Taiwanese President Chen Shui-bian's recent call for a law enabling popular referendums quickly turned into an international crisis. China, fearing that the law could be used to move Taiwan towards independence, reacted strongly even before the referendum bill was approved by the Legislative Yuan, Taiwan's parliament.

Major General Wang Zaixi, Deputy Director of China's Taiwan Affairs Office, warned of the use of force if Taiwanese authorities "collude with separatist forces to openly engage in pro-independence activities and challenge the mainland and the one-China principle."

Chinese Premier Wen Jiabao was slightly more civil. In an interview with an American newspaper, he reminded Taiwan that China would "pay any price to safeguard the unity of the motherland."

A few days after Wen's interview, while commenting on recent developments in Taiwan with Premier Wen at his side, US President George W. Bush said that America opposed "any unilateral decision to change the status quo, and the comments and actions made by the leader of Taiwan indicate that he may be willing to make decisions unilaterally to change the status quo, which we oppose."

Facing re-election and preoccupied with Iraq, President Bush cannot afford a crisis in the Far East. Indeed, he needs China's help in persuading recalcitrant North Korea into seriously negotiating nuclear disarmament.

But President Bush is not alone in facing democratic pressures. Taiwan has its own domestic constituencies that need stroking. With economic growth slowing to a record 50-year low during his tenure, Chen Shui-bian is seeking ways to divert public attention by assuming the role of a daring leader ready to defend Taiwan's sovereignty.

Gone is the moderate policy towards China that Chen espoused previously. In a major policy reorientation, he announced last August that there is "one state on each side of the Taiwan Strait."

To further differentiate himself from the Kuomintang (the party that ruled Taiwan for most of the last half century) and its ally, the People's First Party, Chen has made the embodiment of local values, safeguarding Taiwan's sovereignty, and the "two state" theory the theme of his presidency. A new constitution, backed by a national referendum, is part of this drive to reshape Taiwan's identity and distinguish the new generation of politicians from those who arrived as exiles from the mainland.

Whereas a referendum serves as an election gimmick, it is nonetheless a normal democratic tool almost everywhere, and the strategy would not have caused the stir that it has if the Taiwanese public did not seem to back it. Clearly, public opinion in Taiwan regarding relations with China has changed dramatically.

In the past, the Taiwanese repudiated words like referendum and new constitution, owing to China's sensitivity. But recent polls show that Taiwanese attitudes towards China have changed markedly, and that more and more people are less concerned about what China thinks. Few consider China's rulers to be even remotely friendly, and this growing aversion to the mainland provides daring politicians with room to maneuver.

But Taiwan's policy towards China has also undergone a very different kind of overhaul in the last decade or so, with previous confrontations replaced by a new engagement aimed at exploring economic opportunities in the vast Chinese market. Taiwan has been a major supplier of foreign capital flowing into China, contributing twice as much as the US and accounting roughly for 20% of China's total inflows.

Taiwan is also the driving force in China's high-tech industries. Estimates suggest that 70% of the hardware made in China's IT industry is produced by Taiwan-owned companies. Taiwan has also allowed mini-links to be opened so that the residents of Kinmen (an offshore island) and Xiamen (a port city of China) can enjoy unrestrained travel across the Strait.

These goodwill gestures have, however, failed to moderate China's belligerent posture. Missile tests aside, China has been trying to cajole America into stopping arms sales to Taiwan. The rumored proposal in October 2002 by Jiang Zemin, China's former president, in a meeting with President Bush to withdraw Chinese missiles in exchange for a termination of US military sales to Taiwan is but one example.

This hostility extends to almost every field of endeavor. China blocked Taiwan's entry into the Word Health Organization even though the SARS epidemic inflicted heavy casualties on the island earlier this year. China also managed to convince three nations to shift loyalty away from Taipei's meager diplomatic corps during President Chen's three years in office. Worse yet, two of the cases were timed to humiliate Chen - one on the eve of his assumption of the Democratic Progressive Party chairmanship, the other before his stopover in New York while on a state visit to Central America.

So in terms of cross-Straits stability, China can be said to be every bit as provocative as Taiwan, and matters may yet spin out of control if leaders on both sides continue their recklessness. While smaller Taiwan should be careful not to provoke its giant neighbor, China must come to terms with the workings of a functioning democracy. Intimidation and suppression can only breed hostility among ordinary Taiwanese.