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In recent years the concept of 'soft power', popularized by the work of Joseph Nye, has gained currency in both China and Taiwan. This paper explores how the Chinese and Taiwanese understand soft power and its sources, and how their understanding differs from Nye's formulation. It discusses why this foreign concept has become so salient in the Chinese and the Taiwanese discourse. It also examines the impact of this concept on the external policies of China and Taiwan. The paper concludes by pointing out the limitations of the concept of soft power. [ABSTRACT FROM AUTHOR]

Facing the ever-growing interdependence across the Taiwan Strait, Mainland China's strategy towards Taiwan is undergoing a profound change, that is, transcending the staunch realpolitik mentality and turning to an institutional arrangement in policy making. Especially since President Hu Jintao took up his position, the Mainland has endeavored to improve cross-Strait relations through the institutionalization of a series of sensitive issues, such as the proposals and signatures of some long-term accords aiming to advocate economic cooperation, promote social exchanges, weaken political opposition and foster mutual trust. By taking the Mainland's national development strategy shift, Taiwan's domestic reality and 'institution deficit' in cross-Strait relations into consideration, this paper analyzes the reasons, efforts and features of the Mainland's recent institutional-orientated policy transition. [ABSTRACT FROM AUTHOR]