The 1996 deployment of two U.S. carrier battle groups to the waters off Taiwan in response to the firing of Chinese missiles close to Taiwan's shores brought home suddenly the genuine danger of a military clash between the United States and China over the Taiwan issue. This is an assessment of the intractable differences between Beijing and Taipei over the status of Taiwan, the rise and growing strength of an opposition party advocating Taiwan independence, and Beijing's threat to use military force to prevent independence. At the same time, it weighs the moderating influence of investment and trade across the Taiwan strait and the re-opening of cross-strait dialogue.