The question of Taiwanese sovereignty is confusing. Various arguments claim that the mainland Chinese government holds legal sovereignty over Taiwan, or that Taiwan is a sole sovereign nation, or, in a small minority, that
Taiwan is still a US territory officially administered by American military government.Taiwan was seized by Japan in 1895 after the Sino-Japanese war, and Japan held the island until remaining Japanese forces there officially surrendered in October of 1945. The island was then formally ruled by US military government, but administrative authority was given to local bodies. Japan ceded sovereignty over Taiwan according to the 1951 San Francisco Peace Treaty, concluded between Japan and Taiwan in 1952. There is no record of the date the US terminated military government.
When the Maoist rebels seized control of mainland China in 1949, President Chiang Kai-shek and the Kuomintang (KMT, the nationalist party), along with over a million Chinese citizens, fled to Taiwan, where they established the Republic of China (ROC) not to be confused with the communist People's Republic of China (PRC) on the mainland. To this day the KMT claims the ROC to be the true government of all of China and wishes for reunification and the removal of the communist government. They were defeated in a 1988 election which brought the Democratic Progressive Party into power, whose political line is less clear than the KMT, but apparently involves closer ties to the PRC while maintaining independence.
The ROC held the Chinese seat in the UN until 1971.
The United States recognized Taiwan to be legally occupied by the ROC under Gen. MacArthur's General Order No.1 until 1972 when Nixon in communication with PRC leaders agreed that the PRC was the "lawful government" of Taiwan, but no timetable for a transfer of sovereignty was ever set, and in the 1982 "Six Assurances" to Taiwan, the US stated that it would not formally recognize Chinese sovereignty over Taiwan.
Things are still in the same state of limbo. The US and most of the rest of the world do not recognize Taiwanese independence (you'll note there is no seperate entry for Taiwan in the CIA world factbook), but they also do not formally recognize Chinese rule. The PRC claims the Taiwan issue to be a domestic affair despite having no adminstrative power there.
