Premier Su Chen-chang (蘇貞昌), while answering questions posed by a PFP legislator Wu Ching-chih (吳清池) today, said Taiwan may boycott the Olympics. Why?
The official English name of the Taiwanese teams is "Chinese Taipei" (中華台北). Taiwan has used this name ever since the late '70's, and they are not objecting to it now. But Beijing has continually referred to the Taiwanese team using a different set of Chinese characters (中國台北). It translates into English the same as "Chinese Taipei" or as "China Taipei," but the terms are subtly different. The official name that Taiwan accepts implies some sort of cultural or historical "Chineseness," while the characters Beijing keeps using have a decidedly political meaning that Taipei is part of the country of China (by implication, the People's Republic of China). China has also been calling Taipei an "overseas Chinese city."
Update: The Taipei Times adds:
Liu told the news conference that Taiwan later discovered that China had started spreading propaganda, saying that Taiwan would be the torch's first stop within China. China also called Taiwan "Taipei, China," instead of using its formal title as a member of the International Olympic Committee, "Chinese Taipei."
The opposition for it's part points out that China has no power to officially change the Taiwanese teams' names, so boycotting would be pointless. Instead, they believe protesting to the Olympic Committee should be able to rectify the problem. And they also suspect Su of pandering to the green electorate ahead of the DPP party primary.
My feeling is that this is basically a non-issue. The PFP legislator was trying to stir up some trouble, and Su was more or less making a theoretical statement.