China keeps up the pressure on defiant Taiwan

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China has no imminent plan to attack Taiwan but will continue to flex its military muscles against the island state long after next week's presidential elections, analysts forecast. "This year is the year of threats for Taiwan," said Yang Chih-heng, senior military researcher at the Institute for National Policy Research in Taipei.

China is trying to allay fears that it plans to invade Taiwanese territory, while keeping pressure on President Lee Teng-hui, the expected election winner. In Washington, the Pentagon said China had explicitly told the administration that no invasion of Taiwan was planned.

China's first missile tests ended yesterday but the large-scale live- fire naval and aircraft exercises are scheduled to continue until Wednesday; yesterday Peking announced new war games which will straddle the 23 March elections. The March 18-25 manoeuvres in the Taiwan Strait will be the closest so far to Taiwanese-held territory.

The Taiwanese said suspected new movements of People's Liberation Army (PLA) aircraft had been detected in Fuzhou, at the north end of the Taiwan Strait.

Few on the island expect life to quieten down after the election. Andrew Yang, secretary-general of the Chinese Council of Advanced Policy Studies, said: "I think China will continue to use the mixed political, economic, military and diplomatic measures to force Taiwan to come to the negotiating table after the election."

Peking is determined to curb Mr Lee's push for greater diplomatic recognition and to thwart Taiwan's attempt to obtain a UN seat. If he is re-elected, more foreign visits by Mr Lee are likely to prompt retaliation by Peking, which was enraged by his visit in June to the US.

China's strategy is to affect public opinion by targeting the economy. Intermittent military manoeuvres are likely to persist, to keep Taiwan's financial markets and business community on edge. Yang Chih-heng said he expected more missile tests into target zones close to Taiwan later this year. "Perhaps the next ones will be in the East China Sea. Maybe around 20 May, when the new president is inaugurated," he said.

The central-bank governor, Sheu Yuan-dong, said up to $4bn (pounds 2.6bn) had left Taiwan recently as residents converted savings out of the local currency. Taipei spent $1.5bn in the past two weeks buying shares to prop up the local stock market.

Trade and investment are likely to be the next to suffer.Taiwanese figures show $24bn is invested in industrial ventures in China's southern provinces along the Taiwan Strait and Taiwanese investors will become increasingly nervous the longer the crisis continues. China will have to bear the fall- off in investment but it can weather a down-turn.

Mainland concern about Mr Lee's policies is unlikely to abate. "It seems they are getting very impatient about Taiwan's current political development ... the next generation, when they are up to the required age to vote, that young generation does not want any kind of reunification," said Andrew Yang.

Peking wants immediate concessions from Taiwan, including an explicit commitment to reunification. But Andrew Yang said it was out of the question Mr Lee would make political concessions after the election, partly because of pressure by the pro-independence Democratic Progressive Party . His ruling Kuomintang National Party has a majority of just one in the Legislative Yuan.

The best Peking can hope for is lower-level compromises by Mr Lee, who is anxious to ease tension. He may agree to discuss direct air, shipping and postal links, which the mainland has been calling for. He will probably also propose opening discussions on the peaceful settlement of cross-strait relations. But this is unlikely to placate Peking. "What China is trying to pursue is the political issue," said Andrew Yang.

For the PLA, the East China Sea will become its priority area for regional security. Peking's aggressive stance will include more investment in defence. It is already set to buy more Su-27 aircraft from Russia and is keen to purchase more submarines, which would have a role in mounting any blockade of Taiwan.

Taiwan also wants to increased its submarine fleet from four to 12; F-16 and Mirage aircraft on order will start arriving later this year.

Rhetoric will remain shrill as the two sides stake out positions. "Taiwan will stress political reform, and the mainland will stress nationalism," said Yang Chih-heng. But Peking realises it has a window of opportunity in terms of the effectiveness of its bombast before Taiwan's new arms are delivered. "Peking knows now is the time," said Yang Chih-heng.