By Prof. Nancy Bernkopf Tucker

This is another in a series of periodic monographs sponsored by the Center for Navel Analysis Corporation's "Project Asia." The monograph series allows CNAC to present an in-depth analysis of specific issues that are important to policy-makers, written by some of the United States' most renowned experts in Asian security,

This paper is by Dr. Nancy Bernkopf Tucker. She is among the foremost of American diplomatic historians who specialize in American-East Asian relations, particularly the United States' relations with China, Hong Kong, and Taiwan. A Columbia University Ph.D., she has served in the State Department and the U.S. Embassy in Beijing, and now is Professor of History at Georgetown University and at the Georgetown School of Foreign Service. She has been a fellow at the Woodrow Wilson Center, United States Institute of Peace, Harvard, and the Chinese Academy of Social Sciences. Widely published, her book Taiwan, Hong Kong and the United States, 1945-1992: Uncertain Friendships won the Bernath Book Prize in 1996. She has recently completed China Confidential: U.S.-China Relations through the Eyes of American Diplomats.

Dr. Tucker's analysis takes a close look at a situation that many consider even more dangerous to the stability of East Asia than conflict in Korea. The growing tension across the Taiwan Strait and the possibility that China and the United States could conceivably come to blows over the issue of the use of force against Taiwan make Dr. Tucker's attempt to peer into the near future--the next three or so years-- an important analysis. Her judgments, summarized below, are not optimistic:

 It seems clear that the most dangerous actor in this drama is China. China has the most rapidly changing expectations about the world community and its place in that world. Although emphasis continues to be on economic reform, nation building has broadened to include other measures of national power. As a result, Chinese leaders today are less and less content to accept restraints on their expanding influence.

 The clearest threats to the future, as China’s leaders envision it, are the policies and actions of the United States and Taiwan that could weaken, destabilize, and embarrass Beijing. Having abandoned the idea that America is in decline, China's leaders are increasingly worried about how the U.S. will use its immense power to constrict China’s options.

Beijing, of course, is determined to unify China, bringing the province of Taiwan under central control. That event is considered essential and inevitable. China’s leaders assume that it will be welcomed by the people of Taiwan who, unlike their misguided politicians and officials, recognize that they are Chinese first and always, sharing the mainland’s rich history and imbued with a common culture.

 To achieve the goal, China seeks to intimidate and isolate Taiwan, refusing to allow governments to maintain dual recognition, actively trying to outbid Taipei for diplomatic ties, and shutting Taiwan out of international institutions. Regardless of pleas and pressure, China will not renounce the use of force across the Strait.

China's leaders do not understand Taiwan and how inaccurate many of their assumptions are. They fail to see that coercion will not solve the Taiwan problem but rather will encourage recalcitrance. Thus Beijing’s refusal to renounce the use of force or stop adding to its missile installations, acts as a barrier to progress.

 Chinese leaders, however, do not see their own behavior as provocative and deny the relevance of the security dilemma to their actions; they blame Lee Teng-hui, the Democratic Progressive Party (DPP), or Washington, but never themselves.

 Chinese leaders also misperceive the dynamics of Taiwan politics. Rhetorically, they acknowledge that most of the population hopes to preserve the status quo. They are less willing to see that resolution rests far in the future, that many people hope the status quo will endure indefinitely, and that a general consensus has emerged that China must both democratize and become considerably more prosperous before the idea of unity could be seriously entertained.

Chinese leaders fear pro-independence sentiment but do not see how pervasive differentiation from the mainland has become. Indeed, the greatest challenge to Beijing’s vision of the future follows from the changing nature of Taiwan’s population as it becomes younger, more sophisticated, and more Taiwanese.

 Accordingly, Chinese leaders dismiss the relevance of democracy to the problem. Because it would never occur to them to seek popular approval before acting on an issue as crucial as union, they do not credit the necessity in Taiwan. The misapprehension that the public can be ignored is dangerous. So too is Beijing’s conclusion that democracy is just a device designed to postpone reunification.

 Finally, there are also misperceptions regarding the role of the United States. Beijing adamantly opposes arms sales to Taiwan, convinced that they make Taipei’s continuing defiance possible. It can also be argued, however, that Taipei will negotiate only when it feels secure. Thus, judicious arms sales, which bolster Taipei’s confidence without building offensive capabilities or prompting delusions of impregnability, may be seen as constructive, not destructive.

Beijing seems to have concluded that U.S. forces will intervene in the Strait regardless of Washington’s policy of strategic ambiguity and its insistence that action depends upon the particulars of a crisis.

 What then of the potential scenarios for relations in the next several years? Single factors rarely disrupt set patterns of interaction; it will be the confluence of policy choices, domestic imperatives, and how individual leaders assess their problems and options, their mindset, that will be decisive. Barring large-scale disruption in China, war appears the least likely development.

At the same time, progress on devising a viable compromise between Beijing and Taipei also remains improbable. Even before Lee’s July 9th surprise, the tentative Beijing-Taipei conversation had not gone beyond posturing since the inducements for engaging in real negotiations fall short of the propaganda value of blaming one another for the lack of progress. Confidence-building measures clearly are needed and, depending on who is elected president in Taiwan, these might include the “three links,” but are not likely to encompass any fundamental breakthrough in the foreseeable future.

 The real alternatives for the short term appear to be either the status quo or a relative decline from current conditions. The changing military balance in the Strait, the worsening trends in U.S.-China relations, and the upcoming political contests in Taiwan and the U.S., as well as the economic strains that keep growing in China all point toward instability.

 China will probably remain the most recalcitrant of the three governments because internal politics makes compromise more difficult and it faces more powerful challenges. Still, if military confrontations are to be avoided, caution, concentration, and a willingness to be constructive will be needed in Taipei and Washington as well.

As 1999 approached, many Chinese and most American China specialists feared that the unusual number of sensitive anniversaries during the year would mean a stream of potential crises threatening Sino-American relations. These events would begin with the 40th anniversary of the Dalai Lama’s exile from Tibet, progress through the 80th anniversary of the May 4th Movement and the 10th anniversary of the Tiananmen Massacre, and climax in the 50th anniversary of the establishment of the People’s Republic.

What could not have been anticipated were the developments in 1999 that actually caused friction and had nothing to do with historical markers: the war in Yugoslavia, the bombing of the Chinese Embassy in Belgrade, the impact of the Cox Committee report of Chinese espionage in the U.S., the April failure of China’s World Trade Organization (WTO) negotiations with Washington, and Lee Teng-hui’s July declaration of a special state-to-state relationship between China and Taiwan.

By year’s end, the enduring differences between Washington and Beijing would be heavily underscored, belying the rosy predictions of analysts who had argued that little had really changed in Sino-American relations or that agreement on admission to the WTO would repair any damage that had been done. On the contrary, whatever trust still existed in the relationship had eroded, replaced by a lingering and pernicious wariness and uncertainty. That seems nowhere more clear than in the constellation of issues surrounding the status and future of Taiwan.

It is hard to foresee ways in which, over the next few years, the United States and China can avoid tension and possible confrontation over the Taiwan issue. How sharp those impending clashes will be depends on several broad factors--including military balances in the Taiwan Strait; domestic politics in the U.S., China, and Taiwan; and the overall nature of Sino-American relations; as well as the specific points of controversy at any given moment. It is possible to imagine several scenarios.

First, there could be maintenance of the status quo-- the reality of one China and one Taiwan bound together by the fiction of “one China,” with sporadic talks and regular economic exchange across the Strait but no serious modification in political arrangements. It would entail periodic low-level tension, but no significant escalation. This straight-line projection assumes that the U.S. does not announce that it will extend theater missile defense (TMD) to Taiwan, that Taipei does not edge significantly closer to declaring independence -- for instance, by amending its constitution, and that U.S.-China relations do not worsen radically.

In a second scenario, tempers fray, military modernization intensifies, and neither cross-strait nor Sino-American relations find equilibrium. This scenario would involve more frequent and/or more dangerous quarrels over small and large differences encompassing economic, political, and strategic issues. Conditions such as these would be aggravated by the actions of the U.S. Congress. They would also be exacerbated by Beijing’s refusal to acknowledge that its behavior triggers strong responses in Taiwan and the U.S., and this increases the probability of military confrontation.

Chinese leaders would, of course, argue that they are simply protecting China’s security against superior American power and its support for Taiwan. But, as political scientists have noted, an increase in one government’s security in such circumstances will automatically decrease that of the others, creating a security dilemma for all parties.

A third possible future might encompass an intermediate solution that would move noticeably closer either to Taiwan’s independence or to national integration but remain a genuine compromise that leaves final options open. It would require the greatest shift in thinking on the part of Beijing and/or Taipei and therefore is hard to define--but, if it could be achieved, it would probably minimize risks for the United States.

A fourth future might be a war for unification, if Beijing’s patience evaporates or if Taiwan’s people abandon caution and opt for independence despite the virtual certainty of a Chinese attack. This eventuality carries such heavy costs--militarily, politically, and economically--that, although it cannot be dismissed, it assumes a recklessness that has not been evident heretofore in either Beijing or Taipei. Its likelihood and repercussions would vary, depending upon China’s capabilities and determination. Unless China can achieve and maintain air superiority over the Strait, it is difficult to foresee how Beijing can conquer Taiwan if the people of the island are willing to fight.

This could counsel against war or just force Beijing to employ less conclusive means. A blockade, for instance, might be sufficient to intimidate foreign traders and investors, and drive the elite and middle class off the island. The economy might buckle, and surrender follow. On the other hand, a siege would accomplish goals slowly and give the U.S. time to intervene decisively. Still, simply because war would be difficult to wage or horrible in its impact does not mean China would demur if sufficiently provoked.

What is clear is that the issue of Taiwan’s future is the single most important feature of U.S.-China relations. Until we can be assured that this future will be determined peacefully and in accordance with the will of the people in Taiwan, security in northeast Asia will be fragile. The factors that will determine the course of relations--exacerbating frictions and complicating decision making for the United States, China, and Taiwan-- include: domestic politics, economic stress, regional disputes, strategic planning, arms sales, and technological evolution. In the following sections we will examine these six factors.

The pressures that internal political rivalries are bringing to bear on the leadership in all three capitals have sharpened and escalated in the recent past and promise to intensify further in the next several years. That this should be the case in all three societies at the same moment has had much to do with the end of the Cold War, which eliminated the threat of Armageddon, giving scope to other international and many domestic interests. The lapse of the Cold War discipline necessary to oppose the Soviet Union has meant a resurgence of contentious issues buried or sidelined by the more imposing burden of avoiding nuclear confrontation.

Taiwan

Developments in Taiwan have the greatest potential for introducing divisive and threatening elements into the delicate environment of triangular relations in the immediate future. In March there will be a presidential election in Taiwan. This election could be the first fully democratic transition of power on the island, possibly from one party to another, but assuredly from one leader to another, since the incumbent, Lee Teng-hui, has decided not to run. Two potential outcomes frighten observers in Beijing and worry officials in Washington. One, the less likely, is the transfer of the presidency from the Guomindang (GMD) to the Democratic Progressive Party (DPP). The other is a reaffirmation of Lee’s policies and influence, allowing continuation of GMD control using an array of DPP principles.

Since the DPP was established in the 1980s, it has become a powerful political force in Taiwan based on a domestic record that has contrasted favorably with the corruption, incompetence, and insensitivity of local GMD politicians. Nevertheless, the DPP mayor of Taiwan lost in a hotly contested race in December 1998 and the Legislative Yuan remains firmly in GMD hands. Although, island-wide, the DPP exercises local control over 70 percent of the population, it cannot match the GMD’s political machine and has no strong winning issues for the presidential contest.

The greatest stumbling block to a DPP presidency is the party’s charter. Created from an assortment of oppositionist groups, the DPP rejects reunification with the mainland, the goal that the GMD used for decades as justification for martial law and political disenfranchisement. But declaring independence would almost certainly entail war with the People’s Republic of China and, therefore, has consistently been unpopular with most citizens in Taiwan. Public opinion polls make clear that a strong majority favors the status quo and would not vote to give DPP leaders national power as long as they remain adamant about asserting independence.

Times are changing, however. Indeed, both the DPP and GMD have moved toward the political center with unpredictable results. The GMD migrated first. Lee Teng-hui reshaped his party and co-opted much of the DPP’s distinctiveness by aggressively seeking international space for Taiwan even as unification remained the avowed GMD goal. Arguably, he has come as close as is possible to creating an independent Taiwan without actually doing so and, in 1995, 1996, and 1999, successfully defied Beijing’s anger. Whatever his personal and his party’s beliefs on unification might be, Lee has accelerated the development of a Taiwan that could be increasingly indigestible to China.

The shift of the DPP began more recently. In 1995, spokesmen asserted that the DPP did not need to declare independence, because Taiwan was already independent. This proved insufficient or unconvincing to voters. So in 1999, chastened by defeat at the polls, the DPP reluctantly faced the problem of its identity. Convening a May congress, the party passed a resolution designed to promote self-determination and to play down, though not abandon, the more divisive idea of independence. In fact, by insisting upon a plebiscite to decide national sovereignty, the DPP not only rejected China’s efforts to preclude choice, but, interestingly, risked opening an unpredictable contest among options, only one of which would be independence.(1) It remains unclear whether these compromises will be enough to overcome the wariness of voters. It seems certain that they are not likely to mollify Beijing.

China’s leaders, in fact, are antagonistic toward both the DPP, with its avowed separatist views, and the fiercely hated Lee Teng-hui, who has repeatedly and effectively embarrassed them. Their misunderstanding of democracy aggravates their dilemma. Beijing fears that Lee will manufacture trouble to delay the presidential election and stay in power. China’s leaders do not recognize that Taiwan’s democratic system is so firmly entrenched that even under the shadow of a Strait crisis, elections will proceed in March 2000. Moreover, because they do not appreciate the fact that Lee’s positions reflect the desires of the people of Taiwan, they anticipate that his provocative policies will disappear with a change in regime. Thus, although they would generally favor the election of the GMD candidate because they prefer dealing with a party traditionally committed to unity, they are wary of Lien Chan, who may well be dominated by Lee. They might, as a result, welcome the victory of James Soong, who has been rhetorically more positive on reunification, although he has recently talked about "quasi-independence," and who has so publicly split with Lee. Overall, they are most concerned about the prospect of a DDP presidency and will do what they can to intimidate Taiwan’s electorate without scaring it into voting for the DPP.

Beijing’s success in getting President Clinton to articulate the so-called Three Noes(2)in Shanghai in July 1998 fit this strategy. The unequivocal assertion that the United States would not support de jure Taiwan independence had an obvious role in politics on the island, reinforcing caution and diminishing DPP prospects. Quite clearly this was a goal that some influential figures in Washington shared with Beijing,(3) having become increasingly alarmed by the growth in power of what they saw as an irresponsible DPP. They either did not see or discounted the potential of the Three Noes for reducing Taiwan’s leverage in cross-Strait negotiations or contradicting democratic self-determination. Rather, they believed that Clinton’s statement was a necessary safeguard against renewed military conflict between Beijing and Taipei. Subsequently, the administration tried to reassure Taiwan by affirming support for a mutually acceptable solution, meaning one satisfactory to the public in Taiwan.(4)

Reassurance, however, appears to have been ineffective. The Clinton declaration was perceived in Taipei as a significant shift in the U.S. position. No longer neutral, Washington appeared to have accepted the Beijing definition of one China as equaling the People’s Republic of China. Moreover, officials around Lee Teng-hui concluded that the U.S. had also cast aside the Reagan administration’s guarantees against putting pressure on Taiwan to negotiate. Washington made it clear that it advocated talks and, then, that it looked forward to constructive results. Indeed, in the wake of the resumption of a dialogue between Wang Daohan and Koo Chen-fu, Assistant Secretary of State Stanley Roth announced that Washington hoped to see Taipei and Beijing reach undefined “interim agreements.”(5)

Although the Clinton administration insisted that the meaning of interim agreements was procedural--a way to build confidence through problem solving--and not a disguised effort to impose a solution, Taipei rebelled. At the end of a year-long discussion among his inner circle of advisors, Lee publicized their conclusions in an interview with a German reporter on July 9. Lee asserted that henceforth relations between China and Taiwan should be conducted on a special state-to-state basis. “Clarification” of his remarks on July 12 by Su Chi, chairman of the Mainland Affairs Council, appeared to renounce Taipei’s adherence to the one-China policy, exacerbating Beijing’s anger.

Lee’s motives surely were mixed. As a public response to a broadcast journalist, the statement clearly meant to internationalize the Taiwan issue again. Lee sought to overcome Taiwan’s diplomatic isolation, which Beijing had been increasing by courting the few remaining states that still had diplomatic relations with Taipei and continuing to bar Taiwan from international organizations requiring statehood for membership. There is no doubt that he and his advisors sought to put Washington on notice that it had gone too far in courting Beijing. With the prospects of a visit by Wang Daohan to Taiwan looming, Lee assuredly wanted to set a precondition of parity and perhaps provoke cancellation of this next, perilous step in cross-Strait negotiations. And the president may also have been trying to secure his political legacy as he steps down from 12 years in office—especially, to constrict the maneuvering room of his successor.

There is, of course, always the element of unpredictability in a democracy. China’s furious response to the state-to-state formula, particularly if it includes military action, could influence popular decisions in Taiwan, either by rallying people to make a defiant protest vote or by frightening them into seeking a conciliatory president. Public opinion polls which intially gave James Soong a significant lead, based largely on his popularity as the former governor of the island, not because of his pro-reunification reputation have shifted.

A corruption scandal involving Soong, as well as further tainting Lien Chen's scandal-ridden GMD, has boosted Chen Shui-bian's chances. So too has his aggressively conciliatory posture on dealing with China as he asserts that as president he alone, like Nixon in the U.S., could go to China and negotiate a viable solution. In the end, Chen’s best chance of emerging a winner would result from Soong’s candidacy splitting the GMD vote. This scenario deeply disturbs Beijing and, were it to look imminent, there is some reason to believe that Chinese leaders might try to take pre-emptive action. It was, after all, these same leaders who decided to coerce the Taiwan electorate in 1996 and subsequently declared success.(6)

More significantly, the underlying political balance in Taiwan is in flux and for China the real problem is more far-reaching than the results of a single election in 2000. The people of Taiwan--younger, more cosmopolitan, and wealthier than the Mainland Chinese--increasingly identify with Taiwan’s society, history, culture, and language. There are no clear incentives for them to seek reunification, and the nostalgia and patriotism that motivated previous generations no longer exist

China

As Beijing’s leaders seek a solution to the Taiwan problem, they must consider domestic politics as well. In fact, the Taiwan issue is both useful and dangerous. Since the decline of Communism as a unifying principle inside the People’s Republic in the 1980s, the country’s leaders have looked increasingly to nationalism to take its place. Irredentist sentiment regarding Taiwan is used to generate support for a government pledged to retrieve the errant province. Having succeeded in recovering Hong Kong in 1997 and Macao in December 1999, China sees Taiwan as the one enduring symbol of historical victimization by imperialist powers. Thus, the 1996 missile firings, demonstrating technological sophistication and national resolve, became a patriotic triumph to be replayed over and over on Chinese TV.

Were China’s leaders to find themselves in political trouble, Taiwan might become a convenient tool for dampening popular discontent and rallying nationalist fervor. Just as Beijing’s leaders adeptly commandeered the American bombing of the Chinese Embassy in Belgrade to deflect potential demonstrations marking the tenth anniversary of the Tiananmen Massacre, Taiwan could be employed to generate patriotic passions and violent anti-Americanism. As this paper discusses later, should China’s economy precipitously worsen, the regime might well consider a “foreign” adventure to refocus the attention of the Chinese people.

But the Taiwan problem also has the potential for compromising China’s leaders. If the United States were to take a greater role in championing Taiwan’s interests and Beijing failed to deter Washington’s support, the leadership could look weak. If a confrontation in the Strait led to all-out war with the U.S., Chinese leaders could be judged foolhardy and incompetent. Or, if Beijing sought to advance negotiations by making conciliatory gestures that Taiwan’s authorities did not reciprocate, the power of China’s leaders would be undermined. This may be why they have not been more imaginative in their approach to Taiwan even though greater creativity is clearly in order. Some analysts believe that when Lee Teng-hui rebuffed Jiang Zemin’s Eight Points in 1995 and then cleverly engineered a visa to visit the U.S., Jiang was put on the defensive for his soft approach to Taipei and the 1995-96 missile crisis resulted. In the latest confrontation over Lee’s July 9th remarks, although the use of military force remains in abeyance, Beijing has said it won’t send Wang Daohan to Taiwan until Lee renounces his state-to-state formula (unlikely), but it also appears that Beijing won’t take immediate military action unless the Taiwan government enshrines Lee’s formula in Taiwan’s constitution (also unlikely).(7)

Given the seriousness of the Taiwan question, even if Jiang has overcome challenges to his leadership and no hard-line faction waits to contest his authority, he cannot (and probably does not wish to) concede much ground to Taipei. The fact that he has handled the Taiwan issue personally suggests that he sees resolution of the current impasse as a potentially glorious centerpiece of his legacy when he leaves office, which he is scheduled to do in 2002. Or conversely, he believes there is a large risk of a defiant Taiwan tarnishing his reputation and threatening China’s legitimacy.

The United States

The United States is also facing a presidential election in the year 2000, a campaign that promises to be both long and nasty. It may also be more than usually concerned with foreign affairs, and especially with debates over China. The Republican Party, whose traditional domestic issues have been so successfully co-opted or undermined by Bill Clinton, has announced that it will make foreign policy a central element, even though its leading contender, George W. Bush, is hardly a foreign policy specialist. Moreover, Bush is tied to big business interests whose leaders would be opposed to jeopardizing commercial ties with China. And further, much of Clinton’s approach toward Beijing was simply inherited from the Reagan and Bush administrations. Nevertheless, China has emerged early as a priority target driven by what Republicans have seen as a series of disturbing developments.

The GOP has criticized the Clinton administration, during its eight years in office, for soft and fluctuating positions on human rights, WTO accession, and nuclear security. To the Republicans, these alleged weaknesses are especially advantageous in that they all are linked to sensitive domestic problems such as campaign finance, allowing Bush to be critical without challenging the basic ideas of engagement or normal trade relations (formerly most-favored nation trade treatment). He can even embarrass Al Gore on his China-related campaign finance blunder. Moreover, the control of the U.S. Congress is also in the balance with a gain of just six seats sufficient to return Democrats to power in each house of the legislature. Republicans in congressional races may well be less hesitant than Bush to emphasize supposed mishandling of Chinese espionage and other controversial problems.

Most recently, Chinese threats to use military force to deter Taiwan independence have rallied Republicans behind the idea of defending Taiwan. Potential candidates and former officials have called upon the administration to take a firm stand and not use Taipei as a pawn to improve relations with Beijing.(8) In this sense, Lee’s timing went against Taiwan’s interests. Clinton, faced with so many problems in Sino-American relations, sought to mollify Beijing by reaffirming support for the “one China” policy over the telephone to Jiang, in a press conference, and at a summit meeting on September 11 in New Zealand.(9) There, according to National Security Adviser Sandy Berger, the president commiserated with Jiang, observing that Lee “had made things more difficult for both China and the United States.”(10)

Members of Congress have made their mounting discomfort with China and their resurgent interest in Taiwan obvious during the past several months. In the 103rd and 104th Congresses, many prided themselves on not knowing anything about foreign policy and not even possessing passports. Efforts to have them travel to Asia to learn about regional issues routinely failed. But, more recently, a cascading series of mandates for regular reporting on cross-Strait issues by the Pentagon and other executive agencies has signaled a greater determination to attack and correct allegedly mistaken policy. The Pentagon has been directed to review the balance of forces between Taiwan and the PRC and to evaluate the appropriateness of theater missile defense for Asia and Taiwan. Congress also has weighed legislation to augment military assistance programs and improve enforcement of the 1979 Taiwan Relations Act.(11) Indeed proposed legislation, the Taiwan Security Enhancement Act (TSEA), which enjoys strong support in both houses of Congress but is opposed by the administration, would mandate operational communications links with Taiwan’s military; sanction joint military exercises; authorize flag-rank officers to travel to Taiwan; and widen the pool of weapons available for sale to Taiwan, including an early commitment to provide TMD to Taiwan.(12)

There has also been the notorious report of the bipartisan Select Committee headed by Christopher Cox (R-CA), which concluded that China had been carrying on a long-term, highly successful program of espionage aimed at American nuclear weapons laboratories. Conceivably, China had acquired information on all the deployed nuclear warheads in the U.S. arsenal as well as data on tracking submarines and controlling satellites. The 900-page report presented these findings with considerable hyperbole, alleging that China’s knowledge would now be “on a par” with that of the United States, and accusing 80,000 annual Chinese travelers to the U.S. and 3,000 U.S.-based Chinese companies of being agents for Chinese intelligence. More sober review by specialists, however, led to arguments that Beijing lacked the ability to use the most sophisticated data even if such data had been stolen. Nevertheless, the October National Defense Authorization Act for Fiscal Year 2000 bars Pentagon programs for confidence building that include PLA exposure to sensitive national security information.(13)

China, not surprisingly, took exception not just to the accusations of espionage, but also to the implied disparagement of its own scientific capabilities. China’s ambassador to the U.S., Li Zhaoxing, called the Cox report, “an insult to...Chinese scientists and engineers," clearly “nothing but a scandal by itself.”(14) In fact, Beijing asserted that the charges were a deliberate attempt to malign China in order to create a new target for Cold War-style political, military, and intelligence policies. Its announcements that it possesses both the neutron bomb and miniaturized warheads developed independently at home were designed to respond to the Cox allegations as well as to intimidate Taiwan and the U.S. during the summer 1999 cross-Strait confrontation.

None of the congressional investigations or mandates, however, overturn fundamental China policy; nor do they actually compel the administration to take any new actions regarding China. Congress seeks greater White House accountability and a higher profile for Taiwan, but can only suggest a direction and hope the president and his foreign policy team will act. The private interests sponsoring the current effort, whether defense contractors or Taiwan lobbyists, are exerting indirect pressure. Over the next five years, even if a different party takes control of the presidency, it seems unlikely that the officials who devised and implemented the current China policy will undertake a radically new departure; in other words, though strains are likely to continue, the United States formally will remain cautious but tolerant of China’s growing power. Nevertheless, Congress has issued a warning, and pressure assuredly will escalate.

Although the growing sophistication of America-watchers in Beijing gives the Chinese leadership a heightened appreciation of the upcoming American political contest, it will not make them more accepting of interference in what they define as an internal political issue. The acceleration of interest in Taiwan’s defense is seen as intolerable in itself and as further evidence of an American desire to contain China’s increasing power.

Because Beijing will not accept any responsibility for prompting such politics, there is virtually no chance that Chinese leaders will modify irritants and help diffuse this instance of the security dilemma. If legislation such as the TSEA is enacted, Taiwan’s expectations and Beijing’s anger will grow, even though the administration would not follow through energetically. Such misunderstanding of the U.S. system, particularly the elaborate gamesmanship between the executive and legislative branches, might escalate friction for no real reason. Of course, there is nothing Beijing can do to change the nature of the campaign or the anti-China rhetoric that will be a part of it. Beijing could, perhaps, avoid antagonizing Americans further, but, in the current atmosphere with so many reasons for estrangement, there is probably little chance of that.

Fundamental to the survival of the current regime in China is the continuing development of the economy and mounting prosperity of the Chinese people. Political stability is contingent upon solving the multitude of threatening economic problems that have begun to slow growth significantly. A China with a failing regime would be more desperate and dangerous than a strong China; it would jeopardize the welfare of the Asian region and potentially pose more of a threat to Taiwan. Some of the current challenges are not within Beijing’s power to remedy--most particularly the Asian economic crisis--and call for cautious leadership. Others require vigorous intervention, including reforming the state-owned enterprises and the banking system, reducing unemployment, and eliminating corruption. Entry into the World Trade Organization presents a different sort of problem but also is potentially destabilizing.

Analysts estimate that recovery in the Asian region has begun, although it is uneven. Sources of investment and markets for goods are tight and the potential for trade competition with countries whose currencies have been devalued remains unpredictable. To date, Beijing has won plaudits for maintaining the value of the Yuan, averting a new round of devaluation in the region, and unhinging the Hong Kong dollar’s peg to the U.S. dollar.(15) It also granted Thailand $1 billion in aid—thus, appearing more compassionate than the United States, which sought to make funding contingent on reform. Taipei similarly used the crisis to enhance its image by offering assistance to Southeast Asian governments.

China’s internal difficulties, aggravated by the broader Asian dilemma, pose a more acute economic challenge. Inefficiencies and inequities are increasingly blamed on current officials who are seen variously as having moved too quickly or too haltingly, too ruthlessly or too cautiously, too traditionally or too radically. There is universal agreement that the system is seriously flawed, if not broken, and that the government must take corrective steps sooner rather than later. But, there is also universal concern that remedial measures will worsen conditions before they are improved, throwing millions more out of jobs and swelling the already insupportable throngs of economic refugees who float from city to city searching for work and bringing crime and potential chaos to large urban areas. Zhu Rongji, having been elevated to the position of Prime Minister to deal with this conundrum, has been forced to slow reform as economic growth contracts, but apparently remains committed to fundamental change. In the end, he could lose his job if he fails to keep economic development, reform of state-owned enterprises, restructuring of the banking system, and unemployment in some sort of equilibrium.

Sacrificing Zhu, however, might not be enough to save the government if conditions worsened abruptly and severely. Critics of the reform agenda could see an opportunity to reassert contradictory programs were an economic crash to trigger popular protests and frighten those responsible for law and order (such as the military establishment). At the same time, there could also be an assertion of provincial power against central control if local officials were to lose confidence in Beijing’s ability to resolve a crisis situation. In fact, jettisoning Zhu could itself add to an economic crisis as demonstrated, perhaps intentionally, when rumors of Zhu’s resignation produced a dramatic decline in both the Chinese and the Hong Kong stock markets.

It would not necessarily require a total collapse for drastic solutions to be considered. The leadership has been nurturing nationalism since 1989 as an antidote to dissatisfaction with the government and the Communist system. As noted above, Taiwan might be the perfect issue to deflect attacks upon China’s rulers, just as Japan's Meiji government thought to send disgruntled samurai to attack Korea in 1873 or China's Empress Dowager Cixi joined forces with the Boxers against foreigners to preserve the Qing in 1900.

Further, if China’s economy were to erode significantly, that decline would immediately affect the economic integration that Chinese leaders see as a crucial tool for promoting reunification with Taiwan. The Taipei government has repeatedly, and fruitlessly, demonstrated its discomfort with the growing entanglement of the two economies. It has restricted the size and type of investments on the mainland and has refused to establish the “three links,” encompassing direct trade, mail, and transportation, first suggested by China in a 1979 New Year’s “Message to Taiwan Compatriots.” Lee Teng-hui, in August 1996, personally warned businessmen to “avoid haste, be patient,” cautioning them not to enhance Chinese technical capabilities, create a more vigorous commercial competitor, or permit a “hollowing-out” of Taiwan’s industrial base that would give Beijing too much leverage over Taiwan’s market.(16) Severe commercial and financial decline in China would hurt the investments of Taiwan’s entrepreneurs, discourage the movement of new capital into Chinese markets, and loosen the bonds that expanding interaction has created. Taipei could be counted upon to accentuate the problems and try to use the occasion to redirect Taiwan’s commitments to safer venues.(17)

Note, however, that China would, in turn, be discouraged and its policies might change. Having lured Taiwan manufacturing and trade to China, Beijing must create conditions that sustain profitability. Indeed, in conditions of economic stress, Beijing might be forced to conciliate rather than antagonize Taiwan and the U.S. because of its dependence on their trade and investment. But were Taiwan’s businessmen to seek their opportunities elsewhere, constraints on Beijing’s behavior toward Taiwan would diminish. A severe downturn in the Taiwan economy would have much the same result. In effect China’s leaders could use a significant drop in trade and investment as yet another excuse for drastic action against a troubling source of economic dislocation inside China.

Accession to the WTO provides the third major arena within which economic issues could provoke a serious decline in the security situation in Northeast Asia. With the success of Sino-American negotiations in the autumn of 1999, Beijing's entry into the WTO appears imminent given the likelihood that an agreement with the European Union, if not easy to reach, will nevertheless materialize quickly. Once this step has been taken, however, and China joins, other adjustments will have to follow. To begin, Taiwan must also be admitted. Beijing has consistently asserted that, although it demands to be accepted first, Taipei's admission as a customs territory akin to Hong Kong can occur immediately thereafter. Any slippage in that commitment would antagonize not only Taipei but also Washington, which is on record as affirming that "when Taiwan is ready, it should get in."

Whereas China will almost certainly live up to its promises on Taiwan's membership, more difficulty is to be expected in its compliance with WTO rules. Washington and Beijing wrestled over an extended period about the criteria for judging China. Beijing insisted that it should be treated as a developing economy, giving it an extended adjustment horizon, whereas Washington argued that no economy growing as rapidly as that of China qualified for major concessions. Beijing finally yielded and, according to the World Bank, its share of world trade should triple as a result. At the same time, it will incur painful domestic costs as its economy seeks to adjust. Political pressures at home may well militate against rapid implementation of the most onerous measures for opening internal markets to foreign competition, increasing transparency, and making regulations predictable and equitable. The result could well be resentment of globalization at home, and exasperation with China abroad.

Friction may also be generated as the U.S. Congress deliberates on the future of permanent normal trade relations (PNTR) for China, which is a required element of the WTO accession process. Many members of Congress remain reluctant to surrender the supposed leverage over Beijing--and the White House-- that the annual renewal of most-favored nation (now known as normal trade relations) trade treatment has given them in addressing human rights in China and other controversial issues. But, in reality, China will be able to enter the WTO even if Congress refuses to grant PNTR and only the United States will suffer by not being allowed to invoke market access arrangements so laboriously achieved over the last decade. The debate on this procedural point, even if it ultimately produces PNTR, which is most probable, will inevitably anger Beijing. Moreover, if, in order to succeed, the administration agrees to a substitute mechanism for annual examination of Chinese behavior and expression of congressional censure, a new and continuing source of instability will be created. Even more disruptive would be a decision in Congress to link PNTR with passage of the TSEA.

Finally, after both Beijing and Taipei have joined the WTO there will have to be problematic adjustments in their economic relations. Taiwan has maintained barriers against various types of economic interaction in the spheres of trade, investment, communication, and transportation on the grounds of security. Under the rules of WTO membership, most of these impediments to greater interdependence with the mainland will have to be eliminated or severely modified. Thus, Taipei could find that its long anticipated admission to the world trading community is a mixed blessing and that it may be more vulnerable in the future as its control over integration with China diminishes.

Several disputes in the Asian region impinge upon U.S.-China relations and have a direct or indirect bearing upon the Taiwan situation. Some test Taiwan policies. Others threaten the atmosphere within which Beijing and Washington will form their policy toward Taiwan. These include disputes over Korea, Sino-Japanese relations, the South China Sea, Hong Kong, and U.S. military deployment in Asia.

Korea

For several years, the United States and China have been more or less on the same side regarding developments on the Korean peninsula. Both recognize an overwhelming priority in avoiding a war that might involve them as participants and that would certainly mean serious economic and political dislocation in the region. Although the two powers differ on various elements of the Korean situation, they have cooperated in the Four Party Talks and have exercised a largely benign influence.

The cordial interaction on the Korean question, however, may well break down when the reality of reunification finally materializes (an event that probably will not, but could, occur in the next five years). China does not want to share a border with a Korean state that is aligned with the United States and host to American forces. Evidence of this concern is apparent in the substantial assistance Beijing continues to give Pyongyang, whether in food aid or political support, against perceived international coercion. Whereas the United States would not be sorry to have North Korea cease to exist so long as its fall could be carefully programmed not to precipitate a war or devastate South Korea’s economy, China hopes to prop up Pyongyang for as long as possible.

Taiwan has little direct involvement with the Korean question. South Korea shifted diplomatic recognition to the PRC in 1992 despite efforts to cajole and bribe Seoul not to act. Taiwan’s stake in the resolution of the Korea issue has less to do with Korea per se than with the implications of unification. Reductions in the U.S. troop presence on the peninsula, leading to fewer American troops in the region, would leave Taiwan feeling more vulnerable. This would be particularly true if removal of ground troops from Korea increased demands for withdrawal of American ground forces from Japan. Furthermore, the disposition of Korea will have a significant impact on the ability of the U.S. and China to work together and get along. As is often said, bad U.S.-China relations endanger Taiwan, because they make China less cautious in its demands for reunification.

Sino-Japanese relations

Relations between China and Japan are chronically in turmoil. This does not mean that significant trade and investment do not occur. It does not mean that there is no educational exchange or that Japan refuses to conduct aid projects in China.(18) But beneath the interaction, there is also a historical legacy that invariably intrudes and arrests genuine normalization. The problem was best illustrated during the disastrous visit of Jiang Zemin to Japan in November 1998. This trip, the first by a Chinese head of state, generated much attention and raised expectations. In the end it foundered over Jiang’s insistence that Tokyo apologize once again for its aggression in China during World War II and put that apology in writing. Although Prime Minister Obuchi Keizo had acceded to similar entreaties from South Korean president Kim Dae-jung two months earlier, the Japanese rebuffed Jiang. The Koreans had indicated that they would accept the apology and move forward, whereas the Chinese appeared no more ready to relinquish the leverage of victimization in 1998 than they had been before.

Defiance of this guilt test was not the only unresolved clash at the Sino-Japanese summit. Tokyo also refused to embrace the Three Noes articulated by Bill Clinton in Shanghai. When Japan extended diplomatic recognition to Beijing, it agreed to acknowledge the Chinese position on the existence of one China and pledged not to try to create one China and one Taiwan. Washington, which had more or less adopted the Japanese model in its own recognition package, defended its July 1998 decision by declaring that the Three Noes were not a departure from existing policy. The Japanese, however, found the third provision, denying Taiwan membership in certain international organizations, objectionable. More broadly, Japan has been critical of Washington’s excessive conciliation of Beijing, fearing that the U.S. now sees its relationship with Beijing as more important than its ties to Tokyo.

The nadir in Sino-Japanese relations in the years since World War II came in 1996 when the Taiwan Strait crisis and the affirmation of the U.S.-Japan alliance, coupled with China’s nuclear testing and a brief clash over the Senkaku/Diaoyu islands, led Japanese public estimates of China to fall precipitously from just 18 percent negative in 1985 to 51 percent in 1997.(19) Already in 1995, Japan’s Defense Agency had emphasized discomfort with China’s program of military modernization, described in its annual White Paper, fearing it portended a more contentious Chinese role in Asia. Moreover, Beijing’s denunciations of Tokyo’s interest in TMD suggested that China wanted to undermine Japan’s national defense, reserving opportunities to attack or intimidate Japan in spite of pledges never to launch a first nuclear strike or target a non-nuclear nation.

Attitudes toward China and Taiwan are, of course, linked to Japanese domestic politics just as domestic and foreign policies are linked in the U.S., China, and Taiwan. Resurgence of Japan’s Liberal Democratic Party, whose pro-China leadership has been replaced by a younger generation more concerned about a growing China threat, will invariably make a difference in Japanese policy. The impact of other variables, such as the declining power of Japan’s bureaucrats, loss of faith in the existing political system, and growing pluralism, are harder to gauge. Taiwan could benefit.

Negotiations over Japan’s security relationship with the United States illustrate the point. Having acknowledged problems in procedures for joint action during the 1994 Korean nuclear confrontation, Tokyo entered into talks with Washington to clarify expectations and parameters for cooperation. Initially, reaffirmation of the alliance had been set for a November 1995 summit in Japan. Clinton, however, did not make the trip, because of domestic budget battles. Then, in March 1996, the Taiwan Strait missile tests intervened. By the time Clinton and Prime Minister Hashimoto Ryutaro met in April, their joint security declaration had been amended to include a broader strengthening of the 1978 U.S.-Japan Defense Guidelines.

On the sensitive issue of Taiwan, the officials deliberately decided to keep the document vague. Rather than delineate specific geographic areas that should be covered, they simply agreed to refer to situations in areas surrounding Japan. China protested anyway, unimpressed by the obfuscation, and subsequent remarks by Japanese officials, including Chief Cabinet Secretary Kajiyama Seiroku, suggested that Chinese leaders had reason to be suspicious. If anything, continuing Chinese complaints have aggravated Sino-Japanese tensions and have done nothing to impel Japan to clarify the creative ambiguity of the Guidelines in any definitive fashion. Many analysts in China, Japan, and the U.S. argue that, were the United States and China to become enmeshed in a confrontation over Taiwan, Japan would have little choice but to support American actions. The least it could do would be to allow American forces to use bases on Japanese soil. Were Japan not to do this, the U.S.-Japan Alliance would be dead.

Most recently, due to NATO’s war in Serbia, a distraught Beijing has characterized burgeoning Japanese-American security cooperation as an Asian NATO in the making and has warned against adopting a similar interventionist agenda vis-à-vis Taiwan. On June 3, China’s Liberation Army Daily warned that “Japan’s policy of self-defence, and its constitutional article giving up war are turning into mere scraps of paper.”(20)

There is also a historical dimension of the relationship that is relevant to understanding future trends. Japan has long been in an anomalous position wherein U.S. pressure has been seen as the decisive factor in its defense concerns about Taiwan. For instance, the 1969 Nixon-Sato Communiqué forced Japan to acknowledge that the security of Taiwan is important to Japan. In 1971 Tokyo very reluctantly co-sponsored the American effort to preserve Taipei’s seat in the UN and, in 1972 when Tokyo switched diplomatic relations to Beijing, the Diet did not legislate a Japanese version of the later American Taiwan Relations Act.

Japanese hesitance on Taiwan issues grew out of its China policies. Long before America recognized China, Tokyo wanted diplomatic relations with Beijing and was constrained only by its Cold War ties to Washington. As soon as the Shanghai Communiqué became public in 1972, Japan rushed forward with recognition. Moreover, Tokyo continues to worry about being dragged into a Sino-American quarrel over Taiwan. Japan cannot help but be concerned about growing Chinese power and its possibly dangerous proximity to the mainland.

But all this ignores Japan’s own Taiwan interests. By 1989 Japan had become Taiwan’s second largest trade partner; it consistently maintains a trade surplus with Taiwan. Under the presidency of Lee Teng-hui, who was educated in Japan and speaks fluent Japanese, the political and cultural contacts between the two societies have been growing. The relationship could not be said to be trouble-free as trade frictions and contention over disputed islands such as the Senkaku/Diaoyutai sporadically array Tokyo and Taipei leaders against each other.

Nevertheless, Tokyo found Beijing’s 1996 missile firings unacceptable, and, alone among silent Asian governments, Japan formally protested the Chinese military exercises. Japanese leaders indicated their “understanding” when Washington dispatched the Japan-based USS Independence to keep peace in the Taiwan Strait. This suggests that there probably was prior consultation, and it is clear that the crisis prompted Japanese officials to agree to stronger provisions in the revised Defense Guidelines than would have been politically acceptable earlier.

Indeed, Beijing sees the Defense Guidelines as part of a troubling change in Japan’s military posture. Since Richard Nixon began the normalization process with Beijing, China has been willing to see Japanese-American cooperation as a mechanism for keeping Japanese militarists under control. Today, although a nuclear-armed China has no real reason to fear Japan, it worries that Washington may no longer share its commitment to limiting Japan’s military capabilities. The United States actually seems to be encouraging a wider role for Japan in regional security operations, and an increasingly effective and self-confident Japan may be harder for China to intimidate on the Taiwan issue. The fact that Beijing attacked Tokyo more bitterly than Washington over the Guidelines may reflect its apprehension about an incipient change in the strategic balance.

South China Sea

The major sea lanes for communications and transportation of goods between the Indian and Pacific oceans and among Southeast Asian states traverse the waters of the South China Sea. Some 70 percent of Japan’s oil imports travel these waters as does virtually all of Taiwan’s natural gas. This trend will grow in the future; for instance, by 2010 Asia’s dependence on Middle East oil could reach 90 percent of all imported fuel.(21) The region is also thought to have significant oil and natural gas deposits as well as established fertile fishing grounds.(22)

The area has been the scene of territorial disputes over sovereignty among China, Taiwan, Brunei, Malaysia, the Philippines, Vietnam, and Indonesia for many years. Much as Beijing has sought to better its relations with states in the region, its refusal to negotiate settlements, except on a bilateral basis where it can overwhelm its opponent, has angered affected governments. Moreover, there have been military clashes between China and Vietnam in the Paracel and Spratly Island groups (1974 and 1988). Only the Asian economic crisis and perceptions of China as a responsible actor and source of assistance have temporarily moderated these frictions. Proposals for joint exploitation of resources have made little progress.

Involvement of the United States in the region has been relatively small. Washington has asserted that its concern is security, not resources, protecting sea lanes, not deciding disputes over territory or economic zones. Still Beijing is not happy with Washington’s influence in the area and strives to ensure that it will get no help from local governments in a clash over Taiwan. So China worries about Singapore’s invitation to the U.S. Navy to use its new naval base and fears that Washington and Manila have planned joint military exercises in 2000. Xu Dunxin, Vice-Chairman of the Foreign Affairs Committee of the National People’s Congress, has called upon “Asia [to] settle Asia’s issues.” Referring to the South China Sea, he complained, “What has it got to do with America? If America pokes its nose into this, it’ll just complicate matters.” In Thailand on September 3, Jiang Zemin denounced “the new gunboat diplomacy” and “economic neo-colonialism” of “some big powers,” words that only could point to the U.S.(23)

The likelihood that developments in the South China Sea, or the actions of Southeast Asian states, would weigh significantly in the China-Taiwan issue will probably remain small in the next five years. A significant impetus for the ASEAN arms buildup between the mid 1980s and 1997 was fear of growing Chinese power, and the 1996 Strait crisis confirmed the view that money spent for weapons was wisely invested. Beijing has refused to face the fact that ASEAN considers Chinese military modernization a threat and its military maneuvers, such as those against Taiwan or among the contested islands, provocative. Nevertheless, most ASEAN states could not be expected to involve themselves in a cross-Strait confrontation, and have acknowledged Beijing’s position that this is an internal matter. As a result of China’s refusal to join any security grouping that includes Taiwan, the latter has been barred from the ASEAN Regional Forum. Some, such as Singapore, worry less about Taiwan’s fate than about the potential economic dislocation a new confrontation could bring and the opportunity it might offer Japan to deploy its forces in the region.(24)

It should be noted, however, that China and Taiwan have parallel claims to sovereignty over the Spratly Islands. To date, Taipei and Beijing have actually collaborated on South China Sea policies. Taiwan marines have occupied the islet of Itu Aba (Taiping Island) in the Spratly group since 1956, and during China’s confrontation with Vietnam in 1988 they assisted Chinese forces. In a remarkable departure from the more customary competition and antagonism over offshore issues, the two sides have discussed joint exploration for oil and a joint brief to defend their legal position.(25) Thus, it appears unlikely at present that friction will develop as a result of South China Sea claims, but it is not clear that cooperation can withstand strains generated by the Taiwan independence issue. In response to Lee Teng-hui’s July 9th statement, China hinted that it might seize a small island, perhaps along the China coast, possibly in the Spratlys, indeed maybe Itu Aba.(26) Subsequently, in November, Taiwan's Minister of Defense Tang Fei informed the Legislative Yuan that the MND was replacing the marines with Coast Guard forces because local disputes were related to fishing issues and because the islet was indefensible should China choose to seize it.(27)

Finally, the September 1999 chaos in East Timor also affected the cross-Strait situation. Mayhem followed a popular referendum arranged by the United Nations on the issue of independence of the East Timorese, whose language and religion as well as history of Portuguese colonization make them distinct from others ruled by the Indonesian government. To Beijing the imposition of an unwanted referendum on Jakarta was reprehensible. China has clearly been discomforted by the parallels to its own relations with Taiwan and by talk about a referendum regarding independence there. It has stridently asserted that there are no similarities between the conditions that led to the Timor vote and those in Taiwan. As little affection as Beijing may have for Jakarta and as pleased as it would be to see Indonesia’s power in the region diminished, it found the precedent-setting situation disturbing.(28)

Hong Kong

In the run up to the retrocession of Hong Kong, there were dire predictions of the imminent collapse of Britain’s prosperous colony under the weight of China’s repressive rule. More sober critics, however, warned that Hong Kong’s fate would be determined gradually through erosion rather than in some dramatic explosion.(29) Time has demonstrated that the former were excessively bleak in their forecasts but, sadly, that the latter may well prove to have been prescient.

In the first year after reversion, China’s leaders followed a careful policy of noninterference in the affairs of Hong Kong, giving wide scope to their hand- picked chief executive Tung Chee-hwa. Internal politics remained surprisingly open, with no effort to bar street demonstrations. In June 1999 Hong Kong commemorated the tenth anniversary of Tiananmen with a massive protest, whereas even single demonstrators in Beijing were arrested. Of course, China had strengthened its political control before resuming sovereignty by forcing out the elected Legislative Council and delaying new balloting until severely constricted election laws could be put in place. But the judgment most observers rendered initially was cautiously optimistic.

Then things changed. First the Asian economic crisis took a sharp and unexpected toll on the territory. Growth stopped, property values plummeted, and investment disappeared. Speculative assaults on the local currency led Beijing to offer financial support if Hong Kong needed it. Although the international community disliked this remedy and was relieved when it proved unnecessary, the general understanding was that Beijing had conducted itself responsibly.

Less agreement is likely regarding the appropriateness of the second area of intervention in Hong Kong’s affairs: that is, weakening of the rule of law. In two celebrated cases, China has undermined Hong Kong’s autonomy. It has brought to trial in mainland courts men, such as the notorious gunrunner and kidnapper Cheung Tze-keung, who committed most of their crimes in Hong Kong, subjecting them to a process with fewer legal protections and swift execution. More seriously, Beijing has overturned a Court of Final Appeals ruling regarding right of abode in Hong Kong. By acting to reinterpret provisions of the Basic Law governing Hong Kong (i.e., its constitution), the National People’s Congress claimed that it had simply rectified a usurpation of power by Hong Kong, which could not regulate the residency patterns of Chinese citizens. Indeed, Tung and his Beijing patrons pointed to the fact that Hong Kong’s residents wanted to limit access and prevent the influx of up to 1.6 million of their brethren at a time when economic conditions had already reduced the standard of living for many. Critics not only challenged the numbers Tung used, but, more importantly, also insisted that the move undermined faith in the integrity of local institutions and opened the door to future nullification of the final judgments of the Final Appeals Court.

The third intrusion on Hong Kong’s autonomy is the least obvious but nonetheless tremendously damaging. According to the findings of the Cox Committee report, discussed below, Beijing has allegedly been using Hong Kong as a trans-shipment point for high-technology goods and weaponry. Although Hong Kong maintains the right to police its own borders and carries out rigorous checks on routine trade between Hong Kong and China, it has been notably lax in regulating the vehicles of the People’s Liberation Army (PLA). According to Hong Kong officials, customs officials can examine such trucks if PLA representatives are present, but there must be pre-existing evidence that the cargo is suspicious.(30) From June 1997 to June 1999 no such inspections occurred. Nothing in the Cox report demonstrates conclusively that Hong Kong regularly serves as a weak link in American trade control policies. Cases highlighted actually show that Hong Kong authorities have uncovered and publicized cheating. Still, China’s use of Hong Kong in these operations does the territory no good.(31)

Violations of Hong Kong’s autonomy, in fact, have serious repercussions. First, the U.S. Congress may well change export controls for high-technology goods going to Hong Kong, damaging the territory’s continued trade expansion and development of high-tech manufacturing. Second, weakening of the rule of law could undermine the willingness of American, and other international, business to base operations in the territory. Either of these developments would make recovery from current economic woes much more difficult and dim prospects for Hong Kong in world trade and finance.

And finally, the rapid breach of the “one country, two systems” model contravenes one of China’s principal goals. From the first, Deng’s dictum was to have applied to Taiwan, and Hong Kong’s reversion came to be seen as a singular opportunity to demonstrate to the people on the island how smoothly reunification would proceed. Taiwan, however, never accepted the connection. Taiwan’s leaders declared that the situation of Hong Kong--a colony lacking a strong military and independent foreign relations--had no relevance to the future of a democratic people ruled by their own Republic of China government.(32) During the handover, people across the island held “Say No to China” rallies, which gathered as many as 50,000 demonstrators in Taipei. This would be a large enough hurdle to surmount, but, as Beijing intrudes upon the 50 years of strict autonomy pledged to Hong Kong, it confirms Taiwan’s skepticism and determination to reject the “one country, two systems” formula. Thus, China’s policies in Hong Kong have the power to stymie its own irredentist aspirations regarding Taiwan, as they diminish Hong Kong’s economic value and political stability.

American deployments in Asia

In the wake of the American bombing of the Chinese Embassy in Belgrade, Beijing suspended military-to-military exchanges. Such a response was unremarkable. Shortly thereafter, China’s leaders made a more surprising move by notifying the U.S. that ship visits to Hong Kong could not go ahead as scheduled and, then, that military aircraft would also temporarily be barred. Continued use of Hong Kong facilities by the U.S. Navy after reversion took months of negotiation to arrange, and China’s agreement not to disrupt existing practice was seen in Washington as a very positive gesture.

The intervening months, however, have sharpened Chinese misgivings about the presence of large American deployments in Asia. Thus, these most recent actions may be more than a display of anger at the events in Yugoslavia. China wonders what benefits it gets from American forces in Asia since they are no longer arrayed against a menacing Soviet Union, seem no longer to be effectively constraining Japan, and appear increasingly to obstruct Chinese power. Still, it is not clear that China’s rulers have yet reached the conclusion that the Americans should go home.

But there have been hints over an extended period that Beijing’s patience was nearing exhaustion. Unsurprisingly, the disruption of military visits to Hong Kong remains hostage to the overall state of Sino-American relations, although there are general expectations that routine stops will recommence soon since Beijing is already condoning sporadic port calls. Indeed the military-to-military dialogue has resumed with the visit of Lieutenant general Xiong Guang Kai, Director of Intelligence and Deputy Chief of the PLA General Staff to Washington in January 2000. The larger issue of America’s 100,000-man commitment to the western Pacific (East Asia) theater is more enduring and central. Chinese planners assume it complicates reunification by making Taiwan defiant and rendering recovery much more difficult. Beijing has never accepted the idea, argued in Taipei, that a secure Taiwan is more willing to compromise than a frightened one. So at the same time that other Asian leaders are continuing to emphasize the importance of an American presence for peace and stability, China is disenchanted. Future Chinese efforts to push the U.S. out are not inconceivable. In fact, China’s 1998 Defense White Paper is seen by many as the first step in a gradual effort to convince its Asian neighbors that the U.S. presence is not in East Asia’s long-term interests.

Among the serious potential risks in the coming years is the impact that a thoroughgoing reconsideration of Chinese foreign policy might have on U.S.-China relations and Beijing’s schedule for resolving the Taiwan question. In the wake of the Belgrade bombing, there has been considerable evidence that such a reassessment is under way in Beijing, although the causes of the Chinese debate go far beyond the destruction of a single embassy. In fact, a series of developments in recent years has called China’s strategic world view into question. The key issue, however, will be whether reexamination, however painstaking, has any likelihood of taking China in new directions.

Chinese policy-makers appear to have looked at the events of the past decade and concluded that China has not been well served by the policies it has been following. There seems to be a feeling that China has been too accommodating to American interests. This dissatisfaction is heightened by anger that Washington has been unsympathetic to Chinese security requirements, overbearing in international affairs, and content to ignore or embarrass Beijing. Further, Beijing is frustrated that the multipolar world it expected to materialize in the new millennium seems quite out of reach.

In the past, China has conceived of its America problem as a desire by Washington to contain China--to keep it weak and divided. Now the discourse sounds broader, encompassing a sense that Washington wants to dominate the world, imposing values and priorities while it defies global institutions designed to thwart hegemony. Beijing believes that Washington faces no effective opponents in this crusade and is increasingly reckless and dangerous. Development of national missile defense would simply heighten its invulnerability, encouraging indiscriminate efforts at intimidation. At the root of Chinese concern, of course, rests alarm that American hubris will unleash intolerable Taiwan policies, treating the island as an American protectorate and interfering decisively in China’s internal affairs.

The Chinese picture of the 1990s contrasts sharply with the American vision of a recalcitrant Beijing, unwilling to cooperate on proliferation or human rights at the same time that it conducted espionage and drove up the trade imbalance. To the Chinese, there seemed to be a continuing barrage of demands, one replacing another as soon as Beijing made any effort to address U.S. concerns. Chinese leaders fail to see any part that their own actions have played in stimulating American behavior. Aggravating strains, there has been a series of clashes, including the U.S. congressional role in blocking China’s bid for the 2000 Olympic games; relentless U.S. tracking of the Yinhe because of an alleged cargo of chemical weapons precursors in 1993; and, most recently, Clinton’s bumbled April rebuff of Zhu Rongji’s WTO concessions.

Beijing has also found NATO policies aggressive and considers Washington responsible. In the post-Cold War era, NATO has apparently been transformed from a defensive alliance aimed against the Soviet Union into an increasingly offensive enterprise that expands its purview over new territories and new issues such as human rights. The so-called Clinton Doctrine, articulated at a June 1999 news conference, which asserts a global American role in rescuing people from abuse, undoubtedly sharpens that concern (although the recent reluctance to intervene in East Timor may help to reduce it).(33) Especially troubling has been the inclination to bypass the United Nations, where China enjoys a veto in the Security Council, and use NATO instead as an instrument of American power.(34)

Despite the bitterness and dismay evident in Beijing, the dialogue over Chinese strategic policy shows few signs significantly departing from Deng Xiaoping’s emphasis on economic development within a framework of good relations with the United States and other major powers. China might turn to its UNSC veto more often, resume its proliferation of weapons of mass destruction, and refuse to join the Missile Technology Control Regime. It is already engaging in more animated security dialogues with Moscow. But this would be a change in the degree, not the nature, of the policy. Indeed, China has nowhere to go. To sustain its authority, the government has to keep the economic engine operating efficiently and for that it needs integration with Western markets, particularly in the U.S. Apart from weapons purchases, China cannot get what it needs from Russia. No strategic reassessment, then, can break much new ground.

This analysis, however, posits that rational policy makers will weigh options carefully and reject dangerous or burdensome choices. It may hold true with regard to broad Chinese foreign policy determinations but would be too optimistic a prediction if China were to feel threatened over Taiwan. Beijing’s sense of urgency has, in fact, been increasing as Chinese leaders conclude that time is no longer on China’s side. In the past, both Mao Zedong and Deng Xiaoping indicated that, although unification was vital, it could wait. But the domestic political changes on the island and its potential acquisition of TMD alter the dynamic, threatening to make reunification impossible if Beijing does not act quickly. Indeed, China’s military has argued persuasively that budgets must rise and China must modernize its air and naval forces if it hopes to prevent rash action on Taiwan’s part. Some analysts contend that recently Beijing has actually set a deadline for recovery of Taiwan. That seems unlikely, but it would appear that strategic flexibility on the matter has declined.

This, of course, produces a fundamental contradiction for Chinese strategic thinkers. The two objectives of keeping within the Deng framework of constructive relations with the United States and protecting their interests in Taiwan may be incompatible. In such a contest it is entirely possible that Beijing would follow the less reasonable but more compelling route, endangering peace and stability in the region.

The arms sales problem has been a constant since Richard Nixon and Mao Zedong agreed in the Shanghai Communiqué to set aside the Taiwan issue in order to pursue normalization. As recently declassified CIA documents make clear, in negotiations between Henry Kissinger and Chinese leaders, the United States compromised Taiwan’s interests more significantly than Kissinger admitted.(35) Thus, the continued defense relationship between Washington and Taipei in the 1970s rankled, and, although Beijing succeeded in forcing the U.S. military off the island as part of the formal recognition process in 1979-80, failure to prevent ensuing U.S. weapons sales to Taiwan must have been peculiarly unpalatable.

Beijing’s displeasure prompted the 1982 August Communiqué, which pledged a gradual reduction in U.S. weapons supply to Taiwan so long as conditions in the Strait remained peaceful. But neither the Reagan nor subsequent administrations

adhered fully to the spirit of the agreement. Reagan’s contemporaneous Six Assurances to Taipei included pledges against setting a date for terminating sales or engaging in prior consultation with Beijing about sales.(36) The administration also condoned technology transfer that allowed U.S. companies to assist Taiwan in developing high-technology weapons of its own.

But the biggest loophole proved to be Reagan’s secret redefinition of its provisions to mean that the United States would ensure a balance in forces across the Strait.(37) In the early 1990s, China decided to buy advanced Su-27 fighter planes from the Russians while Taiwan was still far from beginning production of its indigenous combat aircraft. In the Pentagon and National Security Council, alarmed officials realized that Taiwan’s antiquated air force could not hope to protect the island against such a sophisticated threat.

When George Bush’s presidential campaign began to founder in 1992, politics and weapons sales came together in blatant defiance of the 1982 Communiqué. Bush decided to sell Taipei the F-16 aircraft it had long desired, opting to court votes from businessmen and workers regardless of Beijing’s response. Chinese leaders, however, largely overlooked the sale because Bush was a friend and they sought to keep him in the White House rather than face the challenge of a seemingly anti-China Democratic presidential candidate. It helped, of course, that China’s possession of the Su-27 minimized the danger of F-16s in Taipei’s hands.

There is no similar dynamic at work in the current clash over theater missile defense. China sees no positive side to TMD, explicitly warning that introduction of this system into East Asia, and particularly Taiwan, will be enormously destabilizing. American assertions that the impetus for introducing TMD into the region would be North Korean missiles, not China, is to some degree disingenuous and Beijing is in no way mollified. Although the North Korean nuclear crisis of 1994 catalyzed the revision of the U.S.-Japan Defense Guidelines and Pyongyang’s August 1998 launching of a three-stage missile over Japan promoted interest in TMD, Beijing understands that after North Korea collapses or melds into a unified Korean state, the agreements might founder but TMD systems will remain. At that point, if not sooner, budget-conscious governments will be seeking new justifications for such money-hungry weapons complexes and China will be an inevitable target.

Other American rationales for mounting attention to TMD similarly fail to impress China. The argument articulated by Secretary of State Madeleine Albright in Beijing, in the spring of 1999, that TMD does not exist yet mocks China’s understanding that financial commitments must be made now to realize the system as soon as technical problems are resolved. In turn, once the money is appropriated, there is little likelihood that a viable system would not be deployed. Further, China absolutely rejects the idea that anything it has done justifies deployment, revealing the workings of the security dilemma yet again. Chinese missiles arrayed along the coast opposite Taiwan are considered a matter of domestic, not international, military policy on which the U.S. has no say, and, furthermore, are indispensable to deterring Taiwan independence. Suggestions by Albright or Lee Teng-hui that withdrawal of these missiles would reduce Taiwan’s desire for a TMD system are not taken seriously.(38)

It is precisely the defensive nature of TMD that makes it so appealing to the U.S. Congress and that has stimulated such interest in its potential suitability for Taiwan. In connection with the Taiwan Relations Act of 1979, Congress has been reasonably vigilant about supplying Taiwan with the weapons necessary to prevent an attack from the mainland. As China’s prosperity has accelerated military modernization, however, there has been a growing feeling that the balance between China and Taiwan is shifting and that Taiwan may soon lose its technological edge, which alone has compensated for China’s overwhelming numerical superiority in men and machines.

Over the years, even pro-Taiwan American politicians have been loath to give Taipei equipment that might allow it to undertake offensive operations, although the line between offense and defense has obviously blurred. Striking an airfield on which bombers are readying themselves to hit Taiwan, for instance, is a difficult gray area. TMD, on the other hand, seems preeminently a defensive tool and therefore is on the side of the angels.

TMD’s very defensive nature, however, is what makes it so abhorrent to Beijing. China has focused its limited resources and expertise on missile development. Given its inadequate naval and air forces, only missiles provide a direct threat to Taiwan and only missiles have any promise of deterring the vastly superior power of the U.S. If Washington now undermines the effectiveness of those missiles, or forces significant increases in the numbers China must deploy, a crucial element of China’s strategic planning will be lost. Beijing fears that Taiwan could gain an illusory sense of invulnerability that might make a declaration of independence more possible.

Meanwhile, ironically, TMD is not universally welcome in Taiwan. It is clearly provocative. It is extraordinarily expensive. It would be minimally effective; that is, it will not create an invulnerable Star Wars shield because it will not stop cruise missiles and because the island is too close to Chinese coastal missile batteries. But the desire to be a part of a TMD system is not driven primarily by military considerations; rather, it is political. Lee Teng-hui wants to establish the intricate network of commitments, dependencies, and responsibilities that participation in TMD ensures. Since the abrogation of the 1954 Mutual Defense Treaty (MDT) in 1979-80, Taipei has yearned for reinstatement of intimate military ties. Foremost, Taipei seeks the early warning capabilities integral to the system that would both protect the island and render it a forward picket for the U.S.

Initially, Taiwan’s military services did not share the president’s enthusiasm for TMD. They only gradually and grudgingly accepted Lee’s decision to study the system seriously. But over time, military opinion has divided. Some, having recognized that TMD could be lucrative, are more devoted to competing for resources linked to the program than trying to block it. Acquisition of early-warning devices, such as the phased-array radar, authorized in principle in April 1999, or Aegis ships, boost budgets and prestige. Sorely needed improvements in communications and inter-service integration also promise to accompany such a system. Ultimately, the more heated controversy may come over whether having actual interceptors would be wise. Some are likely to oppose it, fearing that once deployed they would make Washington less inclined to intervene in a clash between Taiwan and the PRC. Others will argue that using even a flawed TMD system will be the only way for Taiwan to defend itself long enough for the U.S. to come to the rescue.

Neither Lien Chan nor James Soong, one of whom is likely to succeed Lee, supports TMD, but the DPP has been cautiously interested. However, regardless of who wins the office, the president will be constrained by a problem unique to democracies. For an elected leader to forswear a military capability that could defend his people would be irresponsible and politically perilous. Harry Truman understood that, when he inherited the atomic bomb research from Franklin Roosevelt.(39) It is unlikely that any prudent head of state in Taiwan would act differently.

Less provocative than TMD but also capable of distressing Beijing will be the shifting U.S. attitudes toward arms sales and military assistance. In the wake of the 1996 missile crisis, after U.S. forces had sailed into the dangerous waters around Taiwan, the Pentagon recognized that two decades of military isolation made cooperation and even the avoidance of “friendly fire” very difficult. Furthermore, concern grew in Washington that Taiwan’s purchases of sophisticated weaponry had begun to exceed its capacity for absorption.

Accordingly, the Pentagon’s approach to annual arms sales talks with Taipei changed and an explicit effort began to pinpoint and remedy operational flaws, giving special attention to “soft” issues such as training and logistics. The U.S. Defense Department also expanded military-to-military exchanges designed to address the communications and coordination gaps between Taiwan and the United States.(40) Agreements with China by Nixon and Carter never actually banned military contact; they required only the abrogation of the MDT and withdrawal of U.S. troops. Greater abstinence was self-imposed, but Beijing has come to expect detachment. As it is altered and the U.S. works more closely with Taiwan to enhance military readiness and effectiveness, this too could influence the balance of power and unleash more dangerous initiatives in the Taiwan Strait.

Evidence for this conclusion emerged clearly in the wake of Lee’s July 9th initiative. China asserted that Washington should be held responsible because, as Foreign Minister Tang Jiaxuan told a San Francisco audience, Lee’s boldness resulted from persistent arms sales to and cooperation with Taipei.(41) There is no sign that the struggle over limiting arms sales will end any time soon, in light of the fact that Beijing continues to refuse to renounce the use of force to recover the island.

The development of new military technology also is altering relationships between the Chinese, Americans, and Taiwanese. Simply put, as technology enhances the range, accuracy, flexibility, and reliability of weapons and their support systems (particularly conventionally armed ballistic missiles, cruise missiles, and surface-to-air missiles), stability will be more difficult to maintain. Improvements in space-based communications and navigation systems, microchip applications, and electronically scanned radar have upset the calculations of both defensive and offensive planners. Not only will Taiwan be and feel more vulnerable, but at the same time Beijing faces the prospect of losing its ballistic missile deterrent to sophisticated safeguard technology.

Since the demise of the Soviet Union, reclaiming Taiwan has been Beijing’s central strategic problem, and has been the focal point of PLA military modernization.(42) By concentrating on the expertise and equipment needed to accomplish this goal, Chinese leaders can side step the reality that across-the-board advances exceed sustainable budgets and technological prowess.(43) But Beijing has also had to face the fact, reinforced by demonstrations of American military prowess in the Gulf War and the air assault in Yugoslavia, that even in targeting Taiwan it has a long way to go. China continues to lack the amphibious capability to transport sufficient numbers of troops across the Strait, and it lacks air superiority to protect its ships against Taiwan air force attacks. More important, the prospect of having to cope with the U.S. Navy undermines the credibility of the threat to use most types of force.

But China does have access to one remedy where its technological sophistication would be a match for any military in the world: conventionally armed, tactical, ballistic missiles. As the 1999 Defense Department report to Congress on the cross-Strait military balance stated, the PLA has developed a very credible niche ability to attack Taiwan with a weapon that can penetrate virtually any of the island’s existing defenses.(44) A missile assault could be used to soften Taiwan’s defenses, knocking out power grids, grounding the air force, and severely damaging naval bases. Beijing also anticipates it would have a stunning psychological impact, inducing quick surrender.(45)

Indeed, China’s missiles arrayed along the Fujian coast have been so menacing that they have generated a concerted effort to plan countermeasures. Civil defense and hardening of key military and civilian infrastructure fall well within Taiwan’s passive defense capabilities. So too does the offensive-defense of using aircraft to attack and destroy ballistic missile launching sites on the mainland, although the cost in aircraft and pilots would be high particularly as China refines its technology and makes increasing numbers of its missiles mobile. Another option could be development of an indigenous medium-range surface-to-surface ballistic missile that would allow Taipei to threaten southern China and thereby deter a Chinese missile launch.

But as time passes and Chinese expenditures on missiles increase, Taiwan’s ability to protect itself will decline and the need for U.S. support will increase. And it may be that the U.S. will be technically able to supply a solution. U.S. vulnerability to Scud attacks during Desert Storm in 1991 prompted intense interest in perfecting a system that can shoot down tactical ballistic missiles with a high degree of probability. Although the technology has yet to be proven, recent tests suggest that it will work.

As noted earlier, however, Beijing is absolutely opposed to Taiwan’s participation in TMD because its only credible means of influencing Taipei’s behavior would be severely compromised. Moreover, the command and control as well as the surveillance requirements of such a system would forge a closer defense relationship between Washington and Beijing. But this is not all that disturbs Chinese leaders. They also are aware that development of TMD is intimately related to development of National Missile Defense (NMD). The Chinese worry that eventually the U.S. will be able to field an NMD system that can shoot down their ICBMs, even their most advanced Dongfang 31 solid-fuel mobile missile, which they successfully test-fired in August 1999.(46) When that happens, they believe it will be easier for Washington to decide to intervene militarily to defend Taiwan.

During the weeks prior to the 1996 missile crisis, the deputy chief of China’s General Staff, in an infamous conversation, observed that since Chinese missiles could now reach Los Angeles, China need not be worried about an aggressive American defense of Taiwan.(47) Lieutenant General Xiong Guankai was wrong, of course, and the United States did intervene to preserve peace if not explicitly to save Taiwan. But leaders in both the U.S. and China recognize that the issue of nuclear weapons has to be factored into risk assessments associated with military activity, either against or in support of Taiwan.

Of course, destabilizing technological change will not come just from military hardware. As the crisis sparked by Lee Teng-hui’s state-to-state formula has continued, there has been a lively information war going on through the internet, corrupting web sites and causing computers to crash. Mainland hackers actually managed to breach the defenses of the Taiwan Bureau of Investigations on August 15 as both sides assaulted government offices, posting belligerent slogans about the existence of one China. Anticipating such problems and opportunities in the future, Taiwan’s Defense Ministry created an information warfare committee earlier in 1999 and in July, China’s Liberation Army Daily urged computer experts to become “Internet Warriors.”(48) Of course, information warfare has been discussed for several years, and, although the current example comprises fairly harmless cases of harassment, the military establishments in China, Taiwan, and the United States all are eagerly developing their capabilities for infiltration even as they seek barriers to protect vital command, control and communications systems and data.(49)

In the end, the reality is that technological advances have outdistanced the political framework they are meant to serve, so that technology increasingly can drive policy in unwelcome directions. For instance, in July 1999, the Clinton administration acceded to industry demands that certain types of high-performance computers be sold to China. This happened despite Defense Department concerns regarding end-use monitoring, which, as Commerce Secretary William Daley has acknowledged, rarely occurs. Additionally, if violators are discovered, punitive action is an even more remote possibility.(50) But American manufacturers argued that since the readily available desk-top machines of today are as powerful as the computers that designed weapons yesterday, it would be fruitless to try to contain this rapidly changing technology. Beijing, Taipei, and Washington will, therefore, have enough trouble keeping up with the technological breakthroughs of the new millennium, without seeking to control or contain them.

It seems clear that the most dangerous actor in this drama is China. China has the most rapidly changing expectations about the world community and its place in that world. China is growing swiftly, and, modifying the priorities of the last two decades, its leaders have diverted resources into military modernization. Although the emphasis continues to be on economic reform, nation building has broadened to include other measures of national power. As a result, Chinese leaders today are less and less content to accept restraints on their expanding influence.

The clearest threats to the future, as China’s leaders envision it, are the policies and actions of the United States and Taiwan that could weaken, destabilize, and embarrass Beijing. China cannot easily depart from Deng Xiaoping’s framework of change at home and integration abroad, but its leaders appear to be less amenable to solving their problems gradually. Having abandoned the idea that America is in decline, they are increasingly worried about how the U.S. will use its immense power to constrict China’s options. And the key venue for American action is perceived to be Taiwan.

Beijing, of course, is determined to unify China, bringing the province of Taiwan under central control. That event is considered essential and inevitable. China’s leaders assume that it will be welcomed by the people of Taiwan who, unlike their misguided politicians and officials, recognize that they are Chinese first and always, sharing the mainland’s rich history and imbued with a common culture. To achieve the goal, China seeks to intimidate and isolate Taiwan, refusing to allow governments to maintain dual recognition, actively trying to outbid Taipei for diplomatic ties, and shutting Taiwan out of international institutions. Regardless of pleas and pressure, it will not renounce the use of force across the Strait. And it stands by the offer of a “one country, two systems” formula adapted from, but enhanced beyond, that used in Hong Kong. Taiwan would have full autonomy, including its own army, except in the realm of foreign relations, where it would have to sever all military and political links to the United States.

China does not understand Taiwan and how inaccurate many of its own assumptions are. Chinese leaders fail to see that coercion will not solve the Taiwan problem but rather will encourage recalcitrance. The landslide election victory that the people gave Lee Teng-hui in 1996 as missiles rained around them demonstrated that duress could produce a backlash. Similarly, a future missile barrage that actually hit Taiwan might well rally people behind the government rather than prompt their capitulation. Thus, Beijing’s refusal to renounce the use of force or stop adding to its missile installations acts as a barrier to progress more than an incentive. The threats do prevent independence, but China’s aspirations go beyond that. Chinese leaders, however, decline to see their own behavior as provocative and deny the relevance of the security dilemma to their actions; they blame Lee Teng-hui, the DPP, or Washington, but never themselves.

Chinese leaders also misperceive the dynamics of Taiwan politics. Rhetorically they acknowledge that most of the population hopes to preserve the status quo. They are less willing to see that resolution rests far in the future, that many people hope the status quo will endure indefinitely, and that a general consensus has emerged that China must both democratize and become considerably more prosperous before the idea of unity could be seriously entertained. They fear pro-independence sentiment but do not see how pervasive differentiation from the mainland has become. Indeed the greatest challenge to Beijing’s vision of the future follows from the changing nature of Taiwan’s population as it becomes younger, more sophisticated, and more Taiwanese.

Accordingly, Chinese leaders dismiss the relevance of democracy to the problem. Since it would never occur to them to seek popular approval before acting on an issue as crucial as union, they do not credit the necessity in Taiwan. In fact, they have long tried to determine the future through bribing, cajoling, or intimidating the Guomindang, assuming that the people would go along once a party-to-party agreement was reached. The misapprehension that the public can be ignored is dangerous. So too is Beijing’s conclusion that democracy is just a device designed to postpone reunification.

Finally, there are also misperceptions regarding the role of the United States. Beijing adamantly opposes arms sales to Taiwan, convinced that they make Taipei’s continuing defiance possible. It can also be argued, however, that Taipei will negotiate only when it feels secure. Thus, judicious arms sales, which bolster Taipei’s confidence without building offensive capabilities or prompting delusions of impregnability, may be seen as constructive, not destructive. In the same way, Beijing seems to have concluded that U.S. forces will intervene in the Strait regardless of Washington’s policy of strategic ambiguity and its insistence that action depends upon the particulars of a crisis. The conviction that the U.S. is a power run amuck and that eventually it will use its might against Chinese interests could encourage policies that will require an aggressive American response.

What then of the potential scenarios for relations in the next several years? The weight that domestic politics, economic stress, regional disputes, strategic planning, arms sales, and technological evolution will carry is in each case contingent. Single factors rarely disrupt set patterns of interaction; it will be the confluence of policy choices, domestic imperatives, and how individual leaders assess their problems and options, their mindset, that will be decisive. Barring large-scale disruption in China, war appears the least likely development. At the same time, progress on devising a viable compromise between Beijing and Taipei also remains improbable despite the now-suspended resumption of the cross-Strait dialogue by Koo Chen-fu and Wang Daohan. Even before Lee’s July 9th surprise, the tentative conversation had not gone beyond posturing since the inducements for engaging in real negotiations fall short of the propaganda value of blaming one another for the lack of progress. Confidence-building measures clearly are needed, and, depending on who is elected president in Taiwan, these might include the “three links,” but are not likely to encompass any fundamental breakthrough in the foreseeable future.

The real alternatives for the short term appear to be either the status quo or a relative decline from current conditions. The changing military balance in the Strait, the worsening trends in U.S.-China relations, and the upcoming political contests in Taiwan and the U.S., as well as the economic strains that keep growing in China, all point toward instability. Indeed, the intensity of distrust evident in U.S.-China-Taiwan relations suggests that the years ahead will be difficult and that the opportunities for conflict will be more plentiful than the occasions for cooperation. China will probably remain the most recalcitrant of the three governments because internal politics makes compromise more difficult and it faces more powerful challenges. Still, if military confrontations are to be avoided, caution, concentration and a willingness to be constructive will be needed in Taipei and Washington as well. Even minimal use of force in the Taiwan Strait, through accident, inadvertence, or intention, could abruptly escalate into a major clash and bring chaos to the region.

1.“Resolution on Taiwan’s Future,” DPP National Party Congress, May 8, 1999, provided by DPP Mission in the U.S.

2.In August 1995, President Clinton is reported to have assured President Jiang Zemin (in a letter delivered by Secretary of State Warren Christopher) that the U.S. would stand firm on the “Three Noes”: opposition of Taiwan independence; opposition to a “two China” or “one China, one Taiwan” policy; and opposition to Taiwan’s admission to the United Nations, or as stated in Shanghai, opposition to Taiwan’s admission into international organizations for which statehood is required.

3.In Taiwan itself there were those who thought that the political implications of the Three Noes were useful. Figures in the Taiwan military, for example, were relieved by the message that the U.S. would not fight for independence, which bolstered their opposition to it.

4.This message was delivered personally by Richard Bush, chairman and managing director of the American Institute in Taiwan.

5.Roth first articulated the idea at a luncheon speech at the Woodrow Wilson International Center for Scholars on March 24, 1999.

6.John Garver. Face Off (Seattle: University of Washington Press, 1997), p. 155.

7.“Conditions Set for Taiwan Talks," Associated Press, September 9, 1999, www.taiwansecurity.org; “Taiwan Rejects Terms for Chinese Envoy’s Visit,” Reuters, September 10, 1999, ibid.; “Taiwan Refuses to Rescind Statehood Claim Despite China Pressure,” Associated Press, September 15, 1999, ibid.

8.Bush has gone so far as to assert that the U.S. would act in accordance with the Tawain Relations Act to ensure Taiwan’s defense. Competitor John McCain called upon the administration to abandon “strategic ambiguity.” Conservative Republicans William Kristol and Robert Kagan in the pages of The Weekly Standard proclaimed the need to “make absolutely clear that it [the United States] will respond to any military action.” See “Pressuring Taiwan, Appeasing Beijing,” August 2, 1999, p. 5. And 25 individuals, including Paul Wolfowitz, Richard Armitage, Norman Podhoretz, Caspar Weinberger, and Richard Perle, signed a statement released by the Heritage Foundation and the Project for a New American Century which called for a clear guarantee to aid Taiwan if attacked or blockaded. Jane Perlez, “Bush Carries Some Baggage In Developing China Stance,” New York Times, August 29, 1999, P. 4. The statement went on to say, “The time for strategic and moral ‘ambiguity’ with regard to Taiwan has passed. We urge the administration and leaders in Congress to make a clear statement of America’s commitment to the people of Taiwan.”

9.Clinton has emphasized the so-called three pillars of U.S. policy: (1) our “one China” policy is unchanged, (2) interest in a peaceful approach to resolving differences, and (3) support for dialogue. Susan Shirk, Testimony before the House International Relations Committee, Asia and Pacific Subcommittee on H.R. 1838: The Taiwan Security Enhancement Act, September 15, 1999, from www.house.gov/international_relations/ap/shirk.htm.

10.Clay Chandler and John F. Harris, “Clinton, Jiang Meet in Effort to Ease Tense Relations,” Washington Post, September 12, 1999, p. A27 and official transcript released by the White House.

11.On June 8, 1999 the U.S. Senate passed an amendment to the Defense Appropriation Bill for the year 2000 that requires that the U.S. Pacific Command and the Office of Net Assessment in the Office of the Secretary of Defense to report on the continuing implementation of the TRA. On May 27th Senator Trent Lott had also attached an amendment, adopted by the Senate, calling for annual reports on the military balance in the Taiwan Strait by the Defense Department.

12.The bill was initially submitted in the Senate by Jesse Helms (R-NC) and Robert Torricelli (D-NJ) in March 1999 and then in the House by Majority Whip Tom DeLay (R-TX), Christopher Cox (R-CA), Nita Lowey (D-NY), Peter Deutsch (D-FL), and Robert Andrews (D-NJ) on May 18th. Regarding administration position, see Shirk testimony, September 15, 1999.

13.Taiwan also engaged in nuclear espionage in the U.S. See Nancy Bernkopf Tucker. Taiwan, Hong Kong and the United States, 1945-1992: Uncertain Friendships (New York: Twayne/Macmillan, 1994), pp. 146-47, 152, Bonnie Glaser, ”Progress Admist Deep Suspicions,” Comparative Connections, January 2000.

14.Li spoke at a conference hosted by the Center for Strategic and International Studies in Washington. “Chinese Envoy Decries US Criticism on Rights,” Associated Press, September 15, 1999 from www.taiwansecurity.org.

15.China has been considering devaluation again and may be forced to move in that direction in the not too distant future.

16.Taiwan’s business community rebelled at prohibitions on infrastructure investment. Formosa Plastics, barred in 1998 from putting some $3 billion into a power-plant scheme in Fujian, simply defied the authorities and moved ahead with the project, using offshore resources. Ralph Clough. Reaching Across the Taiwan Strait (Boulder: Westview, 1993) and Cooperation or Conflict in the Taiwan Strait? (Lanham, MD: Rowman & Littlefield, 1999); Leng Tse-kang. The Taiwan-China Connection (Boulder: Westview, 1996). In an effort to enhance Lien Chan’s campaign prospects Su Chi, chairman of the Mainland Affairs Council, announced on January 20, 2000 that the “no haste” policy could be modified in a Lien administration.

17.Efforts to persuade Taiwan business to invest in Southeast Asia rather than China have had only moderate success. By 1994 Taiwan was second in investment in the region and had made a significant commitment to development of an industrial zone at Subic Bay in the Philippines. But, these entrepreneurs also continued to build factories on the mainland. Clough, Cooperation, p. 56.

18.From 1985 to 1996, Japan’s two-way trade with China increased from just $19 billion to over $62 billion, and over roughly the same period investments totaled $15 billion. Japanese foreign assistance to China has been crucial to the relationship: between 1979 and 1994 it amounted to $9.3 billion. Michael Green in his Council on Foreign Relations manuscript in progress, entitled Reluctant Realism: Japanese Foreign Policy in an Era of Uncertain Power, chapter 4: “Japan-China Relations.” Green, ch.4, n.10; James Przystup, “China, Japan, and the United States,” in Michael J. Green and Patrick M. Cronin (Editors). The U.S.-Japan Alliance (New York: Council on Foreign Relations, 1999), p. 37.

19.Green, Reluctant Realism, ch.4, n.5.

20.Liberation Army Daily as quoted in Shawn W. Crispin and Susan V. Lawrence, “In Self-Defense,” Far Eastern Economic Review, July 1, 1999, p. 22.

21.Ji Guoxing, “Energy Security: A View >From China,” Pacific Forum, CSIS, PacNet #25, June 25, 1999.

22.Estimates of the oil and gas reserves go as high as 17 billion tons, outstripping the 13 billion tons believed to be in Kuwait. Denny Roy. China’s Foreign Relations (New York: Rowman & Littlefield, 1998), p.186. China became a net oil importer in 1993.

23.Susan V. Lawrence, “Yearning to Lead,” Far Eastern Economic Review, September 16, 1999, pp. 18-19.

24.Koong Pai Ching, “Southeast Asian Countries’ Perceptions of China’s Military Modernization,” Sigur Center for Asian Studies Paper, George Washington University, 1999, p. 15, 18.

25.Roy, China’s Foreign Relations, p. 185.

26.Kenneth W. Allen, “Air Activity Over the Taiwan Strait,” Henry L. Stimson Center, August 16, 1999.

27.Taiwan Central News Agency, " Tang Fei: Taiwan Unable to Defend Disputed Islands," November 24, 1999.

28.For an indication of China’s concern, see Benjamin Kang Lim, “China Says Opposed to Taiwan Independence Vote,” Reuters, September 7, 1999, as cited in Napsnet Daily Report, September 7, 1999. Friction with Indonesia stems from several factors, including the 1965 suppression of the Indonesian Communist Party and the concomitant massacre of ethnic Chinese, the repeated subsequent instances where economic or other problems have been punctuated by ethnic Chinese pogroms, and clashing claims over Natuna island in the South China Sea.

29.Among the most alarmist was Louis Kraar, “The Death of Hong Kong,” Fortune, June 26, 1995. For a range of more sober assessments, see Warren I. Cohen and Li Zhao (Ed). Hong Kong Under Chinese Rule (New York: Cambridge University Press, 1997).

30.It is not absolutely clear that the PLA garrison agrees that such a procedure is acceptable.

31.Mark Landler, “U.S. Move Has Hong Kong Worried it Will Lose Trade,” The New York Times, June 25, 1999, p. A15.

32. “Evaluation of ‘One Country, Two Systems’ in Hong Kong” by Mainland Affairs Council Chairman Chang King-yuh, July 18, 1997, in MAC News Briefing, August 4, 1997, 6.

33.The reluctance to intervene in East Timor without Indonesia’s permission has demonstrated that the Clinton Doctrine has limits and probably has been reassuring to Beijing. See also Robert A. Manning, “The Clinton Doctrine: More Spin Than Reality,” The Los Angeles Times, September 5, 1999 (from www.taiwansecurity.org).

34.Susan V. Lawrence, “Brave New World,” Far Eastern Economic Review , June 17, 1999, pp. 13-14. Lee Teng-hui told The Wall Street Journal that Taiwan “feels good that NATO countries place human-rights and humanitarian concerns above sovereignty.” Karen Elliott House and Russell Flannery, “Arms Race is Beijing’s Fault,” The Wall Street Journal, June 25, 1999.

35.James Mann. About Face (New York: Knopf, 1999). p. 33.

36.The Six Assurances were: (1) the United States had not set a deadline for ending arms sales, (2) there would be no prior consultation with the PRC regarding the arms sales, (3) the U.S. would not undertake mediation between Taipei and Beijing, (4) the U.S. would not revise the TRA, (5) the American position regarding the sovereignty of Taiwan had not been altered, and (6) Washington would not pressure Taiwan to agree to negotiations. Nancy Bernkopf Tucker. Taiwan, Hong Kong and the United States, 1945-1992: Uncertain Friendships (New York: Twayne/Macmillan, 1994), p. 139.

37.Mann, About Face, pp. 127-28.

38.They are also opposed by Taiwan, where the governing authorities want to retain the freedom to determine their involvement in TMD.

39.Martin J. Sherwin. A World Destroyed (New York: Vintage, 1977), pp. 199-200, 202; John Lewis Gaddis. The United States and the Origins of the Cold War (New York: Columbia University Press, 1972), p. 245.

40.Kurt Campbell, Deputy Assistant Secretary of State for International Security Affairs, Department of Defense. Testimony, House International Relations Committee, Asia Pacific Subcommittee, September 15, 1999, www.house.gov/international_relations/ap/campbell.htm.

41. “Official Spells Out Visit Conditions,” Hong Kong Standard, September 11, 1999. This was the same day that Jiang and Clinton met at APEC.

42.Although this is true, it is also the case that China has not, in all the intervening years, done all that much to build landing craft and LSTs or to develop long-range strike capabilities for its air force, acquisition of Su-27s notwithstanding. John Culver, “Defense Policy and Posture II,” in Hans Binnendijk and Ron Montaperto (editors). Strategic Trends in China (Washington, DC: National Defense University Press, 1998), pp. 72-73.

43.Bates Gill, “Chinese Military Hardware and Technology Acquisitions of Concern to Taiwan,” in James R. Lilley and Chuck Downs (editors). Crisis in the Taiwan Strait (Washington, DC: National Defense University Press, 1997), pp. 105-28.

44.Report to Congress Pursuant to the FY99 Appropriations Bill, “The Security Situation in the Taiwan Strait,” February 1999.

45.Of course, historically such campaigns have been ineffective—as, for example with London’s endurance of V-2 rockets during WWII. Rather than frighten people into fleeing or giving up, they rally the citizenry and generate patriotism. There is no reason to believe that the people of Taiwan would be different. On PRC view, see Ling Haijian in Kexue Shibao [Science Times] as quoted in “Article Says PRC’s Missile Can Hit Li Teng-hui’s Office,” Xinhua, August 21, 1999.

46.The successful test on August 2, 1999, was announced publicly by Chinese authorities. The Dongfang 31 has a range of 5,000 miles and can carry a 1,500-pound warhead. It will augment an arsenal of only 20 ICBMs capable of hitting the U.S., all of which are cumbersome and slow because they must be fueled before launch. Seth Faison, “In an Unusual Announcement, China Tells of a Missile Test,” The New York Times, August 3, 1999, p. A6.

47.Patrick E. Tyler, “China Threatens Taiwan,” The New York Times, January 25, 1996. This was the much discussed and analyzed exchange that Chas Freeman had with Xiong Guankai.

48.Michael Laris, “Chinese Web Warriors,” The Washington Post, September 11, 1999, p. A15-16.

49.A general discussion of the costs of IW (information warfare) is in “Information Technology: Vulnerabilities and Threats,” Strategic Survey 1998/99 (London: Oxford University Press, 1999), pp. 51-61. For PRC views on IW see Major General Wang Pufeng, “The Challenge of Information Warfare,” China Military Science (Spring 1995), and Senior Colonel Wang Baocun and Li Fei, “Information Warfare,” Liberation Army Daily (June 13 and 20, 1995) both excerpted in Michael Pillsbury (editor). Chinese Views of Future Warfare (Washington, DC: National Defense University Press, 1997), pp. 317-41.

50.Letter to the Editor, The Washington Post, June 16, 1999.