What in the world is President Lee Teng-hui of Taiwan up to?

China watchers have been scratching their heads over that question this week following Lee's assertion in a German radio interview that relations between Taiwan and China should be conducted on a state-to-state basis. While Lee stopped short of a formal declaration of independence, his statement triggered alarms in Beijing and Washington.To be sure, Taiwan deserves admiration both for the way it has managed its booming economy, barely touched by the Asian financial crisis of the past two years, and for its successful transition from martial law a decade ago to today's robust democracy. To whatever extent an island with 21 million people could be considered a model for a continental nation of 1.2 billion, Taiwan is it.

However, Lee knows that the one thing that could trigger a military invasion - or an economic blockade - of Taiwan by China would be a formal declaration of independence. Such action would have catastrophic consequences not only for Taiwan, but for the future of peace and security in the Pacific Rim.

The Clinton administration should make it clear to Taiwan that there is no way the United States will come to its aid if China responds to a declaration of independence with military force or an economic blockade. Likewise, the administration should warn China that the use of military or economic force against Taiwan would lead to a trade embargo and a long-term suspension of economic, social and cultural contacts.

While Taiwan's resentment of China's attempts to isolate it diplomatically is understandable, the best thing for both Taiwan and China to do now is to cool the rhetoric and concentrate on building economic, social and cultural links. Hopefully, such ties could eventually bridge the gap across the Taiwan Straits.