Summary:

China has taken to threatening Taiwan again, and people are asking
what China will do.  We have turned to the question of what China
can achieve against Taiwan.  In our view, it is not militarily
capable of mounting a serious threat.  Weaknesses in China's navy
and air force mean that Taiwan is capable of defending itself quite
readily.  If the U.S. goes to Taiwan's aid, which we think it will,
China will suffer a massive defeat in attempting to take Taiwan.
China knows it.  Why is it mounting this challenge?  Two reasons:
First, to demonstrate Beijing's will against divisive forces inside
of China; second, to create a sense of embattlement that justifies
increased repression inside of China in the name of patriotism.

Analysis:

Tension between Beijing and Taipei has escalated to the point where
Beijing is making military threats against Taiwan.  Analysts
generally have focused on what Beijing might choose to do.  We
think it is important to consider carefully what Beijing is
actually capable of doing.  Beijing's military options are more
limited than its rhetoric, particularly if the United States is
prepared to defend Taiwan.  However, even if the United States were
to abandon Taiwan and remain neutral in a Beijing-Taipei
confrontation, it is our view that Beijing would face severe
difficulties in mounting a serious threat against Taiwan.

Let us begin with the obvious.  China is an enormous country with a
large standing army.  Taiwan is much smaller, an island separated
from the mainland by the Taiwan Straits, which are less than 100
miles wide at the narrowest point.  The western portion of Taiwan,
the part facing China, is a relatively flat plain, while the
eastern portion is more rugged.  The island is several hundred
miles long but less than one hundred miles wide.  Thus, if the
Chinese People's Liberation Army (PLA) were able to cross the
Taiwan Straits, they would find a terrain favorable to lodgment in
the western half of the country, with harbors adequate for a build-
up of men and materiel.  This would allow for a campaign into the
more rugged eastern portion; China could also isolate and conquer
the capital of Taipei in the north. All of this is built around a
huge "if" - if the PLA can mount a sustainable amphibious operation
against Taiwan.

The geopolitics of the confrontation reflects, in some sense, the
situation between Germany and Britain following the fall of France
in 1940.  If the Wehrmacht had been able to close with and engage
the British army, they would certainly have defeated it.  However,
the Wehrmacht had to first cross the English Channel.  No matter
how powerful the Wehrmacht might have been, its strength was
irrelevant to the prior task of forcing the channel. The Germans
would have had to carry out an amphibious operation that would not
only have to land troops on Britain's shore, but would also have to
continue to supply and reinforce those troops.  In order to do
that, the Germans had to defeat the Royal Navy.  Unable muster
anywhere near the necessary naval forces to challenge the Royal
Navy in the channel, the Germans attempted to first establish air
superiority over the channel and southeastern England. The theory
was that with air superiority over the Channel and the use of
mines, the Royal Navy would be forced out of the Channel, opening
the way for an invasion of Britain.  The attempt to establish air
superiority failed, which meant the basic theory was never tested.
The Germans abandoned the effort to invade Britain, substituting
instead a submarine-based naval blockade designed to cut off
British supply lines to the empire and the United States. The new
goal was to shatter Britain's economy and force it to capitulate.
That attempt failed as well.

Stratfor already addressed last week the question of an amphibious
operation by the PLA against Taiwan, in
http://www.stratfor.com/asia/specialreports/special40.htm ] If the
United States were to side with Taiwan and send carrier battle
groups to or near the Taiwan Straits, the Chinese would face the
same problem the Germans faced with Britain.  The Chinese navy
would be unable to pose a direct challenge to combined U.S.-Taiwan
naval forces.  Its only option would be to try to establish air
superiority over the Straits, posing an airborne threat against
U.S.-Taiwan naval forces. This threat would drive them out of the
Straits and allow Chinese amphibious forces to cross over.  In
short, China is in the same position as Germany in 1940.  That is
not a happy precedent for China.

China is not likely to achieve air superiority over the Taiwan
Straits through a conventional air campaign.  Taiwan currently has
about 150 F-16s, over 250 F-15s, as well as 60 Mirage 2000s.  These
are backed up by four Hawkeye battle management platforms, used by
the U.S. Navy for air-sea battle management.  China's air force has
larger numbers of aircraft, but none are as sophisticated as
Taiwan's.  Taiwan would win any battle for air superiority and
would not require U.S. assistance, save possibly for the
replacement of munitions. And even this may not be altogether
necessary.  Indeed, we could further argue that even if Taiwan
naval forces were to face Chinese naval forces directly (without
U.S. Naval assistance), Taiwan's naval forces, coupled with
Taiwan's air force, would be sufficient to raise the risks of an
attempted invasion enough to deter attack.

This leaves China with an unconventional option.  To be more
precise, China is left with a variation on the Luftwaffe strategy.
Unable to invade until it achieves air superiority and unable to
achieve air superiority using conventional aircraft, China could
seek to suppress Taiwan's air defenses with cruise missile attacks
on Taiwan's air fields. China could conduct a battle against
Taiwan's air force, based on the following assumptions: It has
developed cruise missiles with sufficient stealth to penetrate
Taiwan air defenses; it has sufficient precision to strike targets
as small as aircraft and command and communication nodes; it has
sufficient explosive power to penetrate revetments; and it has
sufficient numbers to be effective. The goal would be to render
Taiwan's air forces inoperative by destroying the command, control
and communications required for managing the air battle, while also
destroying much of Taiwan's air force on the ground.  Indeed, if
China had anti-ship versions of such missiles, they could conduct a
simultaneous campaign against Taiwan's navy.

There is every reason to believe that China has such missiles and
in sufficient numbers to make a difference. Certainly, they have
been working on such missiles for several years.  But there is an
inherent weakness in any over-the-horizon missile attack:
intelligence.  The foundation of U.S. cruise missile warfare has
been superb intelligence.  The Chinese clearly have reconnaissance
satellites, but it is not clear that these satellites are
sufficiently sophisticated to provide real time intelligence.
Human intelligence could fill in some of the gaps, but ultimately,
launching missiles against aircraft on the ground requires
extremely tight time-lines to succeed. The attacker must know what
aircraft is where within the time frame of the missile strike in
order to be effective.  This is a missing link in any Chinese
missile attack, and it is not one that is easy to solve quickly.
Space control is the key to sea-lane control in the age of cruise
missiles.

It appears that China does not have sufficient satellites nor
sufficiently robust communications links that the United States
could not shut down.  The U.S. must have developed anti-satellite
capabilities in the past decade, and the ability of the U.S. to jam
communications is second to none. That means the satellite-to-
ground station link and the ability of the ground stations to
disseminate information can be rendered useless.  At the very
least, the Chinese will have to assume so.   Even more important,
China is vulnerable to counter-strike.  The American ability to
identify Chinese launch facilities through use of U.S. satellites
and other means would permit rapid counter-strikes on Chinese
launchers.  Now, the Chinese have been acquiring Unmanned Aerial
Vehicles (UAVs), which could be a useful substitute for satellites
in this type of environment, save that the UAV is vulnerable to
gunfire, jamming and, above all, mechanical failure.  Were China to
launch a missile based Suppression of Enemy Air Defenses (SEAD)
campaign against Taiwan, they would quickly find themselves on the
short end of the stick.

Thus, it appears to us that China cannot establish air superiority
over the Straits even against Taiwan alone.  If it has a mass of
cruise missiles and reliable intelligence capabilities, then China
could threaten Taiwan's air superiority with a concerted attack on
its air fields.  But even here, Taiwan could strike back at
launchers with its air force and its own cruise missiles, assuming
only that the United States were willing to share intelligence with
Taiwan.  If the United States becomes a combatant, China cannot
succeed in invading Taiwan.  If the United States merely provides
Taiwan with real time intelligence, Taiwan can prevent China from
achieving air superiority over the Straits.

This leaves us, using our 1940 scenario, with the final option:
blockade.  Here again, the air power factor comes into play.  Using
surface vessels close to Taiwan will not work.  A deployment at a
substantial distance from Taiwan would require a large number of
surface vessels able to operate at great distances for an extended
period of time.  China's navy is primarily designed for coastal
patrol.   It has only a handful of destroyers and frigates, not
nearly enough to conduct an extensive blockade.  China has about
five nuclear attack submarines and other conventional submarines,
but Taiwan has some 18 anti-submarine warfare destroyers and 12 ASW
frigates.   Moreover, submarines are a poor choice of weapons for a
blockade with political overtones.  They are better at sinking
ships than stopping them.  Presumably, China would be looking to
keep third parties out of the war rather than bringing them into
it.  If China were forced to declare, as Germany was, unlimited
submarine warfare, striking all vessels within a very large battle
area, it would generate support for Taiwan. This is especially true
since the number of submarines available to China is insufficient
for the creation of an effective cordon sanitaire.

Therefore, it appears to us that China, whatever it might wish to
do, is incapable of mounting an amphibious operation against
Taiwan.  It could, of course, choose to launch nuclear missiles
against Taiwan, obliterating it.  But given the economic value of
Taiwan to China even in its current political role, and given
China's insistence that Taiwan is part of China, using nuclear
weapons would not seem to be in China's best interest.  When the
threat, however indeterminate, of a U.S. response is factored in,
it seems unlikely that China will bombard Taiwan with nuclear
tipped missiles.  It is uncertain that China would not use
conventionally armed missiles to make a political point, but we
doubt they would use weapons of mass destruction.

Taiwan by itself is a formidable foe.  However, it is our view that
the United States will participate in the defense of Taiwan.
Taiwan is an essential link in any American global strategy.  While
the United States toys with its appropriate role on the mainland of
Eurasia, there remains a fixed assumption that U.S. maritime
supremacy, which is the foundation of U.S. national security, must
be maintained.   In order to continue this strategy, the United
States has historically worked to sustain a presence in the waters
off of Asia.  This archipelago strategy, forged with the turn-of-
the-century seizure of the Philippines, assumes the United States
must maintain a blocking position on the north-south trade routes
of Asia. It is a shield strategy to block Asian powers from
breaking into the central Pacific and a strike strategy in which
nearby bases are available for operations against Asia.

This archipelago strategy matured fully after World War II in a
line of maritime relationships stretching from the Aleutians
through Japan and Okinawa, Taiwan and Philippines to Singapore.
Because this strategy is currently in tatters, with unrest in
Indonesia, poor defense relations with the Philippines, and growing
unease in Japan over its dependency on the U.S., abandoning Taiwan
would be strategically demented.  It is the perfect trade route
blocker, shield and sword.  Given how little Taiwan needs from the
United States to secure it against China, it is unthinkable that
the U.S. would not provide it.

Strategy aside, politics dictates a defense of Taiwan.  Clinton is
on the defensive over China.  Between campaign finance, spy
scandals and a general sense that U.S. policy on China was poorly
implemented, the current administration would be placed in an
impossible position should China attack Taiwan.  Regardless of its
intent, the failure of the administration to come to Taiwan's aid
would be read as confirmation of the worst charges of its critics.
Having aided Kosovo, whose strategic interest to the United States
was dubious, the failure to defend Taiwan, whose strategic
importance is manifest, would be politically impossible for the
Clinton administration.  This means that while Taiwan is
formidable, we would expect the United States to participate in its
defense as well.  And China knows all this.

In short, for all of China's bluster, we do not see China as having
the military capability, at this time, to threaten Taiwan.  In
order to develop this capability, it would have to move its
reconnaissance satellite program ahead by several generations and
undertake a naval construction program of substantial proportions.
China knows all of this perfectly well.  It knows that it is not
going to invade Taiwan and it is not going to blockade Taiwan.  It
may fire a missile or two at Taiwan, but even that is unlikely.

Then why is China carrying on so?  There are two reasons.  First,
Beijing is desperately trying to assert its authority throughout
the country.  It is terribly afraid of Tibetan and Xinjiang
separatist, religious sects and party splits.  It must show itself
to be strong on Taiwan, because domestic factions could construe
any sign of hesitation as a sign of weakness.  When one is truly
weak, one cannot afford to show it.  Second, China needs something
to rivet the nation's attention, create a sense of embattlement and
justify the current enclosure as western investors turn away.  A
crisis with Taiwan and the United States is, like "wag the dog"
scenarios in the United States, exactly what China's leadership
needs at this moment.

Therefore, while China knows it does not have the wherewithal to
invade Taiwan, its own people don't know and, quite possibly, the
public in Taiwan and the United States don't know.  Perhaps even
Taiwan's leadership might be rattled by Chinese bluster.  We doubt
that though. The declaration of statehood was not the act of
nervous men.  Indeed, Taiwan seems intent on capitalizing on
tension (see [ http://www.stratfor.com/asia/specialreports/special44.htm ]
for a discussion of this).  In our view, the threats against Taiwan tell
us more about the current status of politics inside of China and
the insecurities of the men around Jiang Zemin, than they tell us
about geopolitical confrontations with Taiwan.

It does point out the need for the United States to clarify its
maritime policy in Asia.  The Taiwan issue is an opportunity to
reexamine U.S. strategic relations with the rest of the Asian
archipelago.  This includes its relations with the Philippines and
Singapore and careful consideration of what chaos in Indonesia
would mean to the United States.  The unintended consequence of
China's threats against Taiwan will, we think, be a redefinition of
U.S. Asian maritime strategy, if not by this administration, then
by the next. Unwittingly, China is generating the force that will
compel the U.S. to think through its post-cold war naval strategy
in Asia.