Taiwan and China do the sabre dance

Worst tension since 1970s raises fears that Peking will seize 'renegade' island

It is arguably one of the biggest games of bluff and counter-bluff in modern Chinese history. Eyeing each other warily across the Taiwan Strait, China and Taiwan are testing how far they can go without plunging into full-scale war.

China could hardly contain its fury when the President of Taiwan, Lee Teng-hui, made a "private visit" to the United States in June, a visit that was seen as undermining China's success in diplomatically isolating Taiwan, which Peking regards as a renegade province.

A month after the President's visit, China tested tactical ballistic missiles in the Taiwan Strait, showing it was able to attack the island. Another exercise followed in August. Now Taiwan also has announced its own exercise, planned for Thursday.

There has been nothing like this level of political and military tension since the 1970s, when Chiang Kai-shek threatened that his Nationalist government, defeated in 1949, would storm back to the mainland and recover it militarily. China responded by bombarding Taiwan's smaller islands near the Chinese coast. Taiwan maintained a steady hail of return fire.

That confrontation eventually faded, and talks between the two governments gave rise to hopes of a peaceful solution. However, China feels President Lee is intent on the ultimate heresy of making Taiwan an independent state, abandoning the Nationalists' and Communists' longstanding commitment to Chinese reunification.

"I really think it's possible China will invade," says Tsai Bih-hwang, of the ruling Kuomintang (Nationalist) party. Andrew Yang, secretary of the Council of Advanced Policy Studies, a government advisory body, said: "We don't under-estimate their ability to do it."

When the first Chinese military exercise was launched, the stock market dropped like a stone and visa queues formed outside Western quasi-diplomatic offices.

"It was a shock," said Antonio Chiang, publisher of Journalist political weekly. People wondered what else China might do, if it responded so aggressively to what was no more than a private visit to the US.

As Mr Yang points out, it was more than just a visit. "It very much emotionally affected the people. Here was the symbolic importance of our leader visiting a major Western country," he said. "It changed the emptiness and frustration of the Taiwanese people."

China saw even more sinister motives behind the visit, according to Chu Yun-han, the director of programmes at the influential Institute for National Policy Research.

He believes that Peking looked at the visit as part of a plot between Japan and the US to undermine China by promoting Taiwan.

Taiwan refuses to back down. Last month it made yet another futile attempt to rejoin the United Nations. President Lee, meanwhile, is riding high on the support he is gaining as the Chinese media launches personal attacks on him.

"The question here," says a Western observer in Taipei, "is how Taiwan's military response is conducted. How can they be seen as non-provocative but demonstrate that they are capable of providing defence?"

And what would happen if the military escalation got out of hand? China has the world's biggest army, and it is increasingly equipped with modern armaments. Unlike Taiwan's forces, the Chinese army has a number of leaders who have been tested in battle. China has "sufficient military capability to bring Taiwan to its knees if it wishes to do so", says a foreign resident with close ties to the military establishment.

He believes Taiwan's army has reasonably high combat efficiency, "but it has not been tested for a long time". Although Taiwan's army has acquired some modern equipment, such as F-16 fighter jets from the US, and Mirage 2000 jets from France, years of diplomatic isolation have taken their toll on its ability to acquire state-of-the-art equipment.

This is not to say Taiwan is incapable of resistance, but it may have difficulty coping with military action which falls well short of war. Wang Chien-shien, of the New Party, which believes President Lee is provoking China unnecessarily, says Peking could inflict heavy blows without full- scale war. He reckons that a missile attack on the southern city of Kaoshung, the centre of the petrochemical industry, would create enormous destruction. He also believes China might bomb airfields, immobilising Taiwan's jets.

Mr Chiang thinks China could "terrify the Taiwanese people" without using missiles. Continued military tests, the seizure of fishing vessels and other less extreme measures would divide Taiwanese society.There is also a possibility that many of Taiwan's leaders would leave if the going got tough. An unusually high number of prominent people hold foreign passports.

Taiwan keeps "pushing the limit, testing China's response to see where the trigger point is", Mr Yang said. If it accidentally goes too far, some people on the island believe the US will come to the rescue. Washington, however, remains adamantly silent on this matter.

Those who are close to US thinking on Taiwan believe, as one put it, that "the US will use force under certain conditions, but we don't what those conditions are". Others firmly rule out the possibility of American intervention. They believe that the overwhelming importance of good US relations with China outweighs any other course.

At the height of the Cold War, Taiwan was a bastion against the advance of Communism, a situation reflected in the Mutual Security Pact between Taiwan and the US. But the Cold War is over and the defence agreement was abandoned long ago. Taiwan looks thoroughly exposed.