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The military balance is shifting

Taiwan will be a key concern for the new Chinese leadership, especially since relations have barely progressed during Jiang Zemin's 10 years in power.

The two sides have been rivals since 1949 when the defeated Nationalists fled to the island following their defeat in the civil war.

Democratic Taiwan has self-rule, but Beijing views it as a breakaway province and refuses any suggestion the island is a sovereign state.

China has threatened to unite the two by force if necessary, and has missiles aimed at Taiwan. On a number of occasions, relations have threatened to boil over into all-out war, which could suck in Taiwan's staunchest ally, the United States.

China argues that Taiwan is a domestic issue that the US should not get involved in. It strongly objects to the US selling weapons to Taiwan, arguing that this makes Taiwan more likely to push for independence.

Invasion fears

With the US likely to get dragged into any conflict, China is unlikely to launch an attack on Taiwan in the near future. And President Chen Shui-ban says he will not declare independence unless China attacks.

However, some analysts say that if China's military spending continues at its present rate it could successfully invade Taiwan within 10 years.

Currently the two sides have no diplomatic ties and lack direct transport, trade and postal links.

Taiwan has spoken in favour of lifting the ban on direct links, which it imposed more than 50 years ago. China has said it must first accept the “one China” principle, and says renewed links would be a domestic issue, not country-to-country.

The lack of direct commercial flight between China and Taiwan means businesspeople have to travel via a third place, usually Hong Kong.

Despite this, business links have boomed. This is another factor that could avert war, and could even, some analysts argue, smooth the way for possible future reunification.

Taiwanese businesses have invested up to US$100 billion on the mainland over the last decade, helping fuel China's rapid economic growth.

Opinions vary within Taiwan on what its future status should be. But almost no one wants reunification with China unless there are democratic reforms.


Diplomatic relations with 27 countries

Was member of United Nations until 1971

UN gave the seat to China instead

China has blocked attempts to rejoin

Both joined World Trade Organisation in 2001

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