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In the early fall of 1958 one of the most mysterious crises of the Cold War erupted in the Taiwan Straits. The Chinese began shelling the offshore islands of Quemoy and Matsu, but they did not try to invade or deliberately provoke a war with the Americans. This incident provides a great study on how perceptions of international and domestic events shape the actions that a country takes, and how the Chinese government worked in a crisis situation. In this case perceptions that Mao held combined with Mao’s leadership converged to formulate the decision to shell the islands. With the same idea, the response that the Americans made to Mao’s aggression was formulated out of the perceptions that they had of Mao’s intentions. Examining this crisis is important to understand the history of the Taiwan issue and to understanding what possibly actions the PRC could take in the future on this issue. Perceptions play an immensely important role in shaping the policy outcomes of a nation. Mao wielded an enormous amount of power, so the views he held shaped many of the decisions and views that the other communist leaders held. Therefore, we will address both the domestic and international factors and the perceptions that Mao himself