Due to the 20-year rule, we cannot go all the way "up to now," although there have been significant fluctuations in popular opinion and some viewpoints, however the basics have not changed since 2002. This is a HUGE issue with many details I'd like to go into, so I'll try to offer a summary at the conclusion, followed by a more extensive history.
We'll begin by going back a few hundred years for context. Taiwan has been a part of what is now known as China proper since the Qing Dynasty. In 1661, a Ming loyalist named Zheng Chenggong (, also known as Koxinga) invaded the island with an army of nearly 25,000 troops from the Chinese mainland. The Zheng family ruled the island until 1683, when admiral Shi Lang () seized it on behalf of the Kangxi Emperor.
Taiwan remained under Qing Dynasty control until it was surrendered to Japan in the Treaty of Shimonoseki following the first Sino-Japanese War in 1895 (along with the Liaodong peninsula and the Penghu islands; the Senkaku/Diaoyu islands were annexed separately and not named in the treaty, contributing to their current disputed status).
From 1895 until 1945, Taiwan was occupied by Japan and known as the Republic of Formosa (using the old Portuguese name for the island). During this time, the Xinhai Rebellion overthrew the Qing Dynasty government on the Chinese mainland, which was succeeded by the Republic of China in 1911, which inherited the Qing's treaties and territorial claims.
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Following the Japanese invasion of China and the second Sino-Japanese War (1937-1945), the treaties with Japan were terminated, and the Cairo Declaration in 1943 announced the allies' intention to return Taiwan and other lost areas to the Republic of China:
Taiwan, and the other territories taken by Japan, were returned to the Republic of China in October 1945, and Japanese claims were formally renounced in the Treaties of San Francisco (1951) and Taipei (1952), despite the fact that Taiwan was already part of the Republic of China and governed by the same.
After Japan's capitulation in 1945, a civil war between the Republic of China and the Communist Party broke out on the Chinese mainland, and events there now have significance. By 1949, the Communist Party had completely seized control of China's mainland, and Chiang Kai-shek had fled to Taiwan with his administration.
The People's Republic of China was established in 1949, yet the Republic of China that they claimed to succeed was still present on Taiwan at the time of the split. Similar to how the Republic of China succeeded the Qing Dynasty, the People's Republic of China asserted that it was the state that would succeed the Republic of China and inherit all of its geographical claims.
Meanwhile, Chiang Kai-shek reigned in Taiwan, which regarded itself to be China's only genuine government and maintained that position while believing it could regain the mainland. Similarly, the PRC desired to reclaim Taiwan but lacked a navy—after the Korean War and the deployment of the US 7th fleet to the strait, this was simply not conceivable.
This left the world with two governments claiming to be the genuine government of all of China: the Communist PRC on the mainland and Chiang Kai-military shek's dictatorship on Taiwan.
Over the next two decades, China's legitimate authority was increasingly recognized, culminating in the UN Resolution on Admitting Peking, or General Resolution 2758. In October 1971, the PRC took the place of the RoC at the UN, with the US voting against it. Nixon later visited China in 1972, and the US formally recognized the PRC in 1979. Over time, more and more countries recognized the PRC as the sole legal and legitimate government of "China."
So, where does it leave Taiwan? Simply put, it had not officially ceased claiming to be China's rightful government and dismissing the Communist government as a gang of rebels, but these claims were no longer taken seriously (and internally, it had given up on taking back the mainland by military force). Similarly, China imposed criteria for diplomatic relations, including commerce, with all other countries, including their recognition of Taiwan as a part of China.
The "Three Joint Communiqués," including the Shanghai Communiqué, that led to the creation of US-China ties stated that the US "acknowledged that all Chinese on both sides of the Taiwan Strait maintain there is only one China." This practically meant that Taiwan was considered (officially) to be a part of China (though which China, PRC or RoC, was not explicit).
For the most of this time, both Taiwan (the Republic of China) and the People's Republic of China agreed that there is only one China, but who is the true government is just an internal debate, the outcome of a never-ending Civil War. The 1992 Consensus (92/) codified this, since both sides stated that they both think there is only one China, but each has their own view of what that implies.
However, most of this was due to Taiwan being dominated by the Nationalist Kuomintang (), the original Republic of China's ruling party and Taiwan's military dictatorship. The above-mentioned 92 Consensus was a product of Lee Teng-government, hui's which also established a National Reunification Council tasked with planning the reintegration of the mainland into Taiwan. After Taiwan became a democracy in the 1980s and 1990s, the Democratic Progressive Party (DPP, or ) became a more powerful force, eventually gaining the president in 2000 with Chen Shui-election bian's (we're getting close to the 20-year rule here).
We need take a detour into Taiwanese politics here- the Nationalists (Kuomintang, KMT, called the RoC) fled to Taiwan in 1949 as foreigners. There was a notoriously savage massacre of local Taiwanese (the 228 event), and they were from the mainland. Most native Taiwanese were descendants of Fujianese who had immigrated to the island, and thus did not have the same strong, recent connections to the mainland as the Kuomintang.
They had been a Japanese colony for 50 years and had a distinct political identity from the KMT and mainland Chinese elite who fled to the island in 1949, displacing the local aristocracy. The DPP had a much stronger Taiwanese identity, and although putting a lot of pressure on the dominant KMT in the 1990s, they did not take power until their minority government from 2000 to 2008, which I can't discuss too much without breaking the 20-year restriction.
Let's just say that prior to the year 2000, the many Taiwanese who identified less strongly with the mainland and reunification did not wield much political power, and that the same nationalist government that founded the Republic of China in 1912 and considered itself the rightful government of all of China was in charge. This is not to suggest that no changes occurred inside the KMT; aside from abandoning the mainland, the RoC amended its constitution in 1991 to recognize that it no longer ruled the mainland.
In summary, From 1945 through 1949, the Republic of China was at war. In 1949, the Communists destroyed the Nationalist government led by Chiang Kai-shek, who fled to Taiwan (then a province of the Republic of China), believing himself to be the genuine leader of China, ready to retake the mainland. The Communists founded the People's Republic of China, and saw themselves as the new China, inheritors of the political tradition and territory of the old China—which included Taiwan—and saw it as critical that they complete China's "reunification" by unifying with Taiwan.
They could not, however, capture Taiwan, nor could Taiwan retake the mainland. As a result, the world was left with two Chinas competing for international legitimacy. The People's Republic of China gained enough political support to be recognized as the sole China, and made recognition of itself as the sole China and Taiwan as a part of it a condition of diplomatic relations and trade, causing other countries to cut ties with Taiwan. Taiwan, which was still headed by a party that opposed independence, never openly sought independence, however independence movements gained strength over time and it began to distance itself from believing itself China's official, legitimate government.
Taiwan is a country: the Republic of China, with its own foreign policy and military, recognized by only a few tiny countries. But Taiwan is not, because doing so would break historical continuity and necessitate a declaration of independence and constitutional changes, as well as triggering war, because the mainland would see it as a renegade province attempting to secede, and the "unfinished" Civil War would then have to be completed.
As long as their official opinions on "One China" do not alter, both parties can argue about who is the actual China, and the debate stays "internal." Even countries who recognize the Republic of China (Taiwan) do not recognize two Chinas because Taiwan has not proclaimed independence from the Republic of China.
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