President and Communist Party chief Hu Jintao issued a blunt warning to Bush on Friday not to press ahead with arms sales to the democratically ruled island that Beijing claims as a rebel province - to be recovered by force if necessary.
Speaking on Saturday at ceremonies to mark the August 1 Army Day, anniversary of the founding of the People's Liberation Army (PLA), Cao said both peace and stability were impossible if Taiwan pursued independence.
"If the 'Taiwan independence' separatist forces obstinately persist in their course, the Chinese People's Liberation Army has the determination and ability to resolutely smash any 'Taiwan independence' separatist plot," the People's Daily, mouthpiece of the ruling Communist Party, quoted Cao as saying.
Hu took a rare initiative to stress the importance of the Taiwan issue by calling Bush to voice Beijing's opposition to sales of sophisticated weapons to Taiwan, which is considering spending $18 billion on Patriot anti-missile systems, submarines and anti-submarine aircraft.
Defence Minister Cao said China hoped to achieve peaceful reunification with Taiwan, which Beijing has viewed as a renegade province since Nationalist forces fled there in 1949 at the end of the civil war on the mainland.
"We absolutely will not allow any person, using any means, to split Taiwan from the motherland," Cao said. "There is nothing more important than the territorial integrity of the motherland, and the will of 1.3 billion Chinese people cannot be spurned."
The arms issue has taken centre stage since Taiwan President Chen Shui-bian took part in a rare submarine dive last week to boost military morale just days after arch-rival China completed a mock invasion of the island and to assure Washington of Taiwan's commitment to buying US weaponry.
The drill, following China's war games off the island, was intended to boost public support for the arms deal that includes eight diesel-engine submarines, analysts said.
Cao renewed calls for modernising China's huge military, which for decades relied on sheer manpower over technology.
In recent years, China's military has been trying to become leaner and meaner by reducing troop numbers and buying advanced weapons such as submarines and fighter jets from Russia.
China has beefed up its missile forces, in large part in case of war with Taiwan. Military experts estimate China has amassed about 500 missiles along its eastern coast opposite Taiwan.