It is correct that a true democracy can have more than 2 political parties, however, it can not have only one party at any given point of time. An one-party political system will inevitably lead to totalitarism because nobody can play the role of check and balance. A 2-party format probably is the most efficient one within the democrcatic system.
Democracy is the nature result of a long and prosperous economic process. Democracy only happenens in the societies where the middle-class segments become dominant. Democracy only happens when more and more people, after they have enjoyed higher standard of living, want to protect themselves against government's potential abuse of power and corruption. For mainland China, the democractic movement will come in the next 20 years; it is not because the ruling Communist Party wants, but because more and more people who move into the middle class will demand. Democracy also is necessary so that the power of governing can be transferred peacefully. Do Chinese people have to die in millions in civil war every time when the ruling party changes hand?
A true democracy has two elements -- free election and rule-by-law. In it's young democratic process, Taiwan has struggled to elevate itself to the higher status of rule-by-law in recent years. I'm confident that Taiwan will get there with few more power rotations in peace in the next 20 years.