The Chinese government launched another broadside against Taiwan today, warning that the self-governing island faces "calamity" because of President Lee Teng-hui's pronouncements on Taiwan's political status.

Meanwhile, a day after China announced that it had tested a new long-range missile, Taiwan's stock market plunged sharply but closed with only a fractional loss after the government intervened by buying $155 million worth of equities.

The continued tension between the governments in Beijing and Taipei is a pointed illustration, Western diplomats said, that a U.S. diplomatic mission to both cities two weeks ago failed to mollify the rivals. U.S. officials tried to persuade Lee to modify recent remarks that have angered Beijing, while they cautioned Beijing not to use force to try to impose its will on Taiwan.

Lee, however, has declined to back down, reiterating his inflammatory declaration of July 9 in which he said his government wants to deal with the mainland on a "special state-to-state" basis, repudiating Beijing's view of Taiwan as a wayward Chinese province. Lee's assertion marked a major break with the "one China" framework that has kept peace between the two sides for decades -- a formula that holds that both are parts of the same country and that peaceful reunification is inevitable.

China has rejected an explanation of Lee's remarks offered by the Taiwanese leader's top China negotiator, Koo Chen-fu, jeopardizing talks planned between Taiwan and Beijing later this year. China has seized a Taiwanese cargo ship, and warplanes from both sides have been flying past the halfway point in the Strait of Taiwan. Meanwhile, the United States has added to the tension with its announcement Monday that it will sell $550 million worth of weapons to Taiwan, including E-2T early-warning aircraft and parts and equipment for warplanes.

In an editorial that will appear Wednesday, the official newspaper of China's ruling Communist Party warned the people of Taiwan not to listen to their president, whom the article refers to as a "splittist." It said Lee's "state-to-state" initiative would "damage the island province's economy and trade and eventually bring calamities to the people."

On Monday, Beijing announced it had tested a long-range ballistic missile that military analysts believe is the Dongfeng 31, a mobile-launched, three-stage vehicle with a range of 5,000 miles. While military analysts said the missile was developed to threaten Japanese and U.S. military positions throughout Asia, the news triggered the stock sell-off in Taiwan.