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The China Democratic Socialist Party was founded in Shanghai on August 15, 1946. It was formed through the merger of the former Chinese National Socialist Party (no relation to the German Nazi party) and the Democratic Constitutionalist Party, both of which had survived the years of Japanese aggression by generally supporting the Kuomintang-led national government. The new party's first head was Dr. Carsun Chang (Zhang Junmai).

The CDSP's platform was to promote democratic socialism in China, world peace, individual freedoms, economic development, a narrowing of the gap between rich and poor, and equal rights for women. The party also sought the implementation of a social welfare system for public health and social security.

After the promulgation of the Republic of China's constitution in January 1947, the CDSP established branches in several provinces and cities around China and participated in the first elections to the National Assembly, Legislative Yuan and Control Yuan. The party also postulated Hsu Fu-lin as candidate for vice-president in the First National Assembly of 1948 in Naking.

After the ROC Government's retreat from mainland China, key members, including elected representatives and party leaders, followed the KMT to Taiwan. Dr. Carsun Chang moved to the United States and was replaced as party head by Hsu Fu-lin until Hsu's death in 1958. Dr. Chang was elected party chairman by a national congress of the CDSP held in 1959.

The CDSP was one of three authorized political parties in the Republic of China after the transfer to Taiwan and imposition of Martial Law. The party held a small number of seats in the National Assembly, Legislative Yuan and Control Yuan, but failed to gain elected representation after Taiwan's democratic transition in the 1990s.

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