Saturday, July 17, 1999 Published at 12:59 GMT 13:59 UK
China 'rehearses for war'
The crisis sent theTaiwan stock index plunging
China has staged an exercise involving more than 100 civilian vessels in the Taiwan straits, amid continuing tensions over remarks by the Taiwanese president.
The exercise, conducted on Thursday, lasted more than 12 hours. The vessels involved converged at sea to rehearse a rapid call-up in time of war.
The current escalation in tensions between China and Taiwan was triggered when Taiwanese President Lee Teng-hui called for relations between the two sides to be redefined as state-to-state ties.
The BBC's Beijing corespondent James Miles says that, although the exercise was small in scale and only involved civilian vessels, it was clearly aimed in part at stepping up psychological pressure on the island.
The rehearsal was witnessed by regional military and civilian leaders, according to the pro-Beijing Hong Kong newspaper Wen Wei Po.
Local residents watching the drill are reported to have sung the old communist song "We Must Definitely Liberate Taiwan".
There have been unconfirmed reports that the Chinese and Taiwanese armed forces have been put on higher states of alert in the past few days, but Taiwanese defence officials say they see no sign of unusual military movement on the mainland.
Large-scale army, navy, and air force drills are also being planned along the coast in Zhejiang province and the city of Shanghai, according to the independent Hong Kong daily Ming Pao.
It said the military exercises would be staged as a warning to President Lee over his decision to scrap Taiwan's "one China" policy and as a celebration of the 50th anniversary of communist rule.
Taiwan has said that the idea of a single indivisible China should be ditched because Beijing is using it to undermine the legitimacy of the island.
Fears that the row could escalate into military conflict sparked the biggest one day fall on Taiwan's stock index in nine years on Friday.
The index closed at 7,411.58 - a loss of 6.4% or 506.46 points from Thursday's 7,918.04 close.
It was the steepest slide in points since 1990 and the biggest loss in percentage terms since the last serious escalation in tensions with Beijing in 1996, when China menaced the island's presidential election by staging ballistic missile tests.
The United States has warned China it will not tolerate a violent solution to the row over Taiwan.
State Department spokesman James Rubin said the US would see any effort to determine the future of Taiwan by non-peaceful means as a threat to the security of the Western Pacific.