The United States celebrated the opening of a new $250 million office for its de facto embassy in Taiwan last week, spurring new tensions between the United States and China. Official U.S. policy since establishing formal diplomatic relations with the People’s Republic of China in 1979 “acknowledges the Chinese position that there is but one China and that Taiwan is part of China.” The opening of the new U.S. facility does not signal a change, says CFR’s Elizabeth C. Economy, author of the new book The Third Revolution: Xi Jinping and the New Chinese State. However, the Trump administration has been more vocal on discussing Taiwan relations, suggesting that the U.S.-Taiwan relationship under President Donald J. Trump could develop to some extent independently of U.S.-China ties, she says.

Washington just opened a new compound for the American Institute in Taiwan (AIT). What is it, and why was the new complex established now?

The American Institute in Taiwan has been in existence since 1979. It operates as a de facto U.S. embassy to support relations with Taiwan by promoting business, educational, and cultural relations, processing visas, and welcoming U.S. officials and other guests. The new building has been in the works about a decade, so its opening by the Trump administration does not reflect any change in U.S. policy.

Other states around the world also maintain unofficial ties with the island through economic, trade, or cultural offices.

China opposed the AIT’s opening ceremony and has regularly condemned U.S. arms sales to Taiwan as illegal and provocative. Does it have a basis for challenging them under international law?

China does not have a legal basis for challenging the existence of AIT or U.S. arms sales. In fact, U.S. law, the 1979 Taiwan Relations Act, explicitly established AIT to promote relations between the United States and Taiwan, while recognizing that it is not an embassy and that the United States does not maintain formal diplomatic relations with Taiwan. The law also states that the United States will “make available” to Taiwan equipment and services that will enable the island to maintain the capability to defend itself.

Have U.S.-Taiwan relations changed under the Trump administration?

China does not have a legal basis for challenging the existence of AIT or U.S. arms sales.

There has been a subtle change in the Trump administration’s stance—but more in form than in substance. The United States has consistently provided arms to Taiwan, and the Trump administration’s 2017 sale was not outside the norm. In March 2018, Trump signed into law the bipartisan Taiwan Travel Act. The legislation acknowledges and encourages but does not mandate senior-level visits between officials from the United States and Taiwan. The AIT compound was already headed toward completion by the time the Trump administration arrived, so it is not part of any design to ratchet up the relationship. However, the U.S. government has demonstrated a willingness to push back against China on Taiwan-related issues. For example, in response to Beijing’s pressure on U.S. airlines to drop references to Taiwan as an independent entity, the U.S. government encouraged the firms to ignore such demands; the Trump administration called Beijing’s effort “Orwellian nonsense” and threatened to retaliate against Air China if Beijing took action against U.S. airlines.

Traditionally, Congress has been the champion of Taiwan—pushing against an executive branch that places Taiwan in the broader context of the U.S.-China relationship. In the Trump administration, there are several officials who are more likely to understand the U.S.-Taiwan relationship both within the context of the U.S. relationship with the mainland and also as an important relationship in and of itself because of its democratic system and strategic importance in the region.

What kind of role should the United States play in managing cross-strait tensions?

The United States is between a rock and a hard place: China is big and matters globally on virtually every issue; Taiwan is small, but it is a democracy and reflects the political values and principles upon which the United States was founded. Washington should encourage Beijing and Taipei to talk and maintain peace and stability across the Taiwan Strait. It should never deviate from its commitment to a peaceful resolution of the situation and that there should be no change to the status quo unless both the mainland and Taiwan agree. It should also not allow either side to provoke it into actions that do not reflect core U.S. values and interests.

The state of cross-straits diplomatic relations is at its lowest in a decade.

What is the state of relations under Taiwan’s Tsai Ing-wen and China’s Xi Jinping?

On the trade and investment front, relations are mixed. Beijing has punished Taipei for its perceived more independent stance under President Tsai Ing-wen by destroying food imports if they are not labeled “Taiwan area in China” and making life more difficult for firms believed to be linked to the ruling party’s government. At the same time, Beijing is trying to attract businesspeople who are perceived to be more open to closer political relations with the mainland by offering inducements to Taiwanese firms, such as receiving subsidies and opportunities to participate in government procurement projects.

However, the state of cross-straits diplomatic relations is at its lowest in a decade. The Xi government refuses to allow formal talks between Taiwan’s Straits Exchange Foundation and the mainland’s Association for Relations Across the Taiwan Straits, semi-official agencies charged with managing bilateral cultural, technical, and business matters. The last meeting between the two organizations was in 2015, prior to Tsai Ing-wen’s ascension to the presidency. Beijing has also undertaken live-fire drills in the Taiwan Strait, resumed dollar diplomacy to woo away Taiwan’s few remaining formal diplomatic partners, such as Burkina Faso and the Dominican Republic, and adopted coercive policies to try to isolate Taiwan, such as pressuring multinationals to change their recognition of Taiwan as an independent entity on their websites and other business materials.

This written interview has been edited and condensed.