After Taiwan's retrocession, the Japanese, including the Japanese employees working at the power plant, returned to their homeland. During the wartime, Sun Moon Lake had been the main bombing target of the allied force. In 1947, the "228 Incident" occurred, causing the economics and politics of Taiwan to stagnate. The Sun Moon Lake area was deeply affected by the aforementioned events.

During the period of Japanese rule, with the exception of some small stores, the Japanese managed most of the industries, including the power stations, The Hanbi Building, and the tea-production factories. After the war, the industries were taken over by the Taiwanese. The black tea industry, with its high quality and benefiting from cheap countryside labor, became the most important industry of the Sun Moon Lake area.  

Jade (Yu) Island is renamed Guanghua Island

After the war, Sun Moon Lake became the most famous tourist spot in Taiwan. During 1946, officials of the Nationalist Government, Cian Chang-jhao and Liou Wun-dao came to Taiwan to have an inspection visit. Being attracted by its reputation, they visited Sun Moon Lake. Located on Yu Island was the "Yu island Temple". Cian Chang-jhao felt that this name signified the imperialism of the Japanese in Taiwan, and thus changed the island's name to "Guanghua Island", which means “The Glories of China”.

Puji Village is renamend Dehua Village

After the retrocession of Taiwan, the Nationalist Government changed the name of Puji Village to Dehua Village, and its meaning has the implication of “the Han people influencing the Thao tribe with virtue”. Yu Island was also renamed Guanghua Island. These names were meant to put an emphasis on the ideology of a Great China. From then on, the life of the Thao tribe was mainly guided by this "ideology of a Great China", such as nationalism, the education in the national language, local elections, and agrarian reform, etc. In 1947, the government took down Yu Island Temple which had symbolized the Japanese invasion.

The Favorite of President Chiang Kai-shek

After the Nationalist Government withdrew from Mainland China to Taiwan, Sun Moon Lake became President Chiang Kai-shek's favorite tourist spot, and the Hanbi Building became his temporary residence. The Hanbi Building was constructed in 1916, using Chinese cypress wood for building materials. It was originally built to house Japanese royalty as they vacationed at Sun Moon Lake. During President Chiang Kai-shek's leadership, the Republic of China was still a regular member of the United Nations. Thus, many state guests would come to visit Taiwan. President Chiang Kai-shek often invited these state guests to Sun Moon Lake to enjoy the scenery, as well as the dancing and songs of the Thao tribe. The state guests were often arranged lodgings at the Hanbi Building, allowing it to become the national guesthouse. The Hanbi Building (now known as the Lalu Hotel) is the most distinguished hotel at the Sun Moon Lake area. From the Hanbi Building, you can enjoy a view of Sun Moon Lake in the distance.

President Chiang Kai-shek greatly appreciated the singing and dancing of the Thao tribe. Consequently, he arranged for King Mao to head a dance group to pay respects to the soldiers in the frontline of Jhouhan. Their performances were highly appreciated.

Later on, Mao Sin-siao organized the Sun Moon Lake Aboriginal Singing and Dancing Group. Then, in 1955, he established Mao's Garden. In the garden, you can take pictures with a "princess", and buy handicrafts. To strengthen the tourist appeal, the Peony Garden, the Shueishe Hall, the Chieftain's Great Garden, and the Aboriginal Culture Hall were also established in succession.  From then on, the fame of King Mao spread further. Tourists would often assume that King Mao was the chief (“Toumu”) of the tribe. However, the Thao tribe in Dehua Village does not have the titles of “Chief” or “King”. Their leaders are known as “Skatafatu” and “Sinawanan”.

Owing to his good relationship with the government officials, King Mao became the new leader of the Thao tribe. Throughout his entire life, he strove enthusiastically for the welfare of his tribespeople.