Q A: Why is China so sensitive about Taiwan?
WHAT IS THE HISTORICAL BACKGROUND?
The island formally became a Chinese province only in 1887. But China's faltering Qing imperial government was forced to cede it to Japan in 1895 after a brief war. Japan ran Taiwan as a colony until 1945, when it was effectively handed over to Chiang Kai-shek's Nationalist (KMT) government in China.
In 1949 Mao Zedong's forces won the Chinese civil war and the KMT fled to the island, ruling it under martial law until democratizing in the 1980s, while the Communists controlled China. No peace treaty has ever been signed.
WHAT IS CHINA'S OFFICIAL POSITION ON TAIWAN?
That Taiwan is, was and always has been an inseparable part of China, and that international law supports China's claim. Citizens of China learn this from childhood, and there is no public discussion of alternate views.
China's ruling Communist Party wants outright reunification, the sooner the better, seeing the recovery of the island as the final chapter in the civil war and end of past humiliations when China was forced to cede territory to foreigners.
While in recent years China has tempered overt threats of force to take self-ruled Taiwan, its military build-up has continued.
Taiwan's defense ministry says that, despite easing strains between the two sides, there is no sign China has withdrawn any of the estimated 1,400 missiles it has aimed at the island.
WHAT IS TAIWAN'S OFFICIAL POSITION ON CHINA?
It depends on who is in power. The KMT long ago gave up its ambitions to "recover" China, though it has not dropped its claim to the territory of today's mainland China from its constitution.
Taiwan's KMT President Ma Ying-jeou says reunification can only happen once China democratizes, a prospect that seems unlikely in the short term. Ma has said reunification was unlikely in the near future.
The island's opposition Democratic Progressive Party, whose Chen Shui-bian riled China when he was president from 2000-2008, wants the island eventually to declare formal independence.
WHAT WOULD TAIWAN INDEPENDENCE MEAN?
The abandonment of the island's official name the Republic of China, a redefinition of territory cutting out China and the constitutional establishment of Taiwan as a nation.
China has made clear it would view that as an open declaration of war.
Supporters of independence dispute China's legal and historic claims on the island. They argue that China is alien to Taiwan politically and socially despite common ethnic roots, especially after decades of division.
Independence supporters see little reason, apart from avoiding military conflict, to give up their hard-won democracy in exchange for even indirect rule by China's autocratic Communist Party.
WHAT IS U.S. POLICY TOWARD TAIWAN?
Washington formally acknowledges the "one China" policy and switched diplomatic recognition from Taipei to Beijing in 1979. But the Taiwan Relations Act, passed by Congress the same year, obliges it to sell Taiwan weapons to defend itself.
The United States also says that the people of Taiwan must be consulted on any changes to the island's status, whether that be reunification with China or outright independence.
WHAT ARE WASHINGTON'S BROADER STRATEGIC CONCERNS?
Taiwan is a democracy and strong unofficial ally of the United States. Along with Japan, South Korea and the Philippines, it thus provides an important bulwark against China in the Asia Pacific region.
U.S. officials have voiced concerns about a lack of transparency surrounding China's growing military spending.
During the Cold War, Washington viewed Taiwan as part of its "domino theory," fearing that if the island fell to Mao it would help spread the reach of Communism throughout Asia.
HOW HAVE PAST CRISES PLAYED OUT?
There have been various "Formosa Straits Crises," as they were termed during the Cold War, targeting small islands off China's coast held by the KMT post-1949.
They involved heavy Chinese artillery bombardments, fierce aerial dog fights and naval clashes. Taiwan evacuated some of the islands, at least one having been taken by force, but to this day holds the Kinmen (also known as Quemoy) and Matsu archipelagos.
The last major crisis was in 1996, when China test fired missiles into the Taiwan Strait to protest against Washington's granting of a visa to then-Taiwan president Lee Teng-hui.
U.S. President Bill Clinton responded by sending an aircraft carrier group through the Strait, and the crisis petered out.
Factbox: How China's anger could hurt ties with the U.S.
MILITARY TIES
China has said it will curtail military contacts with the United States, returning to a freeze imposed in 2008 after the Bush administration flagged the arms sale to Taiwan.
China's official Xinhua news agency said a planned visit by U.S. Defense Secretary Robert Gates later this year will be shelved, as will talks between the Chinese People's Liberation Army Chief of General Staff, Chen Bingde, and the Chairman of the U.S. Joint Chiefs of Staff, Mike Mullen. Mutual visits by Chinese and U.S. navy ships will also be affected, said the report.
Defense contacts between China and the United States have, however, always been limited and so there will be scant effect on U.S. operations. Some analysts have also said Beijing might stage more missile tests to demonstrate its anger.
COMMERCIAL SANCTIONS
China has said that U.S. companies involved in selling arms to Taiwan will face "corresponding sanctions," breaking with Beijing's long-standing reluctance to use formal sanctions in international disputes.
The vague warning did not specify when any sanctions would take effect, but companies that could be affected include Sikorsky Aircraft Corp, a unit of United Technologies Corp; Lockheed Martin Corp; Raytheon Co; and McDonnell Douglas, a unit of Boeing Co.
Beijing could face challenges that any such sanctions violate commitments to open trade it has made as a member of the World Trade Organization. In response, it could argue the sanctions are a legitimate act to protect national security.
Even without official penalties, China can informally punish foreign governments and businesses through adverse decisions on tenders, contracts and regulatory disputes.
ECONOMIC AND CURRENCY TIES
China is the world's third-biggest economy, behind Japan and the United States, and holds foreign exchange reserves worth $2.4 trillion. Economists have estimated about two-thirds of those reserves are invested in U.S. dollar-denominated assets.
While China is the single biggest holder of U.S. Treasuries -- owning at least $776.4 billion of U.S. government debt at the end of June 2009, according to statistics -- there have been no signs Beijing will use broader trade penalties or its dollar holdings to punish Washington.
Doing that, or even hinting at it, would jeopardize the value of China's own assets and alarm investors. Beijing appears too focused on shoring up economic growth to risk such steps.
Trading in offshore one-year dollar/yuan non-deliverable forwards on Monday indicated investors foresee a slightly slower appreciation for China's yuan, with Beijing less willing to heed Washington's calls for a currency rise.
INTERNATIONAL COOPERATION
China has said cooperation with the United States over regional and international problems will be hurt by the dispute, but the Chinese Foreign Ministry did not spell out what issues could be affected.
The government is likely to show its anger in oblique ways, such as delaying talks or downgrading representation at them, rather than through substantive policy reversals.
Washington has looked for stronger Chinese support over several international worries, chiefly the nuclear ambitions of Iran and North Korea.
China is a permanent member of the United Nations Security Council, and so has the power to veto any proposed resolutions. Its rising influence and status as the world's biggest developing country also give it clout over issues such as climate change and international financial reforms.
BILATERAL DIPLOMACY
China's Foreign Ministry has canceled one scheduled meeting between senior Chinese and U.S. officials, a vice-minister level meeting on strategic security, arms control and nuclear non-proliferation.
Other bilateral talks are also likely to be curtailed or downgraded. They could include a dialogue on human rights that President Barack Obama and President Hu Jintao agreed to during their summit in November.
It is less clear whether China will show its anger by delaying, shifting or downgrading regular Joint Commission on Commerce and Trade (JCCT) talks scheduled for later in the year, or the higher-level Strategic and Economic Dialogue due to be held in Beijing around mid-year.
Washington officials were recently in Beijing to discuss preparations for those two meetings, and Chinese President Hu is expected to visit the United States later this year.
PUBLIC OPINION
Chinese media and Internet sites have sounded public anger about the proposed arms sales and the dispute will stoke anti-American sentiment.
In a 2008 poll of Chinese public views of the United States by the Chinese Academy of Social Sciences, 46 percent of respondents said the Taiwan issue was the biggest problem in China-U.S. relations -- by far the most popular response.
Public anger over the arms sales has already produced calls for boycotts of American companies and products. Similar protests against French, Japanese and U.S. companies in past years have erupted and then quickly petered out with little lasting effect on their sales in China.
By: Brant
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