By John Hill

By calling for legislation to enable a referendum on Taiwan's independence, Taiwan's President Chen Shui-bian appeared to dramatically break one of the pledges he made when elected president in 2000.

Would China risk its huge trade with Taiwan?

At that time he promised he would not provoke China by pushing the independence issue too overtly.

But now it seems that there is a clear intention to raise the stakes in the war of words with the People's Republic of China, 130km away across the Taiwan Strait.

The statement has caused a predictable reaction in Beijing.

Rhetoric

The China Daily, the government's English-language newspaper, said that Mr Chen's comments would "poison the already worsening atmosphere".

A government spokesman said that this move towards independence will "bring Taiwan into disaster".

The president's comments were rapidly played down by others in Taiwan.

Some stressed that by merely calling for legislation to enable a referendum no pledges had in fact been broken.

President Chen's Democratic Progressive Party (DPP) does not have a majority in the legislature, and a controversial piece of legislation such as this would have great difficulty in getting passed given the strength of feeling against the idea in opposition parties like the Kuomintang (KMT).

The cost of war

The latest war of words raises the question of whether the Chinese military possesses the means to enforce Beijing's will with regard to Taiwan.

Tuesday's People's Daily carried a story concerning large-scale military exercises due to begin in the middle of this month simulating seaborne landings and attacks.

Unusually, the paper reported "military insiders" saying "the strategic target of the exercises is Taiwan Island".

Last month the Pentagon issued a report on China's military power which suggested that China would still face difficulties in mounting a D-Day style invasion.

Uncle Sam will never risk ramming into China only for a small island whose strategic significance has greatly discounted with the end of the Cold War

China's People's Daily

But it added, "nevertheless, the campaign would likely succeed - barring third party intervention - if Beijing were willing to accept the political, diplomatic and military costs".

There, for Beijing, is the rub, for those costs may be extreme.

The economic relationship between the two is huge. Trade is worth US$31bn, and Taiwanese investment in China had reached $17bn by the end of 2000.

A war would disrupt that business, and the current Chinese leadership is heavily dependent on economic growth to keep the enormous Chinese population in work, and its own position secure.

China is heading for a leadership change later this year, a process which looks increasingly fraught, and conflict with Taiwan would be the last thing a new leadership would want.

The military balance

Militarily, Taiwan certainly is not a pushover. According to the Pentagon, the Taiwan Air Force dominates the strait with "a qualitative edge... and possesses three times as many (modern) fighters as China".

These F-16s and Mirage 2000s are facing growing numbers of Russian Su-27s and Su-30MKKs however.

Comparative forces

China: 2.3m active troops and 600,000 reserves Taiwan: 370,000 active soldiers and 1.7m reserves China: Approx. 350 DF-11 and DF-15 missiles targeting Taiwan Taiwan: 200 US-made Patriot missiles protecting Taipei

It is an arms race mirrored in the army and the navy, with China recently ordering a further eight KILO-class submarines from Russia to counter the proposed submarine sale by the US to Taiwan

But China's most credible and immediate threat lies in its increasing battery of conventional short-range ballistic missiles.

These could be used as part of a more limited coercive strategy to produce a rapid collapse of Taiwan's 'national will'.

Worryingly, Chinese military doctrine emphasises the force-multiplying effect of surprise, so such coercive strikes might come out of the blue.

The big question is whether Beijing would misjudge American commitment to its democratic friends in Taiwan.

The People's Daily asserted on Tuesday: "One point is clear; Uncle Sam will never risk ramming into China only for a small island, whose strategic significance has greatly discounted with the end of the Cold War."

John Hill is a UK-based China analyst