"We don't know how at a micro level the political thinking of China is being shaped by the economic interaction," said Shelley Rigger, a professor from Davidson College at a panel discussion Wednesday. "What we do know is that this is a tricky relationship."

And as in any tricky relationship, mainland China and Taiwan, which Beijing regards as a renegade province, are finding out that one cannot live without the other. Increased economic interdependence has brought their economies closer, but diverging views on Taiwan's sovereignty prevent reconciliation, Rigger explained.

Taiwan has had a rocky relationship with China over its status since its separation from the mainland in 1949 when communists took power in Beijing. China has argued the island's government must accept it is an integral part of the mainland. Taiwan has been ambivalent about its status but it enjoys de facto independence.

This quest for autonomy may not come cheaply, as Taiwan may have to put its democracy in jeopardy, Rigger said.

"In a democracy, a lot of ideas are introduced but not one is determined as a strategic idea for the long term," she said.

"It often seems as if self-determination and democracy go hand in hand," she adds. "If they want a resolution, they are going to have to sacrifice one of the two."

Cross-strait relations have recently improved as Beijing and Taipei seek closer business links, according to panel experts.

Taiwan is the largest source of foreign investment in China, and the bulk of China's high-tech exports originate in Taiwanese-run factories, said Terry Cooke, a member of the senior foreign service, who was also present at the panel discussion.

The Taiwan Institute of Economic Research estimates Taipei's investment in China has reached is about $160 billion and grows $4 billion-$6billion dollars a year.

Albert Keidel, senior associate at the Carnegie Endowment for International Peace, said he believes that business leaders from Taiwan are automatically drawn to the mainland.

"The mainland economy offers employment opportunities to Taiwan workers as both China and Taiwan speak the same language (Mandarin) and share a common culture," Keidel told United Press International.

This does not discount the possibility of China launching a military strike against Taiwan if it continues to seek independence. According to a Pentagon report, China was gaining "an increasing number of credible options to intimidate or actually attack Taiwan."

This option became even more viable in March, when China passed an anti-secession law, which permits the use of force against Taiwan, if the island formally declares its independence.

"If they (the Chinese) do use force, it will reshape the political and military environment," said Philip Saunders, a senior research professor at the National Defense University.

The United States has had to balance its interests with Taiwan with its economic interests in an increasingly powerful China. As of yet, it has not intervened in the talks between the two sides.

Countries in Asia would like the United States to contain the China/Taiwan issue, according to Saunders, though such countries do not want to get too involved in the conflict themselves.

Japan is the exception. Recently, Japan and the United States said cross-straits relations was an issue of concern to both countries, a position that raised Beijing's ire.

Despite the complexities, Keidel's outlook on the future of China and Taiwan is optimistic.

"I think the link between Taiwan and China will strengthen on an economic level," he said. "On the political level, I think that there will be a continuation of the status quo, meaning Taiwan will no longer seek independence, so things remain peaceful."

All rights reserved. � 2005 United Press International. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by United Press International. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of United Press International.

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