Would China invade Taiwan?

Since the reelection of President Chen Shui-bian in Taiwan last March, it has been difficult for Chinese planners to argue convincingly that the island can be peacefully reunified with the mainland anytime soon.

The situation has created new tensions. Chinese diplomats recently leaked information that retired generals urged military head Jiang Zemin to take swift action against Taiwan - to settle the cross-straits issue well ahead of the 2008 Olympics to be held in Beijing.

It is a conundrum for China's leaders. Some circles here argue that to not force changes on Taiwan will undermine party legitimacy. After Tiananmen Square the deal China made with its upper-middle-class elites was to forge a great nation, and that this dream could not be delivered without Taiwan.

Other circles argue the consequences of aggression are far too unpredictable: that an attack could irrevocably harm China's rise as an economic superpower, destroy the fragile unity of the party leadership should it go badly, and set the rest of Asia against Beijing.

Few analysts feel Beijing will attack the island of 23 million. However, dozens of arguments and schools of thought exist about why China might or might not take the fateful leap. After two weeks of discussions with academics and diplomats in Hong Kong, Taipei, and Beijing, several themes emerged.

China has slowly developed currency as a mainstream state - for the first time ever. Should Beijing use military action against Taiwan without a horrible provocation it may well lose that image.

If a fracas with Taiwan got ugly, China's more than $50 billion a year in direct investment could dry up, jeopardizing its booming east coast manufacturing infrastructure. Its trade surplus with the US, between $60 and $100 billion a year, would likely suffer as well. New interest groups inside China - in banking, manufacturing - could begin a major grumbling campaign if money stops arriving, sources say.

"For political and economic reasons [a military solution to Taiwan] is a big loser for them," says Derek Mitchell, Asia specialist at the Center for Strategic and International Studies in Washington. "China wants to focus on internal development, peace, and stability. They don't want to signal that they solve problems with a gun."

Military action could also destabilize Asia. China would force small regional states to choose between the US and China - something few want to do.

More significantly, cross-straits violence could waken a deeply contentious undercurrent between Japan and China. Should China attack Taiwan, nationalist factions in Tokyo could have "every excuse they need," one Japanese scholar says, to develop the nuclear-weapons capability that many in Tokyo are already hinting about.

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