Tensions have risen ever since Taiwan President Lee Teng Hui used the words "state to state" to describe the relationship between Taiwan and China. Elizabeth Farnsworth leads a discussion on the latest developments and the implications for stability in the region.

ELIZABETH FARNSWORTH: For more we get the views of Minxin Pei, a senior associate at the Carnegie Endowment for International Peace. He was born in China and came to the United States in 1984 to study. And Vincent Wang, an Assistant Professor of Political Science at the University of Richmond, Virginia; he was born in Taiwan and also came here as a student in 1984. Minxin Pei, you heard what Secretary Ross said. He used the words "tense" and "potentially dangerous" for the situation. What words would you use?

MINXIN PEI: I would basically use the same words because the latest development in Taiwan, namely President Lee Teng-Hui's open rejection of the one-China policy and his proposal of a two-state relationship with China amounts to a virtual declaration of independence by China's standards. And China's policy has always been if Taiwan goes down that path, it will result to force.

ELIZABETH FARNSWORTH: So this really worries, you could lose sleep over this?

MINXIN PEI: Well, I cannot believe it but I did.

ELIZABETH FARNSWORTH: So you think -- I mean, is China ready to go to war?

MINXIN PEI: No, not right now. I think it certainly has the potential in the current crisis, but thanks to demonstrations, timely intervention, I think the crisis is being handled in a much more desirable way.

ELIZABETH FARNSWORTH: Thanks to what?

MINXIN PEI: The administration.

ELIZABETH FARNSWORTH: The administration.

MINXIN PEI: President Clinton's personal call to President Jiang Zemin of China and he sent his personal envoys both to Beijing and to Taipei. I think this intervention appeared to have slowed down the escalation, at least for now.

ELIZABETH FARNSWORTH: And, Mr. Wang, how do you see the situation, very, very dangerous?

VINCENT WANG: Yes. It can be a potentially interesting time, but I have a different perspective on the cause of tension that is, everybody knows that even though Beijing and Washington have normalized relations for the last 20 years, Beijing still refused to renounce force against Taiwan, and Beijing has also incorrectly, in my opinion, learned lessons from the 1995/96 Taiwan Strait crisis that there are areas such as missiles, maybe a naval blockade it can employ in order to bring Taiwan into the negotiation table under Beijing's terms. So I think that the basis for peace in the Taiwan Strait for the last 20 years unfortunately has been deterrence; that is to say, peace through strength. Therefore, in light of the increasing military capabilities of the Mainland, and the perceived shift of the U.S. Administration's position on one-China, increasingly close to that of Beijing, this is the element of uncertainty. In other words, I'm saying that tension may arise if Beijing sees weakness.

ELIZABETH FARNSWORTH: On the question of the legislation that was currently -- that was being discussed today in the Senate Foreign Relations Committee, how does Taiwan see this, the Taiwanese government, since it's about strengthening military relations between the U.S. and Taiwan?

VINCENT WANG: Well, I don't work for the government, so I can only --

ELIZABETH FARNSWORTH: From what you know.

VINCENT WANG: I can only speculate what they think and based on my knowledge and reading and so forth, I think in general the government and the people in Taiwan probably welcome this legislation because it's important to understand the intent and the spirit of this Taiwan Security Enhancement Act. That is to say, it is intended to enhance the security commitment of the U.S. for Taiwan. It is not intended to revise the Taiwan Relations Act as somebody has mentioned. What ain't broke, why fix it? So I think, in general, people in Taiwan probably feel more confident now they understand that eventually they will have to enter into a very protracted and perhaps even difficult political negotiation with Beijing. So the more security they can get, the more confident they will enter into the political negotiations. And this piece of dialogue I think is also in the interest of the United States Government and people.

ELIZABETH FARNSWORTH: And Minxin PEI, the Chinese reaction to this, the official news agency said a legislator in China told Congress to shelve this legislation. Explain.

MINXIN PEI: I think the Chinese would view this as an unnecessary publication for several reasons. First of all, when the U.S. and China normalized relations 20 years ago, there was explicit agreement made by the U.S. to abrogate mutual defense relationship, and what this legislation does or will do, if it passes, is to restore that treaty relationship that will be open violation of a mutual diplomatic agreement. Secondly, China believes that any enhancement of this military relationship will give the people in Taiwan a sense -- a false sense of security which will, in turn, encourage co-independence sentiments, which will eventually, in China's judgment, bring to war. And finally I think this legislation will provide a huge inventory of weapons to Taiwan and will encourage a very dangerous arms race on both sides of the Strait. So none of that will actually improve Taiwan's security, rather, it will undermine it.

ELIZABETH FARNSWORTH: Mr. Wang, this all began -- or at least this most recent brouhaha began with President Lee's remarks about there being not just -- there being two states. What was the Taiwanese people's reaction from polls and other sources to those remarks?

VINCENT WANG: I think that if you look at most of the polls in Taiwan conducted over a period of time, which, by the way, are pretty reliable, because different polling houses use the same methodology and they come to the same -- very similar conclusions -- that is to say that an overwhelming majority of the respondents in Taiwan favor some kind of status quo. For example, the latest poll shows that 35 percent of the respondents favor status quo now and decision later, and --

ELIZABETH FARNSWORTH: Decisions later about whether there's a separate state, you mean?

VINCENT WANG: Exactly. To make that a crucial decision in an imprecise future, in other words. 20 percent favor the status quo and eventual -- I think it's eventual -- no, status quo indefinitely, and then 15 percent favor status quo now and unification later; 11 percent favor status quo now and independence later. In other words, 81 percent of the respondents favor some form of status quo. Only 4 percent of the respondents favor immediate independence, and 3 percent favor immediate unification. So I think that the -- President Lee Teng-Hui's comments, which I think unfortunately have been taken out of context by a lot of media, and certainly in Beijing -- look, he was merely reasserting that the Republic of China, which is the official name of Taiwan, has been a sovereign state since 1912. The ROC Government also has a one-China policy, that is, you know, ROC is the only China.

ELIZABETH FARNSWORTH: The Republic of China, ROC.

VINCENT WANG: The Republic of China, right. And since 1991, ROC shifted that position. So now it recognizes the PRC as the governing authority having jurisdiction over the Mainland. So if the ROC does not regard the PRC as a state, how can you have the state-to-state relations? So I think President Lee Teng-Hui's remark is actually an upgrade about Taiwan's perception of the status of the Mainland Government. Furthermore, it's important to know that -

ELIZABETH FARNSWORTH: Excuse me. I just need to go because we don't have much time. The Chinese Government didn't see it that way.

MINXIN PEI: The Chinese Government looks at this development in the context of President Lee Teng-Hui's past behavior, because President Lee Teng-Hui has a track record of not only saying things that are obviously provocative from Beijing's point of view, but also does things that, in the minds of Chinese leaders, move Taiwan very dangerously to the brink of open declaration. And I want to add something about Chinese people's view on reunification issue. From my knowledge and my knowledge of polls conducted in China there is no immediate popular demand for reunification with Taiwan. People in China understand that. But there is a great deal of opposition to Taiwan's open declaration of independence.

ELIZABETH FARNSWORTH: Now, there's very little time left, but first you, Professor PEI What do you think -- or Mr. PEI What do you think will happen next?

MINXIN PEI: I think the Chinese leaders will examine their options. They want to see whether the leaders in Taiwan will retreat, how American diplomatic pressure will work, and then they will decide. Right now, I don't think there is a set cause of action.

ELIZABETH FARNSWORTH: And do you interpret what's happened so far as a moderate response or --

MINXIN PEI: So far, it's quite moderate, despite the harsh and loud rhetoric from Beijing.

ELIZABETH FARNSWORTH: And what do you think is likely to happen next, Mr. Wang?

VINCENT WANG: I think the likelihood of military action on the part of Beijing is slim at this moment because Beijing desperately needs a peaceful international environment. Beijing also has a host of domestic problems. But we can -- we will see the propaganda, the psychological warfare and military maneuver to continue.

ELIZABETH FARNSWORTH: All right. Well, thank you both very much for being with us.

VINCENT WANG: Thank you.

MINXIN PEI: Thank you.