Stepped-up air patrols of the Taiwan Strait by both China and Taiwan have further heightened the potential for military conflict. An article in Hong Kong's Ming Pao newspaper reported last Friday that China's Central Military Commission, headed by President Jiang Zemin, had authorised the country's airforce “to step up low-flying training” and to “strike first in gaining the initiative” in any emergency situation.

Earlier this week, Taiwanese President Lee Teng Hui claimed that Chinese warplanes had twice crossed the unofficial border between the island and the Chinese mainland, fuelling fears of an aerial confrontation. Beijing has pointedly moved several top officers to the Nanjing military region near Taiwan, including Major General Zhu Wenquan, reportedly an expert on amphibious warfare. An article in the China Times noted that Zhu will play “a pivotal role in manoeuvres and other means of putting pressure on Taiwan”.

In a move directed against Beijing, the US last weekend sent two aircraft carriers—the USS Constellation and the USS Kitty Hawk—and their associated battle groups for exercises into the South China Sea, including in areas claimed by China. This provocative deployment is a reminder of the previous military standoff between China and Taiwan in 1996 when the US dispatched two aircraft carrier groups and nuclear submarines to the Taiwan Strait.

This week Taiwanese President Lee reaffirmed his earlier statement that his country's relations with China should be on a “state-to-state” basis. Lee's statement stops short of declaring Taiwanese independence from China, but Beijing has warned that it will not rule out military action if Taipei fails to withdraw its challenge to China's claim over Taiwan.

Lee's comments seek to overturn the previous “One China” policy—a formula that permitted both Beijing and Taipei to claim that they represented China as a whole, but effectively excluded Taiwan from diplomatic recognition and representation in international bodies such as the United Nations. The US administration, which has called on Lee to retract his statement, has been urging talks between the two sides aimed at eventual reunification.

Lee told a delegation of visiting US Congressmen headed by Republican Benjamin Gilman that his assertion of a new relationship with Beijing was a “legal and historical reality which is, by any standards, undeniable”. Responding to calls by the Clinton administration for him to modify his stance, Lee said the dispute would win Taiwan international attention. “I think this is very good, the louder, the better,” he added.

Lee' remarks are directed at bolstering support at home for the ruling Kuomintang (KMT) party, which faces a presidential election in March. For decades, the KMT regime established after the Chinese Communist Party's peasant armies seized power in 1949 ruthlessly suppressed any form of backing for Taiwanese independence, insisting that it, not Beijing, was the legitimate Chinese government. Now, however, significant sections of big business regard Taiwan's subordinate status as an impediment to their economic and political ambitions—a fact that is reflected in growing support for the opposition Democratic Progressive Party (DPP), which calls for an independent Taiwan.

Taipei is seeking to exploit differences in US ruling circles over the US administration's policies towards China and Taiwan. The Gilman delegation is drawn from right-wing Republicans who are critical of Clinton's so-called appeasement of Beijing and call for tougher measures against China over Taiwan and other issues. Prior to his departure, Gilman, who is chairman of the House Foreign Relations Committee, strongly backed Lee's statements, saying: “It is our view that the two sides should engage in dialogue as equals.”

The Clinton administration has reassured Beijing that there would be no change in the US “One China” policy. But mindful of critics at home, it announced on August 2 the sale of $550 million worth of new weaponry to Taiwan, including E-2T surveillance plans and parts and equipment for advanced F-16 and F-5 fighters. The decision immediately sparked a protest from Beijing.

Pro-Taiwan legislators in the US demand that Clinton go even further. Republican Senate Foreign Relations Committee chairman Jesse Helms is sponsoring a law in the US Congress that would significantly bolster Taiwan's military capabilities by authorising its purchase of US theatre missile defence equipment, AIM-120 air-to-air missiles, diesel submarines, naval anti-missile systems and radar early warning systems.

Right-wing Republicans and sections of the US media have been scathing in their attacks on Clinton's approach to China. Charles Krauthammer, a columnist with the Washington Post Writers Group, began a recent comment: “The Clinton Administration's China grovel has gone from merely embarrassing to potentially dangerous. The past two months of our relationship with China are a chronicle of appeasement that has, predictably, made things worse.” On the current crisis, he concluded: “Unless Clinton draws a clear line in the Taiwan Strait, the challenge will only grow more dangerous.”

The conclusions being drawn in Beijing over Lee's comments are conditioned by the US-led NATO onslaught on Yugoslavia, and the bombing of China's embassy in Belgrade in particular. With a conflict over Taiwan, and an emerging crisis over reports that neighbouring North Korea plans a missile test, sections of the Chinese bureaucracy are weighing up the dangers of a US-led intervention, if not directly against China, then on the Korean peninsula, or in support of Taiwan.

In a recent interview with the Australian Financial Review, China's ambassador to Australia Zhou Wenzhong voiced the concern of Beijing over the new NATO doctrine justifying military intervention within sovereign nations such as Yugoslavia. The US and its NATO allies had crossed “a watershed” in Kosovo, he said.

“China, Russia, India and other countries are very concerned about such a policy of putting human rights above national sovereignty. This is not right,” Zhou said. “But would the US have the same support from its allies in Asia if it were doing the same here? I doubt it. [Former Australian prime minister] Malcolm Fraser wrote an article saying that the US should not automatically assume that Japan and Australia would support it in Asia just because they are allies. I think he is right. You should not move into another country if you see things there that are not to your taste. If this became the order of the day the world would be chaotic.”

An article in the Washington Post last Sunday revealed that discussion has already taken place in military circles in China over its limited defence capacities in a decade of aggressive US military interventions. Colonel Wang Xiangsui, who co-authored with Colonel Qiao Liang a book entitled Unrestricted War, was quoted as saying: “The country that studied the Persian Gulf War the most was not America, but China. The military studied all the weapons systems and all the strategy, but we two think that China cannot follow the US model. We are much poorer than the United States. So we think that China needs to begin to adjust the way it makes war.”

Reflecting the thinking in Chinese military circles, Wang and Qiao draw the conclusion from NATO's attack on Yugoslavia that China confronts a similar threat over areas it either controls or claims. “If today you impose your value systems on a European country, tomorrow you can do the same to Taiwan or Tibet,” Wang said. The two officers propose that China plan future strategies including computer viruses, media and financial warfare, to try to deal with the vast technological superiority of the US and other major powers.

Beijing is attempting to upgrade its weaponry. It recently announced the purchase of 72 advanced Sukhoi-30 fighters from Russia at the estimated cost of $US2 billion in a deal that will also permit the manufacture of 250 more in China. On August 2, in a move calculated to increase the pressure on Taipei, China announced that it had successfully test fired a new long-range ground-to ground missile—the Dong Feng-31—capable of carrying a 700 kilogram warhead about 8,000 kilometres.

The issue of how to respond to Lee's assertion of Taiwanese statehood and the new threats posed by the US are undoubtedly major topics at the annual retreat of top Chinese leaders currently underway at the seaside resort of Beidaihe. The aging Stalinist bureaucrats confront an unstable situation at home as well as abroad—the result of declining economic growth, heavily indebted financial institutions and high levels of poverty and unemployment. The social crisis is certain to worsen as the economy contracts further and Beijing accelerates the restructuring and privatisation of state-owned industries. As a result, the Beidaihe retreat is likely to be bitter and divisive as different sections of the bureaucracy press for their interests.

No official resolutions will appear from Beidaihe. But Hong Kong's South China Morning Post has already reported that the Chinese leadership has decided to use a degree of force against Taiwan should Taipei fail to repudiate Lee's “two states theory”. The newspaper's “source in Beijing” claimed that the People's Liberation Army (PLA) was considering options including the invasion and temporary occupation of one of Taiwan's heavily fortified islands close to the mainland. Some leaders reportedly favour action soon after October 1, China's National Day, while others pressed for a delay until after Taiwan's elections next year. Whatever the final outcome of the debate in Beidaihe, the situation across the Taiwan Strait remains tense and potentially explosive.