Bush will decide this month whether to sell advanced destroyers with Aegis radar systems to the rich island Beijing calls a renegade province. China vociferously opposes the deal. Bush could thumb his nose at Beijing or offer less-well-equipped ships.
As China's armed forces modernize, they continue to test their Pacific boundaries--and the U.S. keeps beefing up surveillance. China patrols ever farther afield, routinely laying claim to virtually all of the South China Sea, causing conflict with neighbors like Vietnam and the Philippines, which also claim the tiny islets there (and the oil fields beneath).
Scholars Or Spies
Chinese authorities have detained two American-based academics this year. University researcher Gao Zhan, right, a permanent U.S. resident whose son and husband are citizens, was arrested for espionage last week after being held for more than a month. Li Shaomin, a U.S. citizen and Hong Kong professor, was taken into custody while visiting the mainland last month.
National Missile Defense
China angrily opposes Bush's proposed missile-defense system, which could render its long-range arsenal useless. China also fears the U.S. will use a theater missile defense to shield Taiwan from its short-range missiles. Beijing has warned Bush that he risks a new arms race.
Human Rights Abuses
Paranoia over controlling its populace has led Beijing to oppress religious and labor groups. U.S. and U.N. observers have condemned the crackdown on the Falun Gong spiritual movement. China hates criticism but must spruce up its image as it bids for the 2008 Olympics.