Nationalism has been described by many observers as the most important current in contemporary politicalthinking in China since the early 1990s. It is perceived in the West as ideological patriotism, anti-westernism and Confucian traditionalism, striving for a strong central state, the uncompromising protection of China’s national interests and the enhancement of state capacity through world market integration and economic regionalization. Consequently, Chinese nationalist thinking is said to be realist, undemocratic, xenophobic and sinocentric. However, this verdict disregards a substantial current within the Chinese debate on nationalism that promotes a much more liberal brand of thinking. Liberal nationalism rejects political authoritarianism, anti-westernism and cultural traditionalism, striving for a democratic redefinition of the relation between the state and its citizens. It soon could be strengthened by China’s periphery – foremost the coastal provinces and Taiwan – challenging the ruling monopoly of the party state and enforcing a new national consensus. This consensus would be characterized by the definitive disjuncture of the state and the nation, thereby bringing about federalism, Taiwanese political sovereignty and more democratic reforms of the political system.