Dynamic developments within both Mainland China and Taiwan have compounded the uncertainties looming across the Taiwan Strait. Since mid-2000, the cross-strait relationship has evolved into a mixture of four elements: lingering, though less confrontational, political stalemate; growing and even accelerating economic exchanges; rapidly expanding social interactions; and heightened military competition. Since July 1999, four distinct periods have marked Beijing's tactical operations toward Taiwan: military intimidations and verbal threats (9 July‐21 September 1999); verbal threats (21 September 1999‐18 March 2000); passive observation (18 March‐20 June 2000); and the two-pronged campaign (20 June‐present). Beijing's two-pronged campaign is well-coordinated and full-scaled. One soft prong aims at winning 'the hearts of Taiwanese people'. The soft prong includes the following elements: softening of rhetoric without concrete change of behavior; escalated efforts to invite opinion leaders in Taiwan; mentioning preferential treatments for Taiwanese investors on the Mainland; and allowing a dramatically increased number of Mainland visitors to Taiwan since July 2000. On the other hand, the hard prong seeks to put 'appropriate pressure' on Taipei to accept Beijing's precondition of resumption of cross-strait talks, and eventually Beijing's terms on unification. The hard prong includes the following elements: continuing to conduct military exercises with no reduction in frequency and scale; continuing strangulation of Taipei's international living-space with a new twist of diplomatic war in Africa; mobilizing Chinese overseas globally to oppose Taiwanese independence; escalating Beijing's pressure on Washington not to include Taiwan in the theater missile defense program, and not to transfer arms to Taiwan. The new Taiwan government has adopted much continuity in its cross-strait policy from the previous one. The new administration seeks a structured and constructive cross-strait relationship, holds no precondition for the resumption of cross-strait talks, continues to express maximum goodwill, exercises absolute restraint to avoid being seen as provocative, and takes a proactive approach on promoting socio-economic exchanges across the Taiwan Strait.