Shanghai holds air raid drill with eye on Taiwan

SHANGHAI, Sep 15 (Reuters) Shanghai, a city which Taiwan has threatened to bombard in the event of conflict, held a major air raid drill today, a sign that China still views war as possible with the self-ruled island it claims as its own.

The drill, which Chinese state media called the biggest since the 1949 revolution, was scheduled for the same day as a rally in Taiwan where the ruling party aimed to mobilise 1 million people to support Taiwan's frustrated bid for United Nations membership.

During the 23-minute drill, air raid sirens sounded at intervals across Shanghai's financial district and several outlying areas of the city.

But pedestrians were not required to take cover, cars were not stopped and daily life continued as normal in China's commercial hub. Many people were unaware of the purpose of the drill, or attached little political significance to it.

''There will never be war. We're all Chinese people -- war is impossible,'' said a 36-year-old Shanghai office worker surnamed Li, who was taking his 6-year-old son shopping at a mall in the financial district.

In 2004, then Taiwan premier You Si-kun threatened to fire missiles at Shanghai if the island were attacked. Last week, China's President Hu Jintao told US President George W Bush the next two years would be a period of ''high danger'' in the Taiwan Strait.

But business ties between Shanghai and Taiwan are booming.

Hundreds of thousands of Taiwanese live, work and even retire in the city.

Taiwan President Chen Shui-bian plans to hold a referendum next March on the UN bid, and Beijing could see the vote as a declaration of independence by the island.

Chinese academics have said China would be forced to react, possibly militarily, if the referendum were passed, though Taiwan's efforts to join the UN have repeatedly failed because of a lack of diplomatic support.

REUTERS RC RN1029