One of the key parts for continuing Taiwan's national survival and sustainable development is its strategy toward China. The development of the regional environment and both Chinese and Taiwanese domestic situation are three main factors shaping Taiwan's policymaking toward China. In order to understand the opportunities and challenges of Taiwan's strategy toward China, this paper will first layout what are the domestic and external challenges facing Taiwan. Then it will proceed to describe the trend for the next three to five years in the Asian region, China and Taiwan. Based on this observation, this paper will next examine whether some of the past strategic premises were no longer viable. And if it is no longer applicable, what are those changes and what kinds of implication are they. Those questions will lead us to the key issues: what are the critical questions the new China strategy needs to ponder and what kinds of domestic divergence existed for those questions. We will intend to lay out the key elements for the new China policy in the conclusion.