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China, in its long history, has always been one of the largest empires in the world. Since the turn of the 20th century it has had a tumultuous history and almost isolationist government. However, it is now emerging as one of the world's strongest powers in the world. Yet, a continual thorn in its side is the tiny island of Taiwan across the strait. Several incidents have occurred which have brought the U.S. into the area and has been a cause of concern to the rest of the Pacific community. This paper will explore the three sides of the Taiwan Strait issue and where each side stands. It will provide insight into China and Taiwan's policies and will examine what this means to the U.S. This study attempts to argue that the recent dramatically changed political and economic situation across the Taiwan Strait appears to be more in favor of a peaceful relationship between the mainland and Taiwan than ever before. The U.S. could play a more positive role to encourage this development by weaning its defense commitment to Taiwan.