The planned vote comes as Chen Shui-bian, Taiwan's president, looks to ratchet up shows of independence ahead of presidential elections, also scheduled for March 22, after his ruling Democratic Progressive Party was thrashed in elections last month.
"We pay close attention to development of this 'referendum' issue," the Chinese Communist Party's Taiwan Work Office and the State Council's Taiwan Affairs Office said in a joint statement.
"If the authority led by Chen Shui-bian stubbornly risks danger in desperation, it will certainly pay a heavy cost"
"If the authority led by Chen Shui-bian stubbornly risks danger in desperation, it will certainly pay a heavy cost."
Taiwan, under its official name the Republic of China, lost its UN seat to China in 1971, and efforts in the past 14 years to rejoin the world body using the same name have been repeatedly blocked by Beijing.
'Independence in disguise'
Chinese media cited a government statement calling the vote a "referendum on 'Taiwan independence' in a disguised form".
"Once this scheme is realised, it certainly will seriously impact relations across the Taiwan Straits, seriously harm the fundamental interests of compatriots on both sides and seriously imperil peace in the Taiwan Straits and even peace in the Asia-Pacific region," Xinhua news agency said at the weekend.
China and Taiwan split at the end of a bloody civil war in 1949 after the Communists beat the Kuomintang nationalist army fled to the island and formed a government.
Taiwan's referendum move is also opposed by the United States which has said that conducting a referendum would be a mistake and intentionally provocative.
Washington, recognising one-China, switched diplomatic recognition from Taipei to Beijing in 1979 but remains Taiwan's biggest ally and a major supplier of weapons.