The electoral campaign is analyzed in the context of the crucial political problems of Taiwan: liberalization of its political system since 1987, tension between the “mainlanders” and the native Chinese inhabitants, and the changing role of Kuomintang as a ruling party. The controversy concerning Taiwan‘s future is also outlined: “one China” concept versus independence. The author describes the origins and political options for the main opposition forces, the Democratic Progress Party and the New Party. The struggle of various fractions and groupings inside Kuomintang and the opposition is presented in detail, as well as the tension between the President and the Parliament. The elections of 1996 demonstrated that a new “Taiwanese raison d’etat” was consolidated and the leading political figures in general respected it’s requirements at the expense of their personal preferences. Political elites and the electorate manifested a high sense of responsibility. This suggests that political interests of Taiwan, not emotions, will determine the future negotiations with the Peking of authorities. Kuomintang’s political role with most likely further diminish, whereas the President’s power will increase. The necessary reforms of the political system require from both, the President and KMT, the collaboration with DPP.