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Although the government and society of the Republic of China's (ROC or Taiwan) have changed markedly in the new millennium, the fundamentals of US policy toward the island remain intact. This study outlines recent developments in Taiwan and shows how they represent challenges to the US. It also discusses American policy toward Taiwan and examines several proposals for change that an American administration may wish to consider. In conclusion, the paper explains why the current policy, albeit contradictory and ambiguous, is in the best interest of the United States. There is a strong possibility that any major change in policy would succeed only in undermining peace and stability in the Asia-Pacific region. [ABSTRACT FROM AUTHOR]