While promoting economic modernization, Taiwan has made equal efforts to interpret and promote Chinese culture.

In the first decades after moving to Taiwan, the government actively opposed the tyranny of totalitarianism and communism on the Chinese mainland, maintaining its political facade as a democracy and economically as a supporter of Dr. Sun Yat-sen's Principle of People's Livelihood. The ROC government based its legitimacy on the ROC Constitution, while the Chinese mainland rule was considered a renegade party. For the same reason, the ROC government was conscious of identifying itself as the standard-bearer of traditional Chinese culture and the legitimate heir of an orthodoxy which dated back to the ancient emperors Yao, Shun, Yu, Tang, Wen, Wu, the Duke of Chou, and the great Chinese sage Confucius.

But these policies contain some inherent contradictions. The entire process of modernization, including industrialization, democratization, and the rise of a market economy is an attempt by an Asian nation to assimilate Western culture. Simply put, it is a process of Westernization. People have preferred using the term modernization for the sake of definitive accuracy and for avoiding arousing nationalist sentiment. Moreover, modernization implies the process of Westernization, globalization, and the departure from Middle Age feudalism.

The term "modernization" implies a specific perspective on time and a judgement in values. What is considered "modern" is relative to "the past" or "tradition." Other than the time factor, breaking off with the past must originate from some elementary differences in culture, which emerged when the East encountered the West. Under the impact of the West, the value system the traditional Chinese Empire had relied on for ages was shaken to its foundations. China was forced to change itself in order to face a different world and modern times. Therefore, a "traditional" China and a "modernized" Western world are relative concepts. The suffix "-ize" stands for to become or to be affected by. To put it more clearly, Chinese modernization meant that China was transformed from a traditional form into a Western, modern form.

Therefore, many have seen traditional Chinese culture as being a hindrance to modernization, and should be discarded. In an apparent contradiction, the government wanted to positively promote modernization while preserving and enhancing traditional Chinese culture. This created a tension between the forces of modernization and traditional Chinese culture.

For example, the government has invested tremendous energy in economic development. In the pursuit of modernization, technocrats were recruited, science and technologies imported, and foreign investment and advisors employed to build a modern nation founded on industry and commerce. Just as the Confucian teaching states, "only when the national granary was filled could the knowing and practices of rites and the virtue of righteousness be substantiated," cultural development was temporarily neglected. Industry and commerce were the highest priority for development, while cultural growth was relegated to the sidelines. It is this strain of thought that governed the direction of national development. Former Premier Sun Yun-suan has reiterated his deep regret for not emphasizing cultural development during his term of office. The Ten Major Construction Projects at that time did not include any aspects of cultural development, and although it was later included in the Twelve New Development Projects initiated by late President Chiang Ching-kuo, it was the last to be thought of. No earlier than 1981 was the Council for Cultural Affairs (CCA ) set up, many years after the establishment of the Council for Economic Planning and Development (CEPD). The CCA's budget allocation and position as a Cabinet member, could not be compared to that of the CEPD. In such an environment, official support for cultural development was more a demonstration of support than of substance. Because of the backwardness of cultural development, the work of preserving and strengthening Chinese culture was insufficient or disproportionate to economic achievements. 

Moreover, modernized economic and social life has already drawn society away from a Chinese cultural context. The implementation of a modern education system has led to a gradual lagging in the fostering of Chinese culture and related learning. Under these social circumstances, it is difficult to bring about a prolific Chinese culture. Furthermore, the term "Chinese culture" runs the risk of simply becoming an empty concept, lacking in feeling and understanding. Most technocrats and the technological talents who formed the administrative mainstream, were of modern scientific, technological or Western educational background, and had little affiliation or understanding of the Chinese culture they were supposed to convey. Furthermore, infused with the values of modernity, this group often viewed traditional culture as an obstacle to modernization in need of radical reform and change.

Consequently, these contradictions aroused discussion of Eastern and Western culture in the midst of rapid modernization during the 1950s. While going through rapid modernization, Taiwan has always been under the shadow of a struggle between tradition and modernity.

In 1966, when the fanatic Cultural Revolution broke out on the Chinese mainland, the ROC government launched the Chinese Cultural Renaissance Movement. Temporarily setting inherent contradictions aside, the government policy of reviving Chinese culture became especially distinct and received increased impetus, joining with the ongoing modernization of society and economy.

The memorial day of Dr. Sun Yat-sen's Birthday was first observed as Cultural Renaissance Day in 1967, and in the next year the Chinese Cultural Renaissance Promotion Committee was established under the chairmanship of the late President Chiang Kai-shek. Intended to mobilize all efforts to promote this movement, branch committees were set up throughout Taiwan.

Important individuals and events representing this trend in literature and the arts include Yen Yuan-shu's Nationalistic Literature, Li Ta-san's advocacy of a "Chinese Version of Comparative Literature," and the modern dance troupe Cloud Gate Dance Theatre's use of classic Chinese themes in The Tale of the White Serpent, Legacy, and Liao Tien-ting. Also representative are Hu Lan-cheng's Time Between the Mountains and Rivers, which re-examined faith in ancient Chinese rites and music, the China Poetry Society of Wen Jui-an, the Three and Three Collection by Chu Hsi-ning and daughters, and Poetry of the Dragon Nation by Kao Hsin-chiang. Artistic works took on a variety of forms, touching on real problems in Chinese culture, such as what China should do, or which direction Chinese culture should take.

During the 1950s and '60s, modernization thinkers criticized New Confucianism as too conservative, giving rise to a polemic between the cultures of East and West. In the 1970s, the New Confucians had shown greater liveliness than modernists because New Confucianism syncretized traditional and modern elements and advocated a modernization based on Confucianism. They proposed that Confucianism was not opposed to modernization and was fully compatible with science and technology, and could provide an antidote to the moral dilemmas of modern times. This syncretic thinking is suggestive of the philosophers Kant and Hegel. Their emphasis on nationalistic and cultural values is representative of the intellectual situation in Taiwan during this period. The tide of Confucian thinking in Taiwan had given itself a cultural identity and direction through the process of political, economic, scientific, and technological modernization.

Literary and intellectual circles of the period provided a mental image of China, pointed to the spiritual composition of Chinese culture, and called for society to return to its cultural roots. Despite the popularity of these images, little substantial cultural progress was made, and the thinking remained at an abstract level, not realized in daily life. Thus, for these cultural activists, Chinese-style fashion, Chinese macram and the Chinese art of tea gradually become an integral part of their lives.

The general situation turned the trend of Westernization back in the direction of Chinese tradition. In sociology, course titles on modernization changed to "Tradition and Modernization" instead of "From Tradition to Modern." Discussions centered on how tradition could be useful and effective in the modern world. Tradition and modernity were not seen as opposed to values, or tradition as an obstacle to national modernization. The movement argued that in the modernization of the country, preservation of the Chinese tradition was necessary to prevent cultural colonization. During the 1970s, intellectuals discarded unhealthy, confused, lost, and nihilistic attitudes toward Chinese culture, in order to rebuild, identify, and reflect on traditional Chinese culture.

In the course of cultural development, two forms of transformation occurred: externalization and dissimilation. During the period of popularity of existentialism, literary circles demonstrated an introspective ability, which was beneficial to Taiwan's long-term literary development. (By contrast, literary circles on the Chinese mainland did not begin discussions about the subjectivity of man and literature until the 1990s.) One of the drawbacks, however, was that after a period of introspection, Taiwan's cultural development became gradually externalized and social issues became its main concern. The early focus on the problems of values and the awakening of literary consciousness was transferred to the reform of social institutions and social movements seeking to adjust relations with authority. Thinking became very politicized. The legal and political social sciences took over the humanities and the communication style expressed social action.

In addition to externalization through politics and commercialization, the cultural movement also underwent a process of dissimilation. Once aimed at enhancing national feeling and a return to the roots of Chinese culture, the cultural movement was unexpectedly abandoned and even expressed an opposition to Chinese culture.

In the 1970s, cultural nationalists had slogans proclaiming Taiwanese to be "descendents of the dragon" and the "young China." These images and dreams inspired many discussions about the direction China was going. But this form of cultural nationalism underwent a process of dissimilation after a fierce 1977 debate over nativist literature.

Because the ROC only exercises jurisdiction over the Taiwan area, giving rise to the question whether nativism concerns Taiwan or the Chinese mainland. If Chinese culture also develops in places other than Taiwan, then what is the position of Taiwan in future discussions on Chinese culture? Will Taiwan's Chinese culture turn out to be a merely peripheral culture? Nativism developed in the ROC to oppose the forces of Westernization and resisted being relegated to a subordinate position. Today, in face of the Chinese mainland, Taiwan is confronted with the same problem. In order to avoid being marginalized, the development of a Taiwan-based nativism is probably the best strategy. In short, what began as Chinese cultural nationalism later provoked an opposition to Chinese ideology to produce a new Taiwanese cultural movement.

This peculiar development was embraced by those who advocated Taiwan independence and the creation of a new Taiwan culture, producing an intense nationalism. This further led to an opposition to anything associated with China (the Chinese mainland, mainlanders, the political authorities who moved from the mainland, or mainland culture) and emphasized everything Taiwanese (Taiwanese nativism, people, culture, and political authorities). They viewed everything associated with the former as wrong and oppressive to Taiwan's people, and should be discarded or else Taiwan's populace would have no chance to "see the sky." The mainlander culture was seen as huge stones in a pasture, blocking the sun and preventing the grass to grow.