China and Taiwan – Cross-strait Relations in Flux While China has become the world’s second largest economy, one of its unfinished tasks is reunification; Taiwan. After the KMT was defeated in 1949, China proposed “one country, two systems” to bring in Taiwan in a unified China but no avail. Cross-strait talks as issue, economic relations seem to have progressed well notably by the signing of ECFA. Notably, no country has official ties with Taiwan because of this policy. China would also not allow Taiwan to sit in international body. Obviously, tensions in the Strait would affect not only both sides, but also the whole Asia-Pacific region. Taiwan is the major bones of Sino-American relations by US blocking Chinese attempts to use force or threats against Taiwan because of it feels like an “ally” and a symbol of democracy in Asia. While the US has declared that it would not support Taiwan’s independence, the two sides must be settled by peaceful means. In a way, the US could be using Taiwan to restrain China’s rapid expansion of power.