One thing should encourage the Taiwanese to bolster their defenses. Even when the Taiwanese cannot spend enough to repel an invasion, the Taiwanese may be able to build a military strong enough to make the price of victory for China too high for the Chinese to pay.
The question is what is too high a price to win? I've assumed that the Chinese could capture Taiwan if they are willing to pay the price. My latest Naval Institute Proceedings has an interesting bit (not online, I think):
Some months ago it was reported that the Chinese high command regularly provides the leadership with its predictions for an attack against Taiwan. Apparently in 2004 it emerged under questioning that about 21,000 deaths were expected in such an attack. Contrary to Western views that China has unlimited manpower and that human life is cheap, the leadership found this figure unacceptable. It may have feared that casualties on such a scale would have brought its own competence into question. From a Taiwanese point of view, what is interesting (if the report is true) is that Taiwanese forces really do have a deterrent effect on the Chinese Communist leadership.
The Taiwanese need to remember that they can survive an attack. If they can resist long enough, they not only buy time for America and Japan to intervene, but they increase the cost to China for winning, which may deter an attack in the first place.
As an aside, since a war over Taiwan would likely be over in a month one way or the other, in what way is 21,000 dead in one month not viewing human life as cheap? Even with four times America's population to consider, would we think 5,000 dead in one month was an acceptable price for any objective?
