Not even Buddha himself could have put the island’s predicament more succinctly. Nearly everyone in Taiwan, whether ethnic Chinese or aborigine, is caught in the same devilish dance. The Taiwanese have built a vibrant democracy that is struggling to be recognized by the world. But just as dark forces drag the dancer down, Beijing seems to block the Taiwanese at every turn. Even Washington, committed to a one-China policy that recognizes only Beijing, finds Taiwan’s noisy new democracy awkward. The real-life drama is building toward a climax on May 20, when newly elected president Chen Shui-bian takes office as the first opposition candidate to win a major election in 5,000 years of Chinese history. Chen, a native-born dissident turned politician, has long supported independence. But Beijing regards Taiwan as a renegade province, the vital last piece of the reunification puzzle; it is bent on stifling the island’s newfound sense of liberation. With ominous threats, diplomatic pressure and a massive military buildup, the communist leaders are trying to persuade Taiwan to accept that it is part of one China under Beijing–or face the likelihood of war.

On the surface, a deadly conflict seems almost inevitable. Rich, confident and democratic, Taiwan already acts as an independent nation in all but name. Officials in Beijing and Washington worry that Chen will want that as well. Chinese President Jiang Zemin has become almost messianic in his zeal to recover Taiwan. During the past three months, China’s policy toward Taiwan has shifted from deterrence (“Don’t go independent!”) to something more threatening (“Reunify or else!”). Military experts say 50 ballistic missiles are being added each year to the Fujian province coast, less than 200 miles west of Taiwan. Having isolated the island diplomatically, China is now using its enormous economic reserves to buy high-tech weapons around the world–and point them at Taiwan. Last week Jiang was in Shanghai, discussing Taiwan strategy with his top generals. How much of Beijing’s threatening is rhetoric, and how much is reality? Nobody knows.

But Taiwan has too much to lose to want to call China’s bluff. Chen, above all, is a pragmatist who doesn’t want to start a war. After a stump speech early in the campaign, Chen shouted: “Long live Taiwanese independence!” But since Election Day, he has been careful not to antagonize Beijing. He hasn’t acquiesced to Beijing’s one-China principle, which he told NEWSWEEK is “unacceptable to the vast majority of the people in Taiwan.” But he has promised not to declare independence or hold a referendum. On Election Day, just to make sure, the top U.S. official in Taiwan sternly warned him not to provoke Beijing. But no amount of cajoling can push Taiwan back into its old civil-war mentality. These days, few Taiwanese care much about their parents’ onetime connections to mainland China.

Taiwan has come of age. Many locals say they no longer need to act like rebellious adolescents, shouting “independence” from the rooftops. Instead, they are content to exercise independence in their choice of job, lifestyle or candidates. Rather than risk losing their achievements in a foolish bout of pride, people say, they are focusing on building a better Taiwan–rooting out corruption, expanding civil society and, of course, making money. “Declaring independence now would be like having a wild party,” says Yang Yen, a 32-year-old former underground playwright who used to lead protests for an independent Taiwanese culture. “You feel excited, important, dignified. But the result is like after any wild party: garbage everywhere and you don’t know how to clean it up.” The former radical takes a sip of Chardonnay and laughs about the irony of her new career: she helps run an Internet start-up that does millions of dollars of business with the mainland.

And yet the Taiwanese are fiercely proud of their new democracy. Though the island is, as publisher Antonio Chiang puts it, “a hostage of geography,” it has built one of the freest and most successful societies in Asia. So much for the claim, made by some of the region’s authoritarian leaders, that Western-style democracy is incompatible with Asian values. “We have proven that, even in Asia, democracy can be established,” outgoing President Lee Teng-hui told NEWSWEEK in an interview. “Someday, everybody will follow this path.” What mystifies and maddens many Taiwanese is how their progress has been virtually ignored by the world. “Ten years ago, when our government was still authoritarian, I could understand why the international community didn’t help us,” says one government official. “But now we are a shining example of democracy, a beacon for China. Why do people turn against us?”

The standard answer is that China is an elephant, while Taiwan is a flea. Nobody wants to irk a nation of 1.2 billion potential consumers. But the truth is, in economic terms, Taiwan still dwarfs mainland China. In the past 15 years the island has transformed itself from a backwater of rice paddies and garment factories into a sparkling high-tech mecca. Allowed to flourish with minimal government interference, an army of small computer companies has made Taiwan the world’s leading producer of everything from computer chips to monitors and motherboards. Many of the high-tech parts are made in the Hsinchu industrial park, where the per-acre revenues–and the number of Ph.D.s–are the highest in the world. Taiwanese companies now manufacture nearly a third of their products on the mainland, where low wages have attracted more than $40 billion in Taiwanese investments (story). “The New Economy is fueled by creativity, and that depends on an open society as much as on a market economy,” says Morris Chang, president of Taiwan Semiconductor Manufacturing Co., the world’s biggest chipmaker. “It simply can’t advance in closed societies.”

Compared to much of Asia–particularly China–Taiwan is a haven of freedom. Look at David Chou, for example, a toy manufacturer whose group, the 51st Club, advocates making Taiwan the 51st U.S. state. (In Taiwan, he is laughed at; in China, he would be jailed for treason–or worse.) Or the rock group Anarchy, which serenaded 4,000 Taiwanese teens at the annual Spring Scream in Kenting last month with its frank opinion of Taiwan’s formal name: “F–k the Republic of China!” Then there’s Peter Ng, a 63-year-old who in 1970 tried to assassinate Chiang Ching-kuo–a future president and the son of KMT leader Chiang Kai-shek–outside New York’s Plaza Hotel. The bullet missed. Ng was arrested, but after getting out on bail he went into hiding for more than two decades. Today he is back in Taiwan as a top human-rights activist, leading public prayer vigils for three men he believes were wrongly sentenced to death.

It’s the way Taiwanese express themselves–more than the gleaming skyscrapers, the Hello Kittys and the Starbucks on every corner–that pushes them farther and farther from mainland China. During the past few years, as the native-born President Lee has led a revival of the long-repressed local culture, there has been a boom in all things Taiwanese: history books, language courses, pop music, aboriginal tattoos. The people’s sense of identity has evolved in the process. In 1993 a government poll found that 48 percent of the people considered themselves Chinese, 17 percent Taiwanese and 33 percent both Chinese and Taiwanese. In 1999 only 12 percent of the people identified themselves as Chinese, 37 percent as Taiwanese and 45 percent as both Taiwanese and Chinese.

Taiwan’s new, separate identity is troubling not just to Beijing, but to Washington as well. For the past two decades, the United States has recognized Beijing diplomatically and supported Taipei militarily in a formula known as “strategic ambiguity.” But as China has emerged as a major power, Washington has courted Beijing more assiduously–witness the Clinton administration’s strenuous lobbying in Congress for the passage of “normal trade relations” with China. Washington still sells weapons to Taiwan, and it has vowed to respond to any unprovoked attack by China. But the blossoming of Taiwan’s American-style democracy–when seen in contrast to the mainland’s communist dictatorship–may make it trickier for Washington to defend its one-China policy. Some prominent conservatives, including former U.S. Ambassador to the United Nations Jeane Kirkpatrick, are already saying the approach should be revamped. Chen Long-chu, an international-law expert in Taipei, says: “It’s time to stop living a fiction.”

The irony is that, at this crucial moment, there is one phrase Taiwanese do not feel free to say in public: “Taiwan is independent.” That may sound odd, since voters elected a pro-independence candidate who now enjoys a nearly 80 percent approval rating. “Most intellectuals know it’s true; they are just unwilling to say it,” says Dean-E Mei, a conceptual artist. “They know whoever speaks will be considered a troublemaker.” Indeed, Vice President-elect Annette Lu, a lifelong advocate of independence, has been branded “scum” by Beijing and a “loose cannon” by Washington. The goateed Mei takes it upon himself to shock people into thinking more deeply. In a recent installation, “Identity,” he hung portraits of Lee Teng-hui and Deng Xiaoping side by side, with Deng half-covered by the Taiwan flag and Lee half-covered by mainland China’s.

Throughout the island, old rabble-rousers are putting away their antagonisms. The Independence Party itself disbanded soon after Chen’s victory. Yu Chen Yue-ying–the 73-year-old pro-independence matriarch of the most powerful family in southern Kaohsiung, where the opposition has long been strongest–still wears a fat diamond and treats her people’s problems with maternal tender-ness. But the family’s fight against the KMT is over, clan loyalties are fading and Yu is no longer dogmatic on independence. “Maybe we can have a federation,” she muses. The museum built to honor her father-in-law, a crusader for independence, is locked up and covered in dust.

Back at the National Arts Institute, where Pi Sui rehearsed her dance, students these days take their freedoms for granted. In the glass-walled cafe, they chat about how Taipei’s underground theater has fused with mainstream drama courses. Banned until martial law was lifted in 1987, the underground theater tried to shock audiences. “At first I just wanted to speak out, find a way to express myself,” says Lucie Fu, 31, the director of the Women’s Festival. “But you can’t just yell all the time.” The irony is that Taiwan, having won its democracy, has stopped the yelling–just in time for Beijing to turn up the volume.