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v Contents© 2002 Institute of Southeast Asian Studies, Singapore Contents 1. Introduction 1 2. Background 6 3. Lee Teng-hui and the “Two-States” Theory 11 The “Two-States” Theory 11 Changes in Taiwan’s Unification Position 16 To Kill Two Birds with One Stone 18 Changes in China’s Perception of Taiwan 20 A Deteriorating Political Environment for Reunification 32 An Eroding Social Basis for Reunification 33 4. Taiwan Under President Chen Shui-bian 40 Taiwan’s 2000 Presidential Election 40 China’s Concerns 43 China’s White Paper on Taiwan 44 Washington’s Concern 46 Chen Shui-bian’s Election 48 How Did China Read the DPP? 50 Understanding Chen Shui-bian 51 Trends in Cross-Strait Relations 58 How Does China Read Chen Shui-bian? 59 Taiwan’s Weaknesses 61 vi China and Taiwan: Cross-Strait Relations Under Chen Shui-bian© 2002 Institute of Southeast Asian Studies, Singapore 5. China Responds 70 Political Pressure 70 Economic Engagement 75 Military Deterrence 88 Diplomatic Pressure 93 Taiwan’s Development of Longer Range Weapons, and 100 for Mass Destruction 6. Conclusion 117 7. Postscript 120 Appendix 1: The April 2001 U.S. Arms Sales to Taiwan 126 Appendix 2: The One-China Principle and the Taiwan Issue 127 Appendix 3: Chen Shui-bian’s Victory Speech after the 144 10th Republic of China Presidential and Vice-Presidential Election Appendix 4: Taiwan Stands Up: Advancing to an Uplifting Era 147 Glossary 155 Index 157 About the Author 165 ...

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