Washington’s relations with the People’s Republic of China continue along their rocky path. Thankfully, war remains a far distant possibility. However, the United States needs to find the best strategy to constrain Beijing without threatening military intervention. That means relying on America’s friends to defend themselves.

Nowhere is this policy more important than Taiwan.

The most dangerous area of potential conflict between the United States and China is Taiwan. Although the latter has been free of mainland control for more than a century, other than a brief period following World War II, Beijing still sees the island as an errant province destined to return to Chinese control. The PRC’s threats of war, though muted in recent years, are deadly serious.

Yet Taipei warrants Washington’s support. The 23 million islanders have built a prosperous democracy that provided the model to which Deng Xiaoping looked when he initiated economic reforms on the mainland. Whatever the technicalities of China’s authority, the people of Taiwan are entitled to choose their political future.

However, the island’s freedom is not worth war between America and China. Beijing views the issue as being vitally important for a mix of strategic and nationalistic reasons. U.S. intervention in a crisis in the Taiwan Strait would result in a potentially catastrophic game of chicken between nuclear-armed powers. War with the PRC would be far different than war with Serbia or Iraq.

Indeed, the cost of any conflict with China would be felt for the rest of the century. Even a small war would poison relations between the current superpower and the likely next superpower for years if not decades, and make further conflict likely. Neither nation, nor other nations in East Asia, can afford such an outcome.

The way out of this conundrum is to sell Taipei the weapons necessary for its own defense. Of course, Beijing bridles at the mere mention of arms sales to Taiwan. In August, the Chinese government denounced U.S. plans to provide radar equipment: “China resolutely opposes the United States selling weapons and relevant technical assistance to Taiwan.” Halting sales, added the Foreign Ministry, would “avoid causing new harm to Sino-U.S. relations.” The previous August an unnamed Chinese diplomat declared, “Selling the F-16s to Taiwan would be a big, big problem for us. Cooperation on other things would naturally be affected.”

However, while U.S.-PRC relations might suffer, arms sales would not put the two countries on a possible path to war. Indeed, it might be the best strategy for avoiding a future conflict. Two years ago, Deputy Secretary of State John Negroponte explained that selling weapons “supports our belief that a Taiwan confident and capable of protecting itself will offer the best prospects for a peaceful resolution of cross-strait differences.”

Earlier this year the Obama administration announced a $6.4 billion arms package—long frozen by the Bush administration—for Taipei, but left out the sixty-six requested F-16 C/D aircraft, worth more than $3 billion. Now the administration has begun an assessment of Taiwanese defense needs over the next five to ten years to determine what weapons Washington should offer in the future.

The China-Taiwan relationship is better than in past years. Taiwanese President Ma Ying-jeou, who took office in 2008, is less confrontational than his predecessor and Beijing has finally learned that military threats only inflame island sentiments for independence. The two states recently negotiated the Economic Cooperation Framework Agreement to enhance commercial ties and held the first joint search-and-rescue exercises in the Taiwan Strait. Moreover, Chinese Premier Wen Jiabao recently indicated that his country “might one day” remove its more than 1400 missiles targeting Taiwan.

The improvement in ties is good, but not nearly enough. Even President Ma states that “the threat to Taiwan’s security still exists.” Taiwan has broached the idea of mutual confidence-building steps, but if Beijing wants to minimize the U.S. assessment of Taiwan’s defense needs, the PRC should make a firm declaration that it does not intend to use military force to resolve cross-strait disputes. The regime also should remove army units deployed across from Taiwan and destroy all missile facilities after the missiles themselves are removed.

Until China adopts such a policy, Taipei needs a military sufficient to deter Beijing from attempting military action. While the PRC’s rapid economic growth has been a boon for the impoverished Chinese people, it has enabled the increasingly wealthy Chinese government to strengthen its military. As a consequence, observed analysts with the Washington-based Taiwan Policy Working Group, Taiwan “has experienced a relative decline in military power.”

The Pentagon report on Chinese military spending released earlier this year warned that “China’s military buildup along its East Coast continued unabated.” Thus, added the Department of Defense: “The balance of forces continues, however, to shift in the mainland’s favor.” That doesn’t mean the PRC would necessarily win a conflict, at least at reasonable cost. Still, the Rand Corporation recently warned: “China’s ability to suppress Taiwan and local U.S. air bases with ballistic and cruise missiles seriously threatens the defense’s ability to maintain control of the air over the strait.”

Policy makers in Beijing long have seemed cautious and willing to wait for peaceful reunification. Nevertheless, there are indications that the PRC’s patience is not infinite. The shifting balance of power might tempt Chinese officials to use force if Taiwan continues to resist Beijing’s embrace. The international cost of war would be high. Even if Washington did not intervene and Beijing won quickly, the result would be an international crisis which would roil financial markets, disrupt commercial relations, raise political tensions and spur military buildups throughout East Asia.

To prevent such a catastrophe, Taiwan need not “try to match the PRC ship for ship, plane for plane, or missile for missile,” as the Taiwan Policy Working Group put it. Rather, Taipei needs sufficient power for deterrence. Probably most important is air power. In early October Taiwan’s Deputy Defense Minister for Policy, Andrew Yang, came to Washington to lobby for F-16 C/Ds, upgrade equipment for F-16 A/Bs, and F-35s in the future. He explained: “We have about 90 F-5s as part of our air defense aircraft, and obviously it is urgently in need of replacement.” Last year President Ma pointed to the newer aircraft as necessary “to maintain the military balance” with the PRC.

Also on Taiwan’s wish list are diesel submarines. The PRC is expanding its navy while Taiwan’s Hai Lung–class subs are aging. Taiwan is seeking to acquire foreign replacements, as well as develop its own vessels as part of the so-called Project Diving Dragon.

However, Washington’s role in improving Taiwan’s military, while important, remains secondary. Prashanth Parameswaran of the Project 2049 Institute pointed out last year:

Taiwan must also start shouldering more of the burden for its own defense. Releasing its first-ever Quadrennial Defense Review this year—which called for the establishment of a volunteer force and placed an annual minimum on defense spending of 3 percent of GDP—was a good first step. But Taipei must also develop a full spectrum of asymmetric capabilities and prepare itself for a variety of possible threats from the mainland. This means hardening key civil and military facilities to reduce the impact of a future attack, investing in mobile missile systems to complicate targeting, and stockpiling critical energy, food and medical supplies in case of a potential blockade. Taipei should also use its reputation as a high-tech economy to expand its defense industry and develop weapons and technologies domestically, instead of relying on foreign suppliers.

There is an alternative to further Taiwanese military expansion: a political accommodation between the PRC and Taiwan. For obvious reasons, most Taiwanese have no interest in being ruled from Beijing. In practice, China appears to have eschewed military coercion as long as Taiwan avoids declaring independence, but the former may be growing more impatient with this informal deal.

A more enduring agreement would result in greater stability. Bruce Gilley of Portland State University suggests “Finlandization” as a modus vivendi: “Under such a scenario, Taiwan would reposition itself as a neutral power, rather than a U.S. strategic ally, in order to mollify Beijing’s fears about the island’s becoming an obstacle to China’s military and commercial ambitions in the region.” In return, the PRC would accept Taiwan’s independent existence.

Gilley would halt arms sales to encourage this approach. But China has less reason to negotiate if Taipei loses the effective ability to defend itself.

Ultimately, Taiwan’s strategy—whether tough defense, political accommodation or some combination of the two—is up to the Taiwanese people. Washington can help by making available the weapons which they need to protect themselves. U.S. arms sales are no panacea to tensions in the Taiwan Strait. But arming Taipei may be the best practical strategy to maintain peace in the region.