Stability in relations between Beijing and Taipei has long been maintained by the "One China" policy, a sort of don't-ask-don't-tell illusion which holds that they're part of the same sovereign entity — a policy with which Taiwan's anticommunist leaders for years deluded themselves that they were the mainlands true rulers. China, for its part, has convinced itself that Taiwan will be reincorporated under mainland rule along the same lines as Hong Kong. But whereas Hong Kong's fate was decided by its British colonial rulers, Taiwan's is in the hands of an increasingly assertive electorate. "The overwhelming majority of voters are native Taiwanese whove always considered themselves separate from China," says TIME U.N. correspondent William Dowell. "Democracy has allowed them to reassert control after a century of domination, first by the Japanese and then by nationalist emigres from the mainland."
Although China has threatened military action if reunification can't be achieved peacefully on its terms, it currently lacks the military capability to mount a successful invasion of Taiwan — and going to war could seriously jeopardize its already precarious economy. "Chen may be trying to call Beijings bluff at a time when the military and economic risks make it impractical for China to respond with force," says Dowell. Nonetheless, domestic political concerns leave Beijing unable to tolerate any formalization of Taiwan's de facto independence, which is why the Chinese military has been steadily expanding its naval and air power. While full-blown hostilities may be some way off, the Cold War across the Taiwan Strait is right back on the front burner.