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Section 5 - Prognosis for China


Section 5A: Prognosis for China [PRC Intentions]

In addition to consideration of PRC military capabilities and the internal political and economic situation in the country, it is necessary to assess PRC intentions before a forecast can be made. Dr. Gregor informs us that

As early as 1985, Chinese strategic and defense thinking significantly changed.

The conviction arose...that armed conflict between the major military powers,

involving early, large-scale engagements and a nuclear exchange, was very

unlikely. Rather, the political and military leaders of the PRC anticipated that

armed conflict for the foreseeable future would involve conventional weapons,

would be of short duration, and would probably be a response to immediate

territorial or maritime disputes. Chinese military theorists argued that...[the

properties of modern weapons systems, allow] military engagements to be, more

likely than not, brief and decisive. As a consequence...the armed forces of the

PRC would have to develop capabilities suited to rapid-response, joint-force,

small-scale conflicts...

Since its unsuccessful >punitive war= with Vietnam in 1979...Beijing has both

transformed its military doctrines and sought to enhance its force capabilities.

The Enlarged Meeting of the Party Central Military Commission of 1985, in

which Deng Xiaoping announced his new military doctrine of limited warfare

on China=s periphery, anticipated major changes in inventory, character and

missions of the Chinese armed forces...

China=s new strategic doctrine changed the responsibilities of PLA Navy (PLAN)

from the support of land operations to the conduct of war at sea. Those

responsible for naval planning could anticipate a different set of potential

missions, some involving relatively brief conflicts in local environments, for

which the major military powers would not have the warning required to

mount credible responses. Such missions were constituents of a general

strategy (Originally termed >People=s War under Modern Conditions=) designed

to offer China >comprehensive national security= in a post-Cold War world

conceived by Beijing as >a dangerous neo-Darwinian jungle.= (1 & 2)

Dr. Gregor goes on to explain that the new Ablue water@ strategy of the PLAN was devised by Adm. Liu Huaquing in the 1980s. This strategy conceives of Aactive defense@ of waters inside the Afirst island chain@ C these waters being regarded as Aterritorial waters@ C and Awould require effective military control over the chain of islands.@ He continues: AFor Beijing to control the East and South China seas...means a deliberate and prior effort to press territorial and maritime claims.@ Next he notes a 1992 Chinese law that defines ATaiwan, the Pescadores, the Diaoyu Islands (also claimed by Japan), the Pratas, the Paracels, the Macclesfield Bank, and the Sprately archipelago as components of the sovereign and

Prognosis for China, Page 43, PRC Intentions (Continued), Rev. 4

inalienable territory of PRC...In 1993 the PRC government published a book entitled >Can China Win the Next War?= In it analysts...discussed...strategies to seize and maintain control over the waters within the >first island chain.= @ (3) This, then, is the larger context of PRC official thinking.

Dr. Gregor notes the Adisturbing increase in incidents since 1991" involving Chinese vessels boarding or firing upon ships of other nations in what China regards as Aterritorial seas.@ In October, 1994, after an incident in the Yellow sea, the Chinese informed the U.S. attache in Beijing that China would Atake appropriate defensive reactions@ if the US violated Chinese Aairspace and territorial waters.@ (4) He also notes A...China=s present conception of comprehensive national security, which has transformed the strategic orientation of the PLAN from the support of land operations to the conduct of war at sea, should be a matter of concern. The present posture of the PLAN is one of forward defense and readiness for rapid combined-force operations and local conflicts.@ (5) Finally he says A...we can expect China=s behavior with respect to its immediate neighbors, particularly those with whom it has present or potential territorial disagreements, to be tense, sometimes threatening, and on occasion provocative. Where Beijing feels that China=s honor, territorial integrity, future resources, and >comprehensive national security= are in jeopardy, it will fight.@ (6)

What do the Chinese say their intentions are? The foundation official document is China=s National Defense. It states:

...some countries, by relying on their military advantages, pose military threats

to other countries, even resorting to armed intervention; the old unfair and

irrational international economic order still damages the interests of developing countries; local conflicts caused by ethnic, religious, territorial, natural resources

and other factors arise now and then, and questions left over by history among

countries remain unsolved;...(7)

...Taiwan is an inseparable part of Chinese territory. It is a lofty put

an end to the cleavage between the two sides of the Taiwan Straits and realize the reunification of the motherland. (8)

...The issue of Taiwan is entirely an internal affair of China. Directly or indirectly

incorporating the Taiwan Straits into the security and cooperation sphere of any

country or any military alliance is an infringement upon and interference in China=s

sovereignty. The Chinese government seeks to achieve the reunification of the

country by peaceful means, but will not commit itself not to resort to force...Every

sovereign state has the right to use all means it thinks necessary, including military

means, to safeguard its own sovereignty and territorial integrity...Defending the motherland, resisting aggression, safeguarding unity and opposing any split are

the starting point and underpinning of China=s defense policy... (9)

Prognosis for China, Page 44, PRC Intentions (Continued), Rev. 4


China=s defense policy mainly has the following aspects: Consolidating national

defense, resisting aggression, curbing armed subversion, and defending the nation=s

sovereignty, unity, territorial integrity and security. These are the basic objectives

of China=s defense policy, as well as the main tasks the Chinese Constitution has

entrusted to China=s armed forces. (10)

On September 7, 1999 the People=s Daily announced AChina will eventually reunify

with Taiwan no matter what the cost.@ (11) The Chinese News agency reported in September, 1999 that The 1997-1998 Situational Analysis Report of the China Strategy and Administration Research Society said to contain three basic conclusions about the international situation in

1998. First, the report argues that the United States and Japan are uniting to

contain China and that the >Japan-U.S. Cooperation Guidelines= ...have moved

Japan from a defensive to an >outward= orientation. Second, the report concludes

that the United States has used NATO expansion to confine Russia...Finally, the

report argues that U.S. policy in Central Asia is designed to...weaken Russian

influence...Finally, the United States wants to encourage ethnic separatists in

Xinjiang and other Chinese provinces. (12)

One analysis concludes AThe Chinese analysis of U.S. policy is logical and, on the whole, reasonable...Implicit in this document is another aspect of China=s geopolitical analysis.

They see China=s interests and Russia=s interests as being identical. Both need to limit the expansion of U.S. influence into their regional spheres of is clear that they have concluded that an alliance with Russia is their best policy option...This much can be said with certainty: China now regards the United States as an enemy.@ (13) [Emphasis added].

Events in August, 1999 appear to indicate that Russia and China have indeed formed a strategic alliance. (14, 15, 16 & 17) According to the South China Morning Post APresidents Yeltsin and Jiang >discussed further practical steps in the development of a strategic partnership between Russia and China in the international arena,= Russian Foreign Minister Igor Ivanov said...Mr. Ivanov said he believed >there is an active struggle for a future world order...and what the world will be in the 21st century=...The meeting also >gave a new impulse to...relations between our countries in all sectors...@ (14 again) The ABishkek Declaration@ is Aan agreement among Kazakhstan, Kyrgystan, Tajikistan, Russia and China@ to control their common borders and respect each other=s territorial integrity. (16 again) The agreement that Russia would supply China with the Su-30 was made at these meetings. (15 & 17 again, 18) There are even more alarming reports of agreements to supply China with Russian attack (19) or ballistic missile submarines (20). They fit a pattern that was already disturbing to some analysts six months ago. (21, 22 & 213). There is an October report that the first purchase order for Russian Su-30s has been approved: $US 2 billions for 30 aircraft. (24) There are also reports China is negotiating with India and Indonesia about forming an anti-US alliance. (25)

Prognosis for China, Page 45, PRC Intentions (Continued), Rev. 4


Events in September, 1999 indicate that Jiang consolidated his power over the PLA and

established the primacy of the central government over the regional centers. (26, 27, 28 & 29) The significance of this may be indicated by Patrick Tyler, The New York Times Bureau Chief in Beijing, in a February 1997 article. He said

Of all the issues facing China=s younger leaders after the death of Deng last

Wednesday, none is more critical than political control over China=s vast

military...Today the military has its own representative at the inner sanctum of

the ruling politburo and takes part in all important political and foreign-

policy decisions. Thus, Jiang=s success in becoming China=s pre-eminent

leader in the coming years hinges on his ability to dominate this all-

important institution. It is not yet clear that he can.

...there are concerns among Chinese and Western officials about whether

Jiang will be able to withstand rising pressure to finance ever-larger

military budgets even while the civilian economy is straining for budget

resources and whether he can walk China back from the aggressive posture

it took toward Taiwan in 1995-96...if Jiang proves unable to match Deng=s

success in charting a course of growth and prosperity for the Chinese

people, he risks internal deadlock and civil strife that could prompt a

military intervention into China=s internal politics and threaten his political

survival. (30)

If Mr. Tyler is correct, the end of the period of Agrowth and prosperity@ may have forced Jiang to adopt policies more acceptable to the military. Certainly he has not withstood Arising pressure to finance ever-larger military budgets@ nor has he been able to Awalk China back from the aggressive posture it took toward Taiwan in 1995-96.@ On the other hand, there is evidence that Jiang has indeed succeeded in bringing the military under his control. (31) In one of his early speeches as a national leader, Jiang said it would be on his watch that Taiwan would be reunited with China. It is possible Jiang is not so much making deals as dealing the cards. Bruce Gilley, writing in Current History magazine, sums up:

Certainly Jiang=s firm grip on political power suggests he has had a major role

in defining all the major policies announced since Deng=s death. But...historical

factors have often pointed the way; Jiang merely may have read the tea leaves

correctly and moved in the right direction. If Mao was the Great Helmsman of

China, Jiang often seems like the Great Autopilot.

Whatever the consequences for China=s hoped for emergence as a global power

and as the preeminent power in Asia, Jiang clearly has had little choice but to

ride the tiger of nationalist sentiments in China to preserve his position. In

[foreign policy] , he has appeared not to be leading the charge but rather to

be running scared in the right direction. (32)

Prognosis for China, Page 46, PRC Intentions (Continued), Rev. 4


Events in October indicate that an immense crackdown is going on in China. Some of this is political. AA dissident recently released after serving 10 years in prison for his role in the 1989 Tiananmen protests was detained by police after visiting the family of another jailed democracy activist in Beijing...@ (33) Another dissident, who A...helped other dissidents track down and identify those killed by the People=s Liberation Army in the crackdown...,@ is about to go on trial. (34) AThe government has frozen a fund created for victims of the Tiananmen Square democracy demonstrations in 1989...@ (35) Zhau Ziyang, the AFormer Communist Party Chief...who was disgraced following the 1989 student democracy movement...@ (36) A...was forced to leave his Beijing home for a suburb resort during the National Day holidays.@ (37) Also, ATibetans are being forced to participate in the 50th anniversary celebrations and tight security has been clamped on the region...@ (38) Much more effort is being directed against organized religions. The greatest effort is being expended against members of the Falun Gong (39, 40, 41 & 42). The reason for this is that on April 25 of this year:

Ten thousand people...surrounded the Zhongnanhai, the former royal palace

where the Communist leadership lives and works...The 10,000 did not shout or

pump their fists or jostle. They just stood there, wordlessly...they were

housewives, retirees, government bureaucratsC ordinary folk. All they

wanted was official recognition of their movement...Eventually...Zhu Rongji,

emerged to speak to [them]...He did not give the people what they wanted, but

he listened to them, and they dispersed as quietly as they had arrived... What

they had done is stage the largest demonstration in Beijing since the

Tiananmen Square massacre ten years before. And they had given the

Communist regime an awful fright...

The regime quickly labeled Falun Gong a >massive threat.= It charged that

the Falun Gongers had tried to >overthrow the government= ...The party has

about 60 million [members]...while Falun Gong boasts as many as 100

million...Beijing cannot swallow Falun Gong=s numerical superiority to the

Communists...Beijing has cracked down not only on the Falun Gong, but on

the Catholic Church and the Protestant >home churches= that lack official

recognition. Anything that may excite interest or allegiance outside itself,

the regime is working to obliterate. The government cracks down in order

to avoid cracking up. (43)

This crackdown on other church leaders is illustrated by the arrest of Li Dexian who leads a Ahouse church@ in Guangzhou on October 12. (44) But it is broader than that. AForeign pollsters were warned yesterday to comply with mainland regulation on conduction surveys or risk sever punishment.@ (45) These are not the actions of a regime which is liberalizing. Another kind of indication of it=s intentions may be indicated by a massive purchase of oil in October for December loading. This oil will arrive in China before the March elections on Taiwan. It may be that China contemplates actions that will cause it to be unable to import oil after those elections. (46)

Prognosis for China, Page 47, Rev. 4


5.B Prognosis for China [Short Term Forecast]

The Short Term is defined as from September, 1999 to March, 2000. The current crisis over Taiwan has not, will not and can not blow over. The U.S. position that it will blow over is exactly wrong. It ignores Chinese law, (3 again) Chinese policy both officially (9 again) and de facto, (11 again & 47) and the deeper Chinese need for a national security threat to justify the measures it is taking to deal with its crisis of governability. (48 & 49) Instead of ending, the crisis will continue, with some ebb and flow in terms of intensity. The PLA will continue its partial mobilization, its partial re-deployments, its partial reorganizations, its exercises (50) and its integration of newer systems. In addition to ordinary training exercises, military operations will be strictly limited and controlled. They might included information warfare attacks (51) harassment of shipping lanes (50 again) or air routes (52 & 53) to Taiwan, probably by declaring military exercises along their normal routes or by intercepting merchant ships in China=s Aterritorial seas.@ An invasion of one or more offshore islands is possible but unlikely: China=s military institutions are in turmoil and require time to bring under full control. (43 again & 54) During this period there may be some anti-Taiwanese reaction by other nations in Asia. (55) Chinese media will continue to make extraordinary amounts of noise, not because it is controlled, but because it is profitable. (56) The scheduling of naval exercises with the Russians for the first time in history during October indicates that offensive military operations to coincide with the 50th year of Communist rule celebrations are most unlikely. (57) To the extent the PRC takes Aaggressive action against Taiwan@ it will suffer negative economic and political reactions from many nations. (58)


5.C Prognosis for China [Medium Term Forecast]

The Medium Term is defined as from April, 2000 to January, 2001 (i.e., the beginning of the next U.S. Administration). The dividing line between Short Term and Medium Term is set by the elections on Taiwan. This is chosen because an article in the mainland-based China Business Times states:

...the Beijing leadership will wait until the outcome of the presidential elections

in March before deciding whether to take military action against the island. The newspaper said it was >likely that China will take speedy military action= if the

winner of the election >persists with the two-states theory= or voices support for

Taiwan joining Washington=s Theater Missile Defense system. It said the

positions taken by the five presidential candidates...might be posturing during

the campaign season. >Their true attitude toward the two-states theory can only

be known after the election,= the paper said. (59)

Prognosis for China, Page 48, Medium Term Forecast (Continued), Rev. 4


In the absence of unforseen political pressure from Washington of sufficient intensity to force Taiwan to denounce the >two states theory,= The current crisis over Taiwan will not end. According to Jane=s Foreign Report AThe mainland will adopt a gradual military response starting with a blockade...@ (60) Some advocate that Washington try to force Taiwan into a retraction. Freeman writes:

For the first time since the 1950s, there is a real danger that decisions in Taipei,

not just Beijing, could ignite a conflict in the Taiwan Strait. The United States,

as well as both Chinese parties, would be a loser in any such conflict, whether

American forces joined or not. U.S. policy can no longer hope to deter war

exclusively by keeping Beijing at bay. The Unites States must discourage

decisions and actions by Taipei that could leave Beijing with little choice but to

act militarily. But such a policy choice cannot be implemented if Congress and

the Administration remain at odds. (61)

Events since July seem to have justified his concern. It is not clear, however, that Taiwan can be pressured to retract the >two states theory.= According to one analysis:

Taiwan=s decision to state the obvious has to do with Taipei=s perception that

a window of opportunity has opened up in the deterioration in relations between

Washington and Beijing. It also has to with Taipei=s sense of the future of

Beijing=s policies...Just a few months ago...various important contacts were

underway between Taiwan and the mainland...there were serious thoughts being

given to various relationships that might be developed with Beijing. With the

Chinese economy seemingly resisting the Asian fever, and Taiwanese businessmen

heavily exposed in both Hong Kong and China proper, exploring institutional

alternatives seemed to be worthwhile. Fairly suddenly, both confidence in the

mainland=s economic performance and in the future of Hong Kong=s vaunted

autonomy deteriorated...the general tenor of developments in China seemed

ominous...Taiwan=s long-term sense of vulnerability to China increased.

...Two issues have crippled Clinton=s policy making. First, there remains...a

sense that Chinese money was deliberately given by Chinese interests to the

Clinton presidential campaign in 1996 as a means of extracting favorable

policies from Washington. Second, the Los Alamos espionage scandal has

left the administration appearing indifferent to national security issues, and

particularly lax when it comes to China...the perception creates the reality.

...the United States...simply cannot appear to be too conciliatory.

Prognosis for China, Page 49, Medium Term Forecast (Continued), Rev. 4

This is Taiwan=s window of opportunity. While China=s policy toward both

Taiwan and the United States is becoming more hostile, and while Washington=s

ability to placate Beijing is severely limited, Taiwan can afford to become more

aggressive without generating massive pressure from Washington....Clinton,

eager to prove he can be tough on Beijing, would actually welcome an

opportunity to side with Taipei...For the first time in over a generation, an

administration is present in Washington that is not only not inclined to

contain Taiwan, but is actually not in a position to do so. But this is a window

of opportunity that will only last, at best, until 2001. (62)

On September 16 AMr. Su Chi, chairman of the Mainland Affairs Council, told a group of officials and parliamentarians of the ruling Komintang (KMT)...[that] President Lee Teng-hui=s characterization <sic> of Taiwan-China ties as >special state-to-state= relations would stand and the KMT has enshrined the claim in a party document.@ (63) President Lee=s Foreign Affairs article (quoted on page 3 of this essay) amplifies this position so there can be no doubt he is claiming Taiwan is Asovereign and independent.@

In spite of Taiwan=s domestic politics rendering renunciation a non-option, AChina has spelt out its position in a text delivered by Mr Wang Yonghai, deputy head of China=s Taiwan Affairs Office, as a speech at the East Asian Institute...@ on September 22, 1999. ABut Mr Wang also made clear China=s position that it would not dismiss the use of force in the event of foreign interference and Taiwan deciding to go its separate way...=the military option cannot be ruled out in view of the presence of separatist elements in Taiwan,= he said.@ (64, 65 & 66) An even more explicit article was published by The Liberation Army Daily and distributed by The People=s Daily on September 11. It is titled AWhy We Have Never Promised to Abandon the Use of Force.@ (67)

A few days after President Lee=s article appeared in Foreign Affairs, China ostentatiously moved a missile regiment to the coast of Fujian (no less than eight police vans with sirens screaming escorted the 8 missile carriers and other vehicles). China was trying to send a signal. (68)

Instead of ending, the current crisis over Taiwan is likely to intensify over the medium term. China will engage in what it hopes can be a controlled series of escalations, nominally to Apressure@ Taiwan into returning to the fold. (69) Not only is China=s sense of law and history at stake, not only is China=s honor at stake after the many strong statements it has made since July, 1999, China has a powerful, driving need for a national security threat. (48 & 49 again) Since the crisis of governability can only increase as unemployment increases over the medium term due both to necessary layoffs and due to the economic downturn, and since nothing can mitigate the consequences of the massive environmental disaster in that same period, the requirement for additional internal security measures will increase during this period. China will combine direct pressure on Taiwan with a wide range of indirect pressures, exerted through third parties, such as other nations and non-governmental organizations. These pressures, combined with the declining luster of trade with Beijing as its recession deepens, should reduce investor confidence in investing in PRC ventures. (55 again) To the extent the PRC takes Aaggressive action against Taiwan@ it will suffer negative economic and political reactions from many nations. (70)

Prognosis for China, Page 50, Medium Term Forecast (Continued), Rev. 4


On the other hand, there is every reason to believe that China=s actions will be very popular inside China. The slanted coverage in Chinese media, the genuine Chinese sense of historical wrongs, and logical inconsistencies in modern U.S. China policy virtually guarantee that the PRC government, respected and supported for almost no other reason inside the country, will generate genuine popular support by not backing down on the Taiwan issue. This support may well extend to toleration of worsening economic conditions and more onerous centralized control. This same popular support would instantly evaporate if the PRC government were to back down. In these circumstances, it will almost certainly elect to continue the crisis.

The PLA may have come to the same conclusions as Secretary Cohen in his Report to Congress described above: AThe campaign would likely succeed...if Beijing were willing to accept the almost certain political, economic, diplomatic and military costs that such a course of action would produce.@ (71) One PLA division commander is on record saying China can win. (72) They do not know what they do not know. They do know things we do not know. It is not uncommon for things to appear differently from different points of view. In any case, the PLA may be ordered to act, even before it=s leaders feel entirely confident they can predict the outcome. If this occurs, an attempt to actually inflict a serious military defeat on Taiwan cannot be ruled out. Action should be expected during the season of good weather following the March, 2000 elections on Taiwan. According to Jane=s Foreign Report:

...the military supports...starting with a blockade. >Submarines would be sent, and

ports and waterways would be mined to cut Taiwan off from the rest of the world,

causing economic crisis and social chaos=...The new approach is considered most

desirable because it would be flexible, calibrated and controllable. Chinese political

leaders could stop the process, continue it or expand it, depending on the reaction

of the US and East Asian nations. (61 again)

A genuine attempt at cross-Strait landing operations is not impossible. However, given the PLA=s need to acquire and integrate more high tech weapons,* given the gradualist policy noted above, and given that the political requirement for a sustained foreign threat as well as continued mobilization of soldiers and defense workers (to artificially create employment), an invasion is unlikely during the 2000 campaign season. From a strictly military point of view, the PLA could be much more capable in 2001 and still more capable in 2002. However, political events may not allow the PLA the luxury of waiting. China will react angrily to each political rebuff it suffers at foreign hands, not least because of how well this will play to the domestic political audience. Such a cycle creates a logic of its own: at some point China must act. If limited actions do not pressure Taiwan into giving up, a most unlikely outcome, China may conclude it must invade or be seen to be bluffing. Recall Dr. Gregor=s analysis: Where Beijing feels that China=s honor, territorial integrity, future resources, and >comprehensive national security= are in jeopardy, it will fight.@ (10 again)

* If press reports from the meetings in August are correct, the PRC has agreed to buy more arms from Russia in one month than it has purchased from all foreign countries since 1990. China=s new SSN will complete in two years. Yet they have arranged to buy two Russian SSNs from two different yards permitting simultaneous delivery. What is the urgency?

Prognosis for China, Page 51, Medium Term Forecast (Continued), Rev. 4


International reaction will strongly condemn China if it blockades or invades Taiwan. (73) Whatever remains of China=s theoretical economic promise will largely have disappeared by the beginning of the Medium Term. Official support for >one China= theories notwithstanding, everyone knows that these positions are basically false. Chinese aggression against a democratic >state,= even if only a de facto state, will not be popular. Politicians in democratic nations will respond to their electorates. The strongest reactions will be in East and Southeast Asia. Nations in East Asia, and possibly nations in South Asia as well, will feel threatened by China=s irridentist behavior. They will probably find ways to render aid to Taiwan as long as Taiwan appears to have a chance. Singapore will probably technically be the first foreign nation to help: it has five training bases and some military assets on Taiwan itself. Its people are able to read Chinese and much of their military equipment is similar to that of the Taiwanese. Japanese reaction would probably be fairly slow. There are political and procedural problems preventing rapid commitment of its military units, regardless of its strategic interests or political intent. A potential complication is that North Korea might attack at about the same time as China. A...Foreign Minister Tang Jiaxuan@ arrived in Pyongyang on October 5 for a series of high-level meetings, the first in many years. (74) It is not impossible China suggested the kind of co-ordination which Egypt proposed to Syria in 1973 (at the expense of Israel). Even if China did not encourage it to do so, if North Korea felt conflict was unavoidable in the medium term, it might conclude its best chance to defeat South Korea would be when the U.S. and Japan were distracted by a war over Taiwan.

5.D Prognosis for China [Long Term Forecast]

The Long Term is defined as from January, 2001 to January, 2009. The dividing line between Medium Term and Long Term is set as the beginning of the next U.S. Administration. This is because the incoming Administration will be free to abandon Clinton era policy re. the PRC and/or Taiwan. The Aend@ of the Long Term is set purely for convenience: it may be the end of the next U.S. Administration, if it is successful. It is almost ten years from this writing.

The Ostensible crisis between China and Taiwan could, in principle, be resolved peacefully. If the crisis of governability in China were less immediate and less acute, China might be content with more symbolic protests about the sudden appearance of the Atwo states theory@ in Taiwan. None of the many desperate measures China has taken or will take are adequate to bring this crisis under control. This is the regime that, during the Tiananmen Square crisis, slaughtered its own people rather than listen to popular voices calling for the kind of reforms that might transform and regenerate Chinese governmental institutions. The reforms to economic institutions proposed by Premier Zhu earlier in 1999 were radical enough to generate political opposition at home. Adopted in November, they will increase the rate inefficient enterprises will lay off workers. The extent of reforms has been insufficient to prevent China from entering a period of deep recession. The failure to share the benefits of reform widely with most workers and peasants during the period of significant economic growth has eroded what respect the regime still had. The regime has made no attempt to share political power at the top and has no intention of doing so. (74) Even though the regime does plan to continue the process of economic reform, its unwillingness to consider the kinds of major reforms required forecloses strong future economic performance.

Prognosis for China, Page 52, Long Term Forecast (Continued), Rev. 4

Both officially sanctioned Chinese writers and some Western scholars think that China, because of its great antiquity as a nation, is almost certain to survive as a unified nation-state. (75) In fact, China is the last of the great empires. Had the regime developed effective national institutions, it might be possible to think of a unified China surviving at least for another generation. But, as noted above, Chinese institutions are neither effective nor respected, even among the Han Chinese. (39 again) As China moves deeper into depression and comes to terms with the massive destruction caused by environmental abuse, its crisis of governability will get worse. At some point the power of the regime to maintain order and control will be irretrievably broken. The process by which it occurs will be very fast. Although it is impossible to make predictions with precision, it is probable in the Long Term that China will break up into 5-7 nation-states. These will probably be a Yellow River State (Beijing China), a South China State (Canton China), a Northeast China State (Manchuria?), Taiwan, Xinjiang, Tibet and Hong Kong (a city State like Singapore). This process will probably take much less time to happen than almost anyone expects in the West. This is because of the effects of modern communications and because of traditional Chinese culture. When the regime loses the AMandate of Heaven,@ the fact tends to be broadly recognized almost instantly. It is astonishing that Jiang is trying to turn back the clock: even if this were possible (which it is not), he is reconstituting a Communist Party which will only fail again in ways similar to its failures over the last half century. Both the Communist regime and the Imperial one which preceded it have demonstrated their inability to cope with the modern world. There is no obvious new ruler to hand the AMandate of Heaven@ to and no functional system of governance over which such a ruler could preside. There is no more reason to expect China to remain unified in the Long Term than there is to expect a reconstituted Soviet Union. The Heritage Foundation report of September 28, 1999 ends as follows:

Nationalism remains a potent force in China, and China=s resolve regarding

reunification with Taiwan should not be underestimated...General Xiong

Guangkai, the deputy chief of staff for intelligence, informed Charles Freeman,

former assistant secretary of defense, that...=We are ready to sacrifice a

million people for Taiwan.= A

Tensions between China and Taiwan likely will ebb and flow in the coming

months. But since reunification remains a principle objective of China=s

foreign policy, there will no doubt be more Taiwan crises in the future. U.S.

policymakers would be wise to consider carefully China=s military options

against Taiwan well in advance.@ (76)

The prospect for the Long Term is that China will attack Taiwan if it did not do so in the Medium Term. The disintegration of China might occur before such an attack is begun. If China is defeated in such an attack, it may disintegrate soon thereafter. Only if it both refrains from such an attack and embraces serious political reform might China survive as a unified nation-state. Whatever U.S. and Taiwanese policies are adopted with respect to the PRC, they ought to be formulated in the context of the political, economic and social realities in China itself. What is necessary is that we avoid gross miscalculation that might lead to an uncontrolled and bloody war.

Prognosis for China, Page 53, Rev. 4

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