China’s underlying position on its cross-Strait relations, however strong its current commitment to peaceful diplomacy, is that Taiwan must make sustained, visible progress toward a peaceful settlement or risk a resort to armed hostilities. It has also indicated that any move by Taiwan that might demonstrate its substantive rejection of this new demand could well be the last straw.

But while military measures have had a significantly higher profile since 1995, and there is real concern at the extent to which Taiwan’s move away from the ‘one China’ principle has challenged Beijing, closer examination suggests that there is still some way to go before China would feel itself ready to launch a major military assault. China is operating very much at the psychological or political, rather than military, level of conflict.

An invasion of Taiwan by China cannot be rationally related to two of Beijing’s most important objectives: reunification and sustained national economic development. If China did launch an invasion it might well, whatever its ballistic missile capability, lack the military capability to succeed, particularly if the U.S. intervened, and even in its best case scenario, would not be able to subjugate Taiwan without large scale loss of life. Such use of force could certainly be expected to lead to recognition of Taiwan, even an occupied Taiwan, as an independent sovereign country by major powers such as the U.S. and the EU. The subsequent domestic repression in Taiwan over a protracted period under a China-installed regime would ensure a total breach between China and the developed world. Such a breach would bring a near total end to China's substantial exports to the developed world and produce massive unemployment in its coastal cities at a time when domestic political stability is under severe strains.

China also faces severe constraints for lower level military options. During the present decade, it will not be able to field a force large enough or capable enough to conduct an effective blockade if Taiwan chooses to resist. Nor could it count on being able to do so at any later time, except perhaps in the unlikely event that Russia or some other highly developed military power were willing to supply it with massive numbers of modern weapons systems and platforms. Indeed, on the basis of current trends, it is unlikely to be able to acquire air superiority needed to execute even a partial blockade. Its entire fleet of modern submarines, even if it rises to 40 boats or so in around seven years time, would probably not be able to execute the naval component of such an action, and the acquisition of major surface combatants is likely to continue on a replacement basis for older vessels rather than be directed at an increase in numbers.

For these reasons, if China should feel the need to escalate the ‘war’ with Taiwan, it will seek to exhaust a variety of non-lethal levers it has at its disposal before it will even consider combat hostilities seriously. These include information warfare, covert operations and unconventional provocations designed to create political divisions in Taiwan. These measures, though non-lethal, would carry a risk of escalation that cannot be dismissed.

The validity of these assessments about China operating at the political rather than military level of conflict is borne out to a considerable degree by Taiwan's own policies and military posture. In 1991, Taiwan formally dropped its policy of armed confrontation with China, and it has continued to lower its defence burden accordingly. Even though the military threat from China resurfaced prominently in 1995, Taiwan has not made the sort of massive new investment in defence capability and defence mobilisation that this might have suggested. It has been satisfied since 1995, as it was before, to use the robustness of its defence posture essentially for political purposes, to underpin its distancing from the ‘one China’ principle and as a means of winning international political support for an independence strategy, especially in the U.S. The national defence posture premised on a politico-military threat from China (rather than a threat of invasion) also supports building a new Taiwan identity and provides a basis for claims to de jure independence, without seriously disturbing the otherwise peaceful development of Taiwan's economy.

All that said, the risk of war in the Taiwan Strait must continue to be taken seriously. Neither principal is likely to embark consciously on a war but there is a significant possibility that the calibrations made in policies of threat of force or employment of non-lethal measures by Beijing, or in response by Taiwan or the U.S., may not be exact. A cycle of escalation and counter-escalation is quite conceivable, at each stage of which the political difficulties and costs of disengagement would be greater. There is need, therefore, for the parties themselves and the U.S. to undertake, both unilaterally and between each other, confidence building and transparency steps to lower the risk of miscalculation and misunderstanding that could otherwise lead to serious military consequences.

Many of the elements needed for reducing military tensions in the Taiwan Strait and military confidence building are in place (such as mutual observance of a tacit military separation zone in the middle of the Strait). But there is considerable room for improvement, especially in some areas of military readiness (such as a reduction in China’s missile deployments). Apart from removing these missiles, not much can actually be achieved in changing military deployments. The bigger issues are transparency and managing the perceptions of the military situation in the Strait. Both sides are too willing to use point scoring about military deployments, and this overshadows the visible progress in civil cooperation, especially the prospect for establishing comprehensive direct links and joint oil exploration in the middle of the Strait.

In this environment, the responses of the U.S. have carried both positive and negative consequences. Washington’s determination to oppose Chinese intimidation and possible use of force is clearly the right policy. But there has to be some doubt whether its armed forces are the best instrument to which to give priority in conducting that policy. China is far more responsive to incentive-based policies, related to investment and technology transfer, than it is to threat-based sanctions or attempts at deterrence. One thing is certain: the information dominance of the U.S., based on its far superior and near real-time intelligence capabilities, gives it capacities for crisis management and leadership that neither Taiwan nor China can match. This strength of the U.S. needs to be brought into play more effectively in the interests of peace in the Taiwan Strait.

Beijing/Taipei/Washington/Brussels,6 June 2003