It started with a woman selling cigarettes.
Lin Jian-Mai was peddling black market cigarettes at a portable stand on Taping Road in Taipei on February 27, 1947, when she was caught and arrested by Kuomintang anti-smuggling officers. During the arrest she yelled and struggled with the agents, who had taken her wares and her cash. A crowd gathered watching the commotion. An overzealous agent pistol-whipped the woman, hard.
An angry crowd surrounded the officers, who then fired warning shots to make an escape for themselves. One of the shots hit and killed a pedestrian.
Word of the incident spread. A mob gathered outside the police station, demanding the guilty officer be brought out. When their demands were refused by the captain, the crowd grew angrier and set fire to a police vehicle.
The next day, February 28, amid anti-government demonstrations, the Governor’s security force fired upon the demonstrators with machine guns. Formosans rebelled, attacked mainlanders, and took over part of the city’s infrastructure. On March 7 Chaing Kai-Shek’s army arrived from mainland China. That’s when the slaughter really began.

(Angry Formosans demonstrate outside and take over the Monopoly Bureau)
The beating of the cigarette vendor may have triggered the 228 Incident, but tensions leading to something like this had been brewing for two years, ever since the Chinese government regained control of Taiwan after WWII. The Japanese had taken over the island following the First Sino-Japanese War in 1895, and maintained control for half a century. When the new Chinese government stepped in, corruption and nepotism grew rampant.
Taiwan was treated like a colony of the mainland. The Governor, Chen Yi, controlled the island’s economy and forced Formosans to pay unimaginable amounts for common goods. The Taiwan Company, for example, was run by Governor Chen’s nephew. The company bought coal at 200 yen a ton and sold it to the people for 4,000.
“With his Chinese aides and ‘monopoly police’ [Chen] took over and expanded the Japanese system of government industrial and trade monopoly (sugar, camphor, tea, paper, chemicals, oil refining, cement). He confiscated some 500 Jap-owned factories and mines, tens of thousands of houses.“
Snow Red and Moon Angel, Time Magazine
Chen ran everything from “the hotel to the night-soil business.” And that included the cigarette factory.
It was in this crucible that Chen’s monopoly police beat a woman vending non-sanctioned tobacco—cigarettes that weren’t manufactured by Chen’s government-run companies. It was the spark that set the island aflame.
When Chaing Kai-Shek’s troops arrived from mainland China, the they engaged in “three days of indiscriminate killing and looting. For a time everyone seen on the streets was shot at, homes were broken into and occupants killed. In the poorer sections the streets were said to have been littered with dead,” reported the New York Times. “There were instances of beheadings and mutilation of bodies, and women were raped,” said one American witness.

Witnesses estimated as many as 10,000 people were killed. But there are no official tallies. The government banned Formosans from even mentioning what came to be known as the 228 Incident.
The riots and massacres would trigger the era of “White Terror” in Taiwan. The violence was further fueled by the chaos of the Communist takeover in China, but the government in Taiwan remained in power. The end of martial law in Taiwan would not be declared until 1987.
http://228.culture.gov.tw/web/index.asp
“…I am reminded of the brief note I put down on my diary after seeing the movie, The Last Emperor. The note simply says, “A good and interesting movie, but a wrong title.” By a wrong title I meant that Pu-yi was not the last Emperor of China; there have been many since…One would include among them, Yuan Si-kai, Chiang Kai-shek, Mao Zedong and Deng Xiaoping. Each of the them certainly behaved as emperor and wanted others to so treat him. The tradition of authoritarianism of the ruler is still deeply engrained in the minds of both the rulers and the ruled in Chinese culture. A forceful example can be found as recently as June 4, 1989 at Tienanmen Square. For the rulers, only glory and power count. Human rights, freedom of equality or respect for the lives of people have to surrender to the might of the rulers.”
—Tsung-yi Lin, from the Preface to the New Edition of Formosa Betrayed , George Kerr’s 500-page opus on the February Incident



