NARRATOR: China is looming larger as a world power – politically, militarily, and economically. The Pentagon is shifting its attention from Europe to Asia.

Is China a military threat? Or is it a proud civilization seeking to restore unity and greatness?

China touches Americans in conflicting ways.

Already China is America’s fourth largest trading partner. Total trade in 1999 exceeded $80 billion. Over a half million American jobs depend on China’s imports and exports. More jobs will likely be created as the Sino-American agreement on permanent normal trade relations takes effect. Consumers in large retail stores note the inexpensive toys, tools, and appliances with the “made in China” label. Others, especially those in labor unions, see China’s cheap labor taking away American jobs.

Many Americans on the left and right find it hard to live with China’s human rights record. Members of Chinese religious groups, dissidents, and even those in spiritual exercise groups suffer arrest and long prison terms. China leads the world in executions and has yet to establish an open judicial system. Other observers see Chinese citizens enjoying greater freedom and prosperity. China’s private sector is blossoming.

The greatest concern is that China appears to have the momentum to become a new military threat to the United States. A nation of 1.3 billion people, China’s rate of economic growth averaged 9% in the 1990s. Its growing economy has bankrolled military modernization. China has bought SU-27 fighter bombers from Russia, along with Kilo submarines, and two advanced destroyers with deadly Sunburn anti-ship cruise missiles. Nuclear since 1964, China has over 400 thermonuclear weapons in its stockpile. Its People’s Liberation Army deploys 200 short range ballistic missiles and is producing 50 more each year. Although China has only 20 or so antiquated liquid-fueled intercontinental ballistic missiles, it is developing modern, solid fueled ICBMs to bolster its strategic nuclear arsenal.

This military build-up worries U.S. allies on China’s periphery – Japan, South Korea, the Philippines, Thailand, and Australia. Nowhere is the worry greater than on Taiwan. China wants Taiwan to rejoin the Mainland. The United States has pledged to defend Taiwan from an unprovoked attack. Is China a military threat to America’s allies? Or even to the United States? How will China deal with the explosive issue of Taiwan, an island Beijing claims as its own renegade province. Any clash of arms between Mainland China and Taiwan would inevitably ensnare the United States into an uncertain involvement with untold consequences.

China may well be America’s central foreign policy pre-occupation in the 21st century.

In order to understand China, it is necessary to understand its recent past – although anything in the past 1000 years the Chinese might consider recent in their 5,000 year history.

After enduring 70 years of humiliation and defeat in wars with Britain and Japan and suffering periodic foreign occupation, in 1911 Nationalist forces led by Sun Yat-sen overthrew the Manchu dynasty. The Nationalists, the Kuomintang, slowly consolidated power over all of China. But a new struggle for power soon developed between the Nationalists and Communists. The Nationalists were led by Sun’s successor, Chiang Kai-shek. Chiang routed the Communists and pursued them as they escaped on their 1934 Long March to the isolated far Northwest. The new Communist leader was Mao Zedong. Chiang and the Kuomintang might have successfully defeated the Communists but for Japanese aggression. Japan swallowed China’s Manchuria province in 1931, and in 1937 began its full-fledged war and occupation of two-thirds of China.

An uneasy Nationalist-Communist alliance against Japan endured through the Second World War. Fighting between the two parties erupted again at the close of the war. Mediation by the United States failed to end the revived civil strife.

In 1949, the Communists under Mao Zedong defeated the Nationalists, who then fled to the Chinese island of Taiwan, then called Formosa. It was expected that Mao would invade Taiwan, and he was preparing to do so when the Korean War broke out in June 1950. President Truman then ordered the U.S. 7th Fleet to protect Taiwan from any Communist attack. A formal U.S.-Taiwan military alliance soon followed.

During the Cold War, the U.S. did not recognize the Communist government in Beijing, isolating and containing it more severely than the Soviet Union. The object of this different treatment was to foment a split between the two Communist giants. American policy succeeded by the early 1960s, but the Vietnam war prevented the U.S. from exploiting the Sino-Soviet split until 1969 when President Nixon discouraged a Soviet attack on China and signaled his intention to open relations with China. Nixon went to China in 1972.

The Mainland was awarded China’s permanent seat at the UN Security Council. In 1979, the U.S. switched its recognition from the government on Taiwan to the Mainland’s People’s Republic of China.

Under Deng Xiaopeng, China in the 1980s began to adopt market economics with its “four modernizations:” Industry, agriculture, technology, and the military. One of Deng’s favorite slogans expressed his non-ideological pragmatism on economic reform: “It doesn’t matter if the cat is black or white as long as it catches mice.” By the 1990s, China was recording impressive economic growth.

Meanwhile on Taiwan, the Nationalists achieved far more impressive economic growth and by the 1990s developed a mature democracy. In April 2000, Taiwan elected Chen Shui-bian president, whose Democratic Progressive Party had long advocated Taiwan independence.

For the Communist leadership on the Mainland, one issue has always been high on its agenda – national unity. Beijing negotiated with Britain and assumed control of Hong Kong in 1997, giving the former colony 50 years of special status. In 1999, China reclaimed the island of Macao from Portugal. Taiwan, therefore, is what Beijing calls its remaining “renegade province.” It wants reunification. And this is the hot issue that will determine whether China is a military threat or not. But China also wants economic development.

HE: For China, of course we want, first of all, we want to develop ourselves into a modern country. China has been suffering from foreign aggression for a long, long time, in the past several thousand years. Foreign aggression. China has been a semi-colonial country. So we want to develop ourselves into a modern country. But China wants peace. We have a foreign policy of peace. China will never, no matter how powerful we are later on, or how economically viable we are, we will not constitute any threat to any other country, first of all. Secondly, China wants our own country to be reunited. Hong Kong is back. Macao is back. Taiwan, of course, is part of China. We want to see reunification of whole of China including Taiwan. Thirdly, we want to live peacefully with all other countries in the world. This is very simple.

NARRATOR: He Yafei is Minister Counselor at the Embassy of the People’s Republic of China in Washington. On the question of the reunification of Taiwan with Mainland China, some critics have warned that China intends to use armed force. Minister He refutes those critics, but also issues a warning. He: We are very clear in our position. And that is, we want to have peaceful reunification. We want to have cross-strait dialogue, peaceful reunification. But we also said, very clearly, that Taiwan independence means war. That’s the bottom line. We don’t want to have any war, but we cannot have Taiwan be permanently separated from China.

Most American analysts agree with Minister He. China has internal problems that come first. Tibet has been swallowed but remains to be digested, a land forcibly integrated into the People’s Republic in 1949 after enjoying considerable autonomy. Muslim Uyghar separatists in the far western province of Xinjiang occasionally resort to violence to protest the heavy hand of Beijing. Millions of displaced workers from failing state industries are flooding to the booming coastal cities. Labor protests are increasing as the state factories fail to pay workers or close down. China’s turbulent history makes stability highly valued. And stability requires dealing with these internal problems.

With such a demanding domestic agenda, Beijing would prefer not to use military force against Taiwan. Bates Gill is Director of the Center for Northeast Asian Policy Studies at the Brookings Institution in Washington.

GILL: The number one priority for China is to get its domestic house in order, and to resolve what are huge socioeconomic challenges which they face. We can put it under the general rubric of modernization and reform. Secondly, and associated with that first priority is probably a need for the current political leadership to maintain its legitimacy, and ability to keep the country together. While keeping themselves in power over time, thirdly then, I think they would begin looking abroad, at different areas of national interest, and probably at the top of that list is the recovery of Taiwan.

NARRATOR: The costs to Beijing of using force to recover Taiwan would be high. David Shambaugh is Director of the China Policy Program at George Washington University.

SHAMBAUGH: China does not wish to resort to force, or coercion, to resolve this problem. They have actually very little objective interest in doing so. It would bring tremendous international isolation of China, would make the sanctions and ostracism that China experienced after the 1989 Tiananmen massacre, pale in comparison. Investment would likely dry up, and the regime would be in danger. Indeed, a war would have unpredictable consequences, so it is not all in the Beijing leadership’s interest to go down this course or path, to reunify Taiwan. And it certainly will not behoove their economic modernization goals, or the other goals of maintaining themselves in power.

NARRATOR: If push comes to shove to achieve reunification, Beijing would use force. Independence for Taiwan could not be tolerated. With communism weakened as the ideological glue binding China together, nationalism has taken its place. Nationalism enshrines national territorial unity -- the one-China principle. Nationalism gives a country energy, energy to take on big tasks. Nationalism also marshals people power to penalize any government that fails in meeting those big-task challenges.

Minxin Pei, Senior Associate at the Carnegie Endowment for International Peace also believes Beijing, under the pressure of nationalism, would have to act if Taiwan went its own way.

PEI: They will not only have to do something, they will do something very, very quickly. I would expect a formal state of hostility to exist within 48 hours. If, for example, if they, if Taiwan wants to hold a public referendum to determine the island’s status, I think China will initiate military action before the holding of the referendum.

NARRATOR: What is Taiwan? What is this object of Beijing’s desire?

Taiwan is an island roughly the size of Vermont and New Hampshire combined, 100 miles off the Mainland’s coast. Its 22 million people enjoy a per capita income of $15,000, more than five times that of the Mainland’s population. Taiwan had a small indigenous population back in the seventeenth century when Chinese from across the Strait began settling on the island, eventually expelling the Dutch who ruled the island from 1620 to 1662. Taiwan was considered a backwater of China. After the disastrous Sino-Japanese War of 1895, Japan seized Taiwan and occupied it until it was defeated in World War Two. The victorious Allies in 1945 all agreed that Taiwan should be returned to China, which was then under the Nationalist government. Four years later, the Nationalists fled to the island after Mao Zedong’s communists won the civil war. Still calling itself the Republic of China, the Nationalists began to rule the island. Gradually, Taiwan prospered and democratized. Cross Strait economic relations expanded. Taiwan has over $40 billion invested in 40,000 Mainland enterprises, and annual cross-Strait trade at the turn of the millennium exceeded $25 billion and is growing. The more Taiwan develops the more Beijing wants it back.

Crucial questions remain: If Taiwan ever seeks independence, what can China do militarily to prevent Taiwan’s separation? How can China enforce the one-China principle? The answers reflect a surprising consensus. Virtually all analysts agree that China must use military force, but all agree – including the Pentagon – that China has limited options. Can the Chinese conquer Taiwan? Again, David Shambaugh: Even though it would have horrific consequences externally, and I think militarily, they would not be successful in subduing Taiwan.

BERRY: Are you saying that they don’t now have the military capability to intimidate or to occupy Taiwan?

SHAMBAUGH: Exactly what I’m saying. They have the military capability to terrorize Taiwan, and they certainly have the capability of ballistic missiles to attack and destroy many key targets on Taiwan. But beyond ballistic missiles, my reading of their military conventional capabilities are that they’re totally inadequate to a range of potential scenarios. They do not have the submarine fleet or the surface combatant fleet needed to blockade the two principal ports of Taiwan or the major naval base at Tsoying. They certainly do not have the navy to quarantine the island; they do not have the air force necessary to achieve air dominance over the Taiwan Strait, which of course would be necessary for any kind of amphibious operation. And finally, they have nowhere near, and will not for at least fifteen, twenty years, the amphibious landing capability, the lift capability to move the necessary number of troops, which are estimated at 750,000 forces, across that hundred-mile body of water.

So, ballistic missiles, yes, beyond ballistic missiles, they don’t have a lot that they could bring to bear against Taiwan effectively. And they certainly if they somehow or another were to paratroop or occupy the island, they would have to face pretty fierce resistance in the process.

NARRATOR: For some Pentagon officials and some Members of Congress, Chinese purchases of modern arms from Russia and Israel points to a greater Chinese military capability. However, Bernard Cole, Professor of International History at the National War College, believes that China’s reliance on buying foreign weapons is actually a sign of weakness.

COLE: The fact that China is buying so much of their equipment overseas, primarily from Russia, but also from other European nations as well as Israel, is really testimony to the fact that the military-industrial complex within China is still rather weak and disorganized. The fact is that China is simply not capable of producing operational, modern military equipment today that’s state of the art.

NARRATOR: Still, regardless of the People’s Liberation Army’s shortcomings, China threatens to use force if Taiwan tries to separate. How real is that threat? Stephen Yates is a Senior Policy Analyst at the Heritage Foundation.

YATES: I think Beijing’s capability on its threat of force is very real. I think they also fully intend to bring Taiwan to the negotiating table, without having to use its military force. I think that they’re trying to rely upon the threat of force to be enough to deter the United States from intervening, and perhaps even pressuring Taiwan sooner than it would like, to go to the negotiation table.

BERRY: Do you have any sense of how they could use armed force to pressure Taiwan?

YATES: Well, in 1996, we saw one very clear example of how they could use military force to basically coerce Taiwan, and it was by allowing nuclear capable missiles to splash down in Taiwan’s vicinity – especially the vicinity of its major trading ports – had a severe economic impact on Taiwan, and it also sent shock waves through Washington and other national capitals, that, in turn, translated into pressure on Taipei to restore peaceful dialogue with Beijing. So that’s one way that they don’t actually have to hit Taiwan, but can use their military prowess to push Taiwan into talks.

NARRATOR: The demand for negotiations backed by the threat of armed force is called coercive diplomacy. But even here explicit threats to use of armed force to compel Taiwan to negotiate on reunification might not be necessary. The newly-elected Taiwan President, Chen Shui-bian, has already opened negotiations with Beijing. At the same time, however, he is seeking closer military ties with the United States, including the purchase of advanced weapons for Taiwan’s armed forces. President Chen insists on conducting negotiations with Beijing on an equal footing.

How has the United States responded?

U.S. policy since 1979 has been based on the one-China principle. Taiwan is part of China. However, the Taiwan Relations Act passed that same year states that the future of Taiwan should be determined by peaceful means. Any use of force would be of grave concern to the United States and would be resisted. The Act authorizes military sales to Taiwan to maintain its self-defense capability. In the last decade, the United States has sold Taiwan 150 modern F- 16 fighters, AWACs early warning aircraft, naval destroyers, and a variety of anti-aircraft, anti-tank, air-to-ground, and air-to-air missiles. During times of crisis, such as the 1995 and 1996 Chinese naval demonstrations off Taiwan’s coast, the United States dispatched carrier battle groups to the region to remind Beijing of America’s commitment to peaceful reunification.

America’s policy on the cross-Strait issue is called “strategic ambiguity.” It deters Beijing from launching an ill-advised military assault on Taiwan by providing arms to Taiwan and deters Taipei from provoking a military conflict if it declared independence by adhering to the one China principle. How the United States would respond if deterrence fails remains somewhat ambiguous.

GILL: Well so far, the policy of strategic ambiguity on the part of the United States has served the situation rather well. I think, in fact, the greatest beneficiaries of the policy have been China and Taiwan themselves, who have as a result of the relative peace and calm that’s existed there, for nearly fifty years, has allowed especially over the past twenty years, for those two societies to reform and modernize in ways that simply wouldn’t have been possible had the Straits been a place of greater tension, or even warfare, over the past several decades.

NARRATOR: So far the sparring between Beijing and Taiwan has been verbal, and the United States wants to keep it that way. Overall, U.S. policy seeks a strong, stable, unified China, integrated into the global system, and engaged in diplomacy to handle its international disputes.

Not surprisingly, many Chinese officials doubt that the United States has such a friendly policy towards China. They point to the American bombing of the Chinese Embassy in Belgrade during the 1999 Kosovo war as proof of underlying American hostility. The attack is still widely believed to be intentional. Beijing remains suspicious.

Washington realizes that China is modernizing, becoming a major player in international trade, and asserting itself as a preeminent power in Asia. Washington also realizes that China is a newcomer to global politics after years of invasion, containment, and isolation. Beijing wants what it sees as past injustices rectified. And Taiwan isn’t its only territorial claim. It claims the Spratly Islands in the South China Sea, where it has built an outpost on Mischief Reef. Other countries – Vietnam, Brunei, Indonesia, and the Philippines – also consider some of the Spratly islands part of their territory. The United States has urged a multi-lateral settlement of the dispute over the islands. So far, China has not used military force to back its claims, but it insists that the South China Sea is its domain.

According to Doug Bandow of the Cato Institute, this assertiveness doesn’t mean China is or inevitably will become an enemy of the United States.

BANDOW: So the fact that China wants a bigger role in East Asia shouldn’t be viewed as inherently threatening to the U.S. What the U.S. should do is try to help channel China’s development in a more peaceful direction. We ultimately want a democratic and capitalist China, that’s more likely to come if we trade with China and it’s more likely to come if we don’t treat them like an enemy. I’m concerned about some people who want to treat them as an enemy, then we’re more likely to make them into one. You know, we need to be watchful in a way, we need to, you know, watch where they go. Recognize we can’t be certain, but there’s no reason to expect today they will become an enemy. There are a lot of areas where we can cooperate. Economic integration into the international economy should help. So let’s treat China as a potential friend, but with some wariness on the side, some skepticism.

NARRATOR: The age of globalism gives major powers a great advantage in competing in the global economy. Major powers produce the products and the technology the world needs. Major powers control vast markets the world wants to access. Major powers hold sway on conflicts among smaller powers, authorize peacekeeping operations, issue and enforce sanctions, and create and promote arms control agreements, such as the Comprehensive Test Ban Treaty. Major powers have the perks. China wants to be a major power. Already commanding a veto on the UN Security Council, China is unlikely to jeopardize its growing status with reckless military adventures.

But the long-term status of Taiwan has yet to be determined, and that remains a potential source of armed conflict.