The break up of the Soviet Union and the demise of communism, except in China, should have paved the way for more amicable foreign relations between the two countries. This was not to be, as the confrontation across the Straits of Taiwan has demonstrated. Since the political ideology of communism and democracy are no longer a major constraint in the development of amicable relations between America and China, analysis of events in the relations between America and China points to Taiwan as being the stumbling block.Taiwan has been the major irritant between China and the United States of America for decades. American foreign policy in the far-east is the reason for the continued existence of Taiwan as a separate entity to this day. Taiwan became a separate entity from mainland China in 1949, when the Kuomintang under Chiang Kai-shek was defeated by the communist forces and retreated to Taiwan, which was then called Formosa, to set up the government of the Republic of China, independent of mainland China. The communist forces under Mao Zedong attempted to take back Taiwan but were unsuccessful.In the meantime, America decided to throw its weight behind the independent existence of Taiwan. This decision was based on the need to contain the growth of communism, and Taiwan provided the means to demonstrate America’s will in this direction. Taiwan was also strategically important, as it provided America with a platform for resisting the growth of communism in the Far East.For China, Taiwan and its independent existence have always been an emotional reminder of the past humiliations China has undergone from the West, which it would like to forget. Besides emotional reasons, there are two valid concerns for China. Taiwan is a hindrance for it assuming the role of major world power it has the potential to be and wants to be, is the first. The second is the security threat that Taiwan poses.