A high-profile visit to Taiwan by Speaker of the United States House of Representatives, Nancy Pelosi, saw China undertake its biggest-ever show of military force in the air and seas around Taiwan, including the firing of ballistic missiles.
Now, the world is watching - and holding its breath.
According to experts at The Australian National University (ANU), the current tensions between China and Taiwan cannot be ignored - with major consequences for Australia, including a heightened risk of war.
What makes Taiwan so strategically important?
Taiwan is one of the most densely populated places on the planet with a population of more than 23 million people.
While it's 11,000 kilometres away from continental United States, the island of Taiwan sits a mere 128 kilometres from mainland China.
Professor Brendan Taylor, from the ANU Strategic and Defence Studies Centre, says while geography overwhelmingly favours China, Pelosi's visit is consistent with an increasingly pro-Taiwan American approach to Asia's most dangerous flashpoint.
According to Taylor, tensions between Taiwan and China are generally attributed to Beijing's growing assertiveness.
"However, these tensions are ultimately the product of changes in the dynamics of the relationship between China, Taiwan and the United States and, most importantly, the balance of military power underpinning those ties," he says.
"As China's wealth and power have grown, so too have its military options for conquering Taiwan.
"These tensions have sparked renewed debate in Australia over whether conflict would trigger Australia's obligations under the ANZUS alliance."
What would Australia's role be in a potential conflict?
Taylor says if America asked for a military contribution, Australia would have little choice other than to comply.
Research fellow at the ANU National Security College Dr Benjamin Herscovitch says Australia has already involved itself in the current tensions through recent statements and diplomatic support of Taiwan.
"Australia's recent trilateral statement with the United States and Japan condemned China's launch of ballistic missiles and called on Beijing to immediately cease military exercises," he says.
"Given that the United States and Japan are Taiwan's two strongest supporters internationally, Australia's joint statement with these countries sends a strong signal to Beijing about Canberra's willingness to take a stand on these current tensions.
"Australia's involvement in the current tensions make it less likely that bilateral ties with China will be revived. But given that the security of Taiwan is at stake, some extra criticism from China is a small price to pay."
Could a military conflict be avoided?
While Australia's relationship with China is at risk, Associate Professor at the ANU Strategic and Defence Studies Centre Dr Amy King says Beijing's concerns about how the region perceives its use of power could ameliorate tensions before they boil over.
"China will be sensitive to how its actions in the Taiwan Strait are being interpreted in Jakarta, Singapore, Seoul, Tokyo and elsewhere in the Asia Pacific region," King says.
"China must balance its goal of deterring the United States against its parallel goal of not unnecessarily antagonising those in its immediate region.
"The region is giving China some latitude here, and it is notable that most, though not all, Asian states have refrained from either openly criticising Beijing for its military exercises or supporting the United States for Pelosi's visit to Taiwan."
The fate of a leading liberal democracy is also at stake.
"China's annexation of Taiwan would be the death knell for many of the rights and freedoms of 23 million Taiwanese. It would also mean the destruction of one of the region's freest democracies," Herscovitch says.
While war may not be inevitable, conflict could be used as a means of last resort or the product of an accident.
"It could be triggered by something as simple as an unintended collision of Chinese and Taiwanese fighters flying over the Taiwan Strait, or by a stand-off between US and Chinese ships operating in the waters below, where an exchange of fire results in one of the vessels foundering," Taylor says.
"From there, events could easily spiral out of control."
According to Herscovitch, there's no quick fix to the current stand-off. He says there aren't many viable options to easily diffuse the situation.
"America's decision to not respond with its own massive show of military force likely eased tensions," he says.
"China and America don't want war, and nor obviously does Taiwan. China wants to annex Taiwan without taking on the massive military, diplomatic, economic and political risks associated with mounting a full-scale amphibious invasion across the Taiwan Strait.
"Meanwhile, America and Taiwan want to preserve Taiwan's de facto independence without having to defend the island against an invasion attempt by the People's Liberation Army.
"The good news is that all sides have strong incentives to avoid their respective shows of military and diplomatic force spiralling out of control into a deadly escalatory cycle."