Taiwan was once an affront to the mainland, a repository of everything that Mao wanted to wipe out. now, as bonds between the two are rebuilt, Dorinda Elliott finds an island confident, free—and rich in experiences both spiritual and hedonistic

I shudder for a moment, half expecting to see the ghosts of Chiang Kai-shek and his elegant wife, Madame Soong Mei-ling, walking down the corridor. I am checking in to Taipei's Grand Hotel, the opulent, palacelike structure built by the Generalissimo just a few years after he and his Nationalist army fled to Taiwan in 1949 to escape the Chinese Communists. Frosted-glass Chinese lanterns with red tassels hang from the elaborately painted ceilings, and the floor is covered with a huge regal red carpet. Twenty-foot-tall carved wooden doorways line the hallways. The place has a grandiosity about it; even the well-trained reception clerk, efficient but chilly in her chic Chinese suit, gives off an air of self-importance. I am reminded of my time here as a student, exactly thirty years ago.

The Grand Hotel is a wonderful homage to that era, when Taiwan—officially called the Republic of China—still harbored delusions that it might regain power over all of China. Chiang Kai-shek's authoritarian Nationalist party had, after all, ruled China since 1911, and was a close ally of the United States, which took its side in the civil war with Mao Zedong's Communists. But Chiang's notoriously corrupt government lost the war, and when his two-million-strong army arrived on Taiwan, a hundred miles off the coast of mainland China, he declared martial law, with plans to go home one day. Thirty years later, in 1978, we students were not allowed to have dance parties. We heard whispers of knocks on people's doors at night and of anti-government protesters being dragged off to jail. Around Taipei, huge propaganda billboards exhorted citizens to retake the mainland, as if China's civil war were still under way. It was a confusing time: As an idealistic student, I viewed the Nationalist government as Fascist and corrupt, as opposed to what I imagined as a sort of utopia in Communist China.

But Taiwan today is a flourishing democracy, and I have returned to search my memories, to explore how the island has changed over three decades, and to see how it stacks up to the other China. Beijing still considers Taiwan a renegade province, and so what happens here, politically, culturally, and economically, matters to the mainland. The atmosphere, however, is changing. Taiwan has just elected a new president, Ma Ying-jeou, a Harvard Law graduate who—after eight years of a president who advocated de jure independence from China (enraging Beijing)—is back to talking about both sides being part of "one China," a formula that both Beijing and Taipei can agree upon. Just a month after taking office, he announced that mainlanders—once labeled "Communist bandits"—would be allowed to travel to Taiwan as tourists. There is again a sense of destiny in Taiwan—that maybe, just maybe, it can one day serve as a model for all of China. "What do you think each of those tourists is going to bring home with him to the provinces of China?" says Lin Chong-pin, one of Taiwan's experts on relations between the island and mainland China. "Freedom and democracy."