Taiwan critical to Bush's China policy

HONG KONG, China (CNN) -- The United States' decision over arms sales to Taiwan will be a critical test to determine the direction of Sino-U.S. relations, analysts say.

The Bush Administration has until April 30 to choose from a list of arms proposed by Taiwan that includes advanced weapons such as four U.S. destroyers equipped with the Aegis radar system and Tomahawk missiles.

Under the 1979 Taiwan Relations Act, the U.S. is able to meet Taiwan's legitimate defense needs.

President George W. Bush and Secretary of State Colin Powell have met Chinese Vice Premier Qian Qichen, the most senior Chinese official to have visited the U.S. in two years.

Qian has warned that the U.S. arms sales to Taiwan would be a "very serious setback" for Sino-American relations while refusing to rule out a pre-emptive attack on the island, which Beijing regards as a renegade province.

In wrapping up his meeting with Qian, Bush told reporters that the U.S. had to serve obligations under the Taiwan Act.

"No decision has been made yet as to the sale of weapons to Taiwan," he said.

Evan Medeiros, China analyst at the Monterey Institute, told CNN that the arms sale to Taiwan would be Bush's first major decision in his China policy.

"So it's seen as a test in many ways of the type of policy the Bush administration will adopt towards China," Medeiros said at the California-based think tank.

The Taiwan issue has bedevilled the Sino-U.S. relations since Richard Nixon re-established diplomatic ties with Beijing in 1972.

In 1996, the two countries came closer to war than any time since 1950s, when the U.S. sent aircraft carriers to the Taiwan Strait after China fired missiles off the Taiwan coast.

Andrew Yang, Secretary General of the Taipei-based Council of Advance Policy Studies, said that Taiwan's current major fear is the Chinese deployment of short-range ballistic missiles.

"The number of missiles has been steadily increased. In another 2 to 3 years, Beijing will deploy another 500 to 600 missiles. So definitely Taiwan is under tremendous threat and pressure," Yang said.

Captain Pang Liang-chieh of Taiwan's Navy said: "In face of the PLA threat, Aegis systems is one of the weapons of choice for the purpose of defense."

Analysts say Aegis could ultimately become a platform for a U.S.-backed Theater Missile defense (TMD) for Taiwan, which is part of the broader missile shield the Bush administration has committed itself to create.

"The Aegis-equipped systems certainly have the capability to be upgraded and equipped at some point with theatre missile defense technologies that would provide Taiwan with defense capabilities against Chinese missiles," Medeiros said.

And that could be Beijing's worst nightmare.

"We hate the idea. We condemn the idea. The transfer of TMD would certainly touch off a strong reaction from China. That is not good for peace and stability in that part of the world," says Sha Zukang, Director-General of the Department of Arms Control and Disarmament at China's Foreign Ministry.

Bush in his election campaign promised a tougher approach to a China that many Republicans sees as Washington's potential enemy.

But his party and top advisors remain deeply divided over policies towards China, according to Douglas Paal, President of Washington-based Asia-Pacific Policy Center.

"There is a group that is extremely suspicious of the mainland and wants to get much closer to Taiwan," Paal told CNN.

"And there's a group which says that we cannot afford to do that strategically as a nation because China can damage our interests and has potential that can enrich us through trade and investment. And the two sides have not worked this out in the new administration," he said.

And Beijing has expressed good wishes.

"We do have a lot of common interests with the U.S.. We want to be their friend. We want to have good relations with them," said Sha of China's Foreign Ministry.

CNN Hong Kong Bureau Chief Mike Chinoy contributed to this story.

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