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The article focuses on the role of Taiwan in the national identity of China. Taiwan is governed by a Chinese power structure and has its own military capabilities. It has an ocean buffer sufficient to provide options not available to Hong Kong, China and Macao. According to China, by competing with it for the diplomatic recognition of small nations in the Third World and desiring entry into organizations from the United Nations to the World Health Organization, Taiwan has subjected it to repeated embarrassment.

The new wave of nationalistic fervor in China is believed to have further complicated cross-strait relations. Ordinary Chinese are not willing to see Taiwan moving towards independence. Yet such a nationalistic belief that the mainland has a rightful claim over Taiwan does not seem to accord with the feelings of a rising number of Taiwanese who tend to regard their separateness from the mainland as a unique feature that deserves safeguarding. While the potential for conflict is there, the situation is not all gloomy. The Beijing leadership has so far been able to keep the new nationalism in check by adopting a calibrated response to perceived independence moves by Taiwan. While more conciliatory in its gestures towards Taiwan, China can be firm if the need arises. Also, the United States appears to be tilting in favor of China in terms of maintaining cross-strait stability. Depending on the situation, the Chinese leadership retains the political initiative to break the deadlock at some point in the future. [ABSTRACT FROM AUTHOR]