A remarkable improvement has taken place in U.S.-China relations during the past fourteen months, largely as a result of the 2001 terrorist attacks. Both sides have developed strong incentives to downplay their differences and seek common ground in a variety of areas, particularly the struggle against terrorism. If properly managed, this situation could lead to a more stable, mutually beneficial relationship during the next several years. However, the major obstacle to reaching this objective remains the Taiwan issue, which continues to exhibit highly destabilizing trends. In particular, political and social dynamics on Taiwan, Beijing's steady accumulation of military power, and the rapidly deepening U.S.-Taiwan security relationship could combine to increase the likelihood of conflict within the next five to seven years. To avoid this, and to establish a more sustainable basis for improved U.S.-China relations, the U.S. government must undertake policy changes, beginning with a serious effort to negotiate mutual arms reductions across the Taiwan Strait.

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About the Author
Michael Swaine is senior associate and codirector of the Endowment's China Program. He is the coauthor of Rebalancing United States—China Relations (Carnegie Endowment Policy Brief No. 13).