The summer quarter was a remarkable period in the evolution of Taiwan-China-U.S. relations. A number of events transpired that just a year ago might have led to the brink of a cross-Strait war, but this year raised only mild reactions in Beijing. Taiwan President Chen Shui-bian’s August remarks on Taiwan “walking its own road,” First Lady Wu Shu-chen’s highly publicized visit to the United States, and several well reported exchanges of military delegations – particularly Vice Minister of National Defense (MND) Kang Ning-hsiang’s early September visit – all evoked only muted responses from China. Beijing, apparently, is fully focused on its leadership transition in the lead-up to the 16th Party Congress, while Washington continues with the war on terrorism, Afghanistan, and preparations for a potential conflict in Iraq.
Against this backdrop, China steadily continues its modernization program which is producing a visible increase in military capabilities. In turn, Taiwan is carrying out a modernization program that places priority on streamlining and reducing costs, with questionable results in terms of operational capabilities. To close the triangle, the U.S. marches forward with arms sales and enhanced military-to-military relations across the board with Taiwan. This quarterly report will attempt to clarify this complex picture as we look at future developments in the arms sales area and in the cross-Strait political dynamic.