THE COSTS OF CONFLICT: THE IMPACT ON CHINA OF A FUTURE WAR Edited by Andrew Scobell October 2001 ***** The views expressed in this report are those of the authors and do not necessarily reflect the official policy or position of the Department of the Army, the Department of Defense, or the U.S. Government. This report is cleared for public release; distribution is unlimited. ***** Comments pertaining to this report are invited and should be forwarded to: Director, Strategic Studies Institute, U.S. Army War College, 122 Forbes Ave., Carlisle, PA 17013-5244. Copies of this report may be obtained from the Publications and Production Office by calling commercial (717) 245-4133, FAX (717) 245-3820, or via the Internet at [email protected]. ***** Most 1993, 1994, and all later Strategic Studies Institute (SSI) monographs are available on the SSI Homepage for electronic dissemination. SSI’s Homepage address is: http://carlisle-www.army. mil/usassi/welcome.htm. ***** The Strategic Studies Institute publishes a monthly e-mail newsletter to update the national security community on the research of our analysts, recent and forthcoming publications, and upcoming conferences sponsored by the Institute. Each newsletter also provides a strategic commentary by one of our research analysts. If you are interested in receiving this newsletter, please let us know by e-mail at [email protected] or by calling (717) 245-3133. ISBN 1-58487-072-9 ii CONTENTS Foreword Ambassador James R. Lilley ........... v 1. Introduction Andrew Scobell and Larry M. Wortzel ...... 1 2. Chinese Perceptions of the Costs of a Conflict David M. Finkelstein ............... 9 3. Conflicting Tendencies: Economic Integration Versus Political Impasse Ralph N. Clough ................. 29 4. Taiwan Dependence: The Strategic Dimension of Cross-Strait Trade and Investment John Tkacik ................... 35 5. The Costs of China’s Military Conflict: The Korean and Japanese Dimensions Taeho Kim .................... 63 6. The Impact of a Conflict on China’s Relations with Southeast Asia and Australia Carlyle A. Thayer ................ 79 7. Taiwan and the Chinese Military Ellis Joffe .................... 111 8. Homeland Defense with Taiwanese Characteristics: President Chen Shui-bian’s New Defense Concept Alexander Chieh-cheng Huang ......... 129 9. The Arms Control and Ballistic Missile Defense Costs of a Chinese Conflict Wendy Frieman ................ 163 10. “Eating Imperial Grain”?: The Ongoing Divestiture of the Chinese Military-Business Complex, 1998-2000 James Mulvenon ................ 187 About the Contributors ............... 217 iii FOREWORD There is a need for the United States to move the debate over the challenge China presents us beyond the dispositions of the attention grabbing advocates: the rationalizers who explain Chinese actions in benign terms with their own political or academic motives, or the denigrators, who are “The Chinese Are Coming” school—to wit: China is belligerent, a threat, in short, a monster. It is increasingly important for Americans to think carefully about the vast complexities of the U.S.-China relationship, and the calculations that go into forming courses of action. The Chinese have to consider some of the same realities we do when planning military actions and strategy. The key question is: will China’s so-called first priority of economic development and its resulting influence on domestic social stability curtail China’s continuing reliance on military force as a means of exerting its influence? In addition, will economic development enhance China’s comprehensive national power and thus contribute to some of China’s more unhealthy goals, such as dominating the South China Seas, seizing Taiwan by force, or grabbing the Senkaku Islands from Japan? Is the China-Taiwan economic dynamic strong enough to offset military adventurism? The rationalizers often say security and sovereignty will always trump economic determinism, others insist economic factors will change China—and thus decrease the chances of war, especially with China winning the 2008 Olympics. How this dilemma is managed by the United States, China, and Taiwan will affect the future of Asia, and perhaps the world. We have tried to present in this book factual and analytical essays which stress the need for squarely addressing these questions. So, this volume should make a valuable contribution by addressing the issue of what would be at stake for China if Beijing were to pursue military solutions. The chapters that follow were originally presented at a conference at the U.S. Army War College (USAWC) held in December 2000. It is v the tenth annual conference on the People’s Liberation Army (PLA) that I have organized under the auspices of the American Enterprise Institute and the Heritage Foundation. This is the third PLA conference volume to be published by the USAWC Strategic Studies Institute. I commend it to you. Ambassador James R. Lilley Senior Fellow American Enterprise Institute vi CHAPTER 1 INTRODUCTION Andrew Scobell Larry M. Wortzel A widely held belief is that China will not use force against Taiwan. Frequently, one of two major assumptions is made to justify this assertion: first, Chinese leaders realize that the economic cost of such an operation would be unacceptable; second, China’s leaders recognize that, for at least the next decade or so, any attempt to seize Taiwan would be doomed to failure. Both these assumptions are questionable and indeed downright dangerous. The basis for the former proposition is the assumption that China has too much to lose economically to risk a conflict over Taiwan. Certainly, China’s leaders have placed the highest priority on economic growth over the past 2 decades. China’s economy has gradually been growing out of the centrally planned model, and more and more production and pricing are being determined by the market. 1 And China has become increasingly intertwined with the global economic system through trade and investment. 2 Moreover, economic ties increasingly bind the People’s Republic of China (PRC) together with the larger Chinese diaspora, particularly with the territories of Hong Kong and Macao and with the island of Taiwan—what has become known as “Greater China” or the “China Circle.” 3 These burgeoning cross-strait economic links have continued to grow during the 1990s. This growing economic interdependence is examined in detail in the chapters by Ralph Clough and John Tkacik in this volume. The latter assumption, that China must wait a decade before it is able to act against Taiwan, has recently been made by several military analysts, especially those who have focused on amphibious invasion scenarios. After 1 studying the array of forces available on both sides of the Taiwan Strait, these researchers conclude such an operation would not succeed in the foreseeable future. 4 Unfortunately, by focusing on this extreme and, in our view, least likely scenario and remaining at the operational level, these analysts miss the strategic considerations that guide China’s actions vis-à-vis Taiwan. As many researchers recognize, China, like most countries, tends to play to its strengths. And in Beijing’s view, the chances of an amphibious assault succeeding are slight. Rather than concentrate on launching a seaborne invasion of Taiwan, it is far more likely to employ its extensive arsenal of ballistic missiles to bombard the island and/or its submarine fleet to enforce a blockade. 5 Moreover, Beijing does not just have conventional military options. In addition to weapons of mass destruction (WMD) alternatives, China also can employ other elements of national power: informational, political, and even economic. 6 The above discussion begs three questions. First, “Can China afford to attack Taiwan?” According to a Chinese economic analyst in Beijing, speaking to New York Times columnist Thomas Friedman in 1996, the clear answer is: “No—it would stop investment in China, stop growth, stop our last chance to catch up with the rest of the world.” 7 But inquiring minds will not be satisfied with a single round of question and answer. Indeed, the follow up question is: “Would China under certain circumstances use military force against Taiwan no matter what the economic consequences?” The answer, according to Friedman, is “absolutely.” 8 Many analysts, including the contributors to this volume, would concur with this judgment. The third key question, posed by David Finkelstein in his contribution to this volume, is: “What price is acceptable [to China]?” This is the hardest question to answer, although as Ellis Joffe concludes in his contribution it is likely that China’s leaders are prepared to pay a high price for a war that in their minds would have a good chance of success (i.e., capture Taiwan). Thus, it would be extremely unwise to 2 dismiss China’s insistence that unification with Taiwan is a key national security objective to be achieved by force, if necessary, as merely hot air. As Joffe observes, the depth of Chinese feeling toward the Taiwan issue should not be underestimated, particularly among military leaders. Taiwan is vital for the legitimacy of the regime in Beijing as well as an important strategic asset. There are important factors that mitigate against the use of force. There is considerable internal unrest in China due to economic conditions. This unrest would increase if foreign investment dropped; if unrest increases, the People’s Liberation Army (PLA) would be busy protecting the Communist Party; and China would have a difficult time reconstituting its combat capabilities. Nevertheless, in the face of even more daunting problems, such as in Korea in 1950, China has resorted to military force. Other possible locations for the use of force by China in East Asia are where Beijing has territorial disputes with other states. China claims the Senkaku or Diaoyutai Islands in the East China Sea that are currently controlled by Japan. Beijing also believes it has sovereignty over vast swaths of maritime territory surrounding numerous reefs and atolls in the South China Seas that are claimed by various other countries in the region.