Electoral politics in Taiwan reflects the popular ambivalence in articulation of its political and national identity. This ambivalence is testing the strength of nascent domestic democratic institutions. Taiwanese democratisation has also introduced a new variable in crossstrait relations that China and the US both have to contend with. Greater democratisation of Taiwanese politics and the struggle over the country’s national and cultural identity is making the management of crossstrait relations more complex for all three parties, i.e., Taipei, Beijing and Washington.

The end of the Cold War, the September 11 terrorists’ attacks, preponderance of US power and globalisation have shaped the present world order and posed new opportunities and challenges for China. China’s need to fulfill its grand strategy of acquiring comprehensive national power within this external environment and overcome the existing challenges has given rise to its post-Cold War foreign policy strategy. Given the challenges it faces, its primary need is to ensure continuance of a peaceful environment to sustain its reform and modernisation programme.

On October 12, 2005, China announced the completion of a railway line to Tibet—one of the world’s highest train routes. This railway line climbs 5,072m (16,640ft) above sea level and runs across Tibet’s snowcovered plateau—dubbed the roof of the world. China’s official Xinhua news agency while celebrating the achievement said that the equivalent of USD 3 billion had been spent on the challenging 1,118km (710-mile) section, after four years of construction.

The inaugural East Asian Summit (EAS), touted as groundbreaking, commenced on December 14 in Kuala Lumpur comprising 16 nations— the 10 ASEAN countries, China, Japan, India, Australia and New Zealand with Russian President Vladimir Putin making a special appearance. The EAS Declaration, like many issued before in the region, is wide-ranging: from political and security cooperation, infrastructure development, financial issues, further liberalisation of regional trade and investment, poverty eradication to fighting epidemics. Nonetheless, inter alia, three points need underscoring.

World over, differences exist about the impact of military expenditure. While development economists consider excessive military expenditure as wastage, many defence economists have a different view. With the defence versus1 development debate unending, China makes a unique contribution. While China’s defence expenditure is not well known, the hinese experience shows that investments in development do provide an expanded economic base subsequently, which will take care of defence needs.