Speaking at a Wall Street investment banking conference, the former Nixon administration official said that while neither side intended to go to war, an escalation of tension could lead to hostilities. But this has the uncomfortable parallel to the outbreak of World War One, where an unfortunate escalation can lead to war. China fired three test missiles into the waters on the north and south of Taiwan last weekend, and announced it will hold joint naval and air exercises with live ammunition in international waters west of the island. Taiwanese stocks dropped, with the main Taiwan Stock Exchange index falling 2.04 percent to its lowest point in more than a month following China's announcement of further military exercises in the strait. Taiwanese stocks have fallen 7 percent this year amid rising tensions with Beijing.
China regards Taiwan as a renegade province.
It was formed after nationalist Chinese fled the mainland following their defeat in civil war against the communists in 1949. Kissinger orchestrated the first visit of a U.S. president to China when Nixon visited the country in 1972, a visit that led to U.S. recognition of China, and the statement of policy that Taiwan is part of mainland China.