Perhaps the toughest issue between Beijing and Washington remains Taiwan. The election last March of President Chen ushered in a divided government with highly polarized views on relations with Beijing. In the longer term, Mr. Chairman, cross-strait relations can be even more volatile because of Beijing's military modernization program. China's military buildup is also aimed at deterring U.S. intervention in support of Taiwan. Russian arms are a key component of this buildup.
Arms sales are only one element of a burgeoning Sino-Russian relationship.
On China's domestic scene, the Chinese Communist leadership wants to protect its legitimacy and authority against any and all domestic challenges. Over the next few years, however, Chinese leaders will have to manage a difficult balancing act between the requirements of reform and the requirements of staying in power. Beijing views WTO accession as a lever to accelerate domestic economic reform, a catalyst for greater foreign investment, and a way to force Chinese state-owned enterprises to compete more effectively with foreign companies. But Beijing may slow the pace of WTO-related reforms if the leadership perceives a rise in social unrest that could threaten regime stability. Chinese leaders already see disturbing trends in this regard.