Taiwan: Overall Developments and Policy Issues in the 109th Congress

U.S. officials saw relations with Taiwan as especially troubled during the 109th Congress in 2005-2006, beset by the increasing complexity and unpredictability of Taiwan’s democratic political environment as well as by PRC actions underscoring Beijing’s assertion that it had the right to use force to prevent Taiwan independence. Two developments concerning Taiwan were particularly nettlesome to U.S. policymakers in 2005-2006. The first was Beijing’s enactment on March 14, 2005, of a ten-article “anti-secession law” aimed at reining in Taiwan independence advocates. While much of the law spoke of conciliatory measures—such as encouraging cross-strait economic and cultural exchanges and resumption of direct trade, air, and mail links—Article 8 of the anti-secession law specifically authorized the use of “non-peaceful means” to reunify Taiwan with China. The second irritant was President Chen Shui-bian’s decision early in 2006 to scrap two defunct but politically important symbols: the National Unification Council (NUC) and the Guidelines on National Reunification (GNR). While still pursuing a closer U.S. relationship with Taiwan, U.S. officials and some Members of Congress spent 2005-2006 balancing criticisms of the PRC military buildup opposite Taiwan with periodic cautions and warnings to the effect that U.S. support for Taiwan was not unconditional, but had limits.

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Peony Lui
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Creating Financial Harmony: Lessons for China 

The current turmoil in global financial markets, which began with the American subprime crisis in 2007, has put market liberalism in a bad light.
But it was the socialization of risk—not private free markets—that precipitated the crisis. This article addresses how to structure institutions and incentives to promote financial harmony. The notion that the subprime/credit crisis stemmed from “market failure” diverts attention from “government failure.” To remedy that diversion, this article examines the sources of the present financial crisis and finds that the free market is more the victim than the culprit. The lessons learned from the US subprime/credit crisis can help China confront the challenges it faces in creating a “harmonious society.”

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Economy
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Cato Institute

China, Space Weapons, and U.S. Security

China’s successful test of an anti-satellite weapon in 2007, followed by the US destruction earlier this year of an out-of-control American satellite, demonstrated that space may soon no longer remain a sanctuary from military conflict. As the United States, China, and others increasingly benefit from the information that military and intelligence satellites provide, the temptation to attack these satellites provides troubling potential for instability and conflict in space that could dramatically affect U.S. military capabilities on earth. In this report, the author illuminates the strategic landscape of this new military space competition and highlights the dangers and opportunities the United States confronts in the space arena.

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He Jianan