fashion a new identity distinct from mainland China.
Last weekend's poll left the ruling Nationalist Party or Kuomintang (KMT), which for years has backed reunification, facing liberal party dissidents and a newly credible opposition, both pushing a separate Taiwan. Premier Hau Pei-tsun and his Cabinet announced yesterday they will resign after the KMT's poor performance in the polls.
This new political dynamic, analysts and politicians say, will not only accelerate political and economic change but also sharpen debate over Taiwan's role in a "greater China" confederation expected to emerge in the next decade.
Between the calls for reunification and independence, which have polarized this country in recent years, is a growing consensus that Taiwan should pursue economic links with the mainland while remaining politically independent.
"For years, the KMT has said Taiwan is part of China. But which China are we talking about?" asks Peng Min-ming, the patriarch of Taiwan's opposition movement who returned in November from exile in the United States. "A clearer thinking has emerged in this election that there are two Chinas and that they should go their own ways."
The political shift comes as Taiwan enjoys booming trade and investment ties with its mainland rival and enhanced political and economic stature abroad.
By the end of 1992, more than 5,000 Taiwanese companies will have invested $5 billion in the communist mainland, which itself is undergoing a dramatic transformation to a market economy. By welcoming Taiwanese investment, Beijing hopes to lure badly needed capital and eventually draw the prodigal island back into the Chinese fold.
Yet a more confident Taipei has also triggered Beijing's ire by purchasing high-tech fighter aircraft from the US and France and welcoming high-ranking officials of Western countries that can no longer ignore Taiwan's economic clout.
Taiwan knows its defiance can only go so far and stops short of declaring independence, which China threatens to punish with stiff action. During the election campaign, the opposition modulated its signature call for independence, which made voters uneasy in the past.
"It's not necessary to provoke a reaction from Beijing," says Mr. Peng. "Let's concentrate on the domestic process of democratization and see what happens in 20 years. Things may change in Beijing."
Just how Beijing will respond to the growing democratization in Taiwan remains a major question. Mainland intellectuals cite their smaller cousin as an example of how a harsh authoritarian government can transform itself into a rambunctious multiparty system.
Taiwanese also are closely following the bitter standoff between Beijing's aging communists and Hong Kong's reform-minded Gov. Chris Patten, although observers say it is firming Taiwan's resolve not to accept Beijing's blueprint of one country, two systems.
"In the past, Beijing has always tried to divide and rule. They will probably try to play one faction off against another and create a crisis," says Bertrand Tsai, a political scientist at National Taiwan University. "But if they're smart, they'll keep quiet. A stable Taiwan is more beneficial to China just as a stable China is better for Taiwan."
Still, Taiwanese remain divided over the best path. At a polling station last week, one youth said he voted against the KMT because of party corruption and opposition to a separate Taiwan.
Older people who nurture emotional ties to the mainland still hold out hope for reunification. "It's difficult now to be reunified," said Yu Yang-hsing, a former soldier who fled with the KMT Army to Taiwan. "But maybe 10 years from now."
Shifting public opinion also has thrown the KMT government into internal crisis. For years, the party won support by playing on voter fears about riling Beijing, yet strived to maintain Taiwan's de facto independence.
Native Taiwanese politicians, who gained seats in the recent parliamentary elections, want to see Taiwan treated as a separate but equal administrative entity with the mainland and even be allowed to join the United Nations and the General Agreement on Tariffs and Trade.
Michael Kau, an American political scientist who heads the 21st Century Institute think tank predicts the KMT government "will be taking a much more cautious attitude toward reunification and a firmer stand toward Beijing while focusing on developing Taiwan first."
Government spokesman Jason Hu says that while the government upholds the one China policy, "on the other hand we have to be pragmatic and admit that there are two authorities and two entities."
As investment and trade grow, the government comes under growing pressure from businessmen to liberalize links with China, establishing direct flights and shipping connections, mail and other commercial links.
Ma Ying-jeou, an official with the Mainland Affairs Council which shapes government policy, argues that there are technical obstacles to such steps and urges a cautious approach. Contrasting a gradual reunification process in China with the dramatic merging of the two Germanys, Mr. Ma says, "West Germany seemed to know very little about the inner workings of the East German economy."
With 5000 Taiwan companies on the mainland, "they know a lot about the inner workings of the mainland economy," he says. "This is a safer way for us. We don't have to confront all the problems that we can't handle now."