WITH CHINA and the United States refurbishing their relationship, the issue of Taiwan's status increasingly stands out as a potential deal-breaker.
Differences on other fronts appear containable for the foreseeable future, within an overall policy of engagement.
But Taiwan, struggling to maintain its autonomy against insistent pressure for incorporation from China's Communist government, could become a casus belli involving the United States.
This was my conclusion at the close of a recent two-week trip to China and Taiwan, during which I discussed a broad array of issues with government officials, scholars, journalists and businessmen.
How quickly tensions surrounding the island's future can escalate became clear in 1995 and 1996 when China mounted a campaign of intimidation that included bellicose warnings, military invasion exercises and missile tests in the waters off Taiwan. The coordinated show of hostility was prompted by China's perception that the ''renegade province'' to which Chiang Kai-shek's defeated Nationalist forces retreated in 1949 was sliding into independence with U.S. acquiescence.
Since 1949, the ruling Nationalists have adhered to the idea that Taiwan is part of China, but they insist reunification can be accomplished only after China becomes a democracy and a market economy. Independence as an alternative has grown significantly only in recent years.
China's brandishing of the sword partially accomplished its objective. Taiwanese President Lee Teng-hui moderated his provocative rhetoric both at home and on his support-seeking trips abroad. Within Taiwan's democratic politics, the opposition Democratic Progressive Party (DPP) has also muted its calls for independence.
And the United States has reinforced its adherence to the policy of ''one China, two systems.''
But intimidation has had its costs for China. Two U.S. carrier battle groups, positioned at either end of the Taiwan Straits, underscored American objection to reunification by force. Trade and investment setbacks occurred on both sides of the straits. Taiwanese resolve to maintain separateness stiffened and resulted in stronger than expected support for the re-election of President Lee.
Some 100 garish skyscrapers are rising, groundwork has begun for another 100 and planning has commenced for still another 100.
Today, opinion surveys show a large majority of the Taiwanese public is against reunification with mainland China so long as it is a one-party, authoritarian state. But the public is equally set against rousing the Chinese dragon by opting for independence.
Even the DPP, for which independence is a party plank, would test the proposition in a referendum were it to come to power in the next presidential election.
All parties are treading more carefully. China is pursuing benign enmeshment through calls for more people-to-people exchanges, increased Taiwanese investment on the mainland, and direct air and shipping links. China's coastal city of Xiamen, already the scene of major Taiwanese business activity, is bustling with preparations for additional investments.
Some 100 garish skyscrapers are rising, groundwork has begun for another 100 and planning has commenced for 100 more. Harbor improvements and a glittering new airport are alluring down payments on the economic growth that would follow direct air and sea links. Wary of being entrapped, Taiwan's government is resisting such links and restricting island business people from making large infrastructure investments on the mainland.
Chinese officials drop hints that come spring, a fresh initiative to expand cross-straits ties will be sprung by Chinese President Jiang Zemin, who is riding high after consolidating his power at the 15th Party Congress and taking the opportunity to summit with President Clinton.
Some Taiwanese find that prospect ominous. They point to so-called unofficial efforts by mainland scholars to draft for Taiwan a Hong Kong-type ''Basic Law,'' for supposed implementation by 2010.
Officially, China reiterates its willingness to be patient and await reunification with Taiwan until sometime in the next century, so long as the ambiguous status quo is observed. However, the Taiwanese government is increasingly beleaguered by China's attempts to isolate it internationally and to ensnare the island through vastly increased involvement with the mainland.
The Taiwanese government is also subject to mounting criticism from its business community and foreign investors on the island for restricting their activities on the mainland, thereby ceding significant economic opportunities to Japan, Korea, Hong Kong and Singapore.
And political parties against the long-ruling Nationalist Party, or Kuomintang, is gaining ground.