Here's a broader take.
The Taiwan take of the DOD report is that China has been nullifying Taiwan's advantages that kept the Chinese at bay and that Taiwan is only partly responding to those Chinese efforts that have the potential to tip the scales back somewhat. The report largely discounts the possibility that China could invade, although it does not rule it out:
Large-scale amphibious invasion is one of the most complicated and difficult military operations. Success depends upon air and sea superiority, rapid buildup and sustainment of supplies on shore, and uninterrupted support. An attempt to invade Taiwan would strain China’s armed forces and invite international intervention. These stresses, combined with China’s combat force attrition and the complexity of urban warfare and counterinsurgency (assuming a successful landing and breakout), make amphibious invasion of Taiwan a significant political and military risk. Taiwan’s investments to harden infrastructure and strengthen defensive capabilities could also decrease China’s ability to achieve its objectives. Moreover, China does not appear to be building the conventional amphibious lift required to support such a campaign.
This is mostly boilerplate language from past reports, if memory serves me.
The report also says that if China can't essentially land on a Taiwan in chaos to mop up, a big attack would seek to:
> Deter potential U.S. intervention;
> Failing that, delay intervention and seek victory in an asymmetric, limited, quick war; and,
> Fight to a standstill and pursue a political settlement after a protracted conflict.
These fit with my assumptions that China doesn't need to be able to defeat us--they need to delay our intervention (add in Japanese intervention, I think) until China can defeat Taiwan. That's different. There's history for that.
I also strongly disagree with the idea that China lacks the ability to conduct a large-scale invasion because they have not built the conventional amphibious lift needed to support an amphibious campaign. We build that kind of capabilities. We have been unique in the history of amphibious warfare in building such specialized capabilities for sizable forces. Those capabilities make amphibious invasion more effective even in the face of opposition. But it isn't the only way to invade. And we should not assume China would not invade without those capabilities.
Face it, America lacks the capabilities for a large-scale amphibious operation. I don't think we have the ability to lift an entire Marine Expeditionary Force if we gathered all of our amphibious warfare assets. So we're to believe that if China doesn't build that specialized capabilities to lift multiple divisions that China can't invade?
Hey, here's a thought: China isn't building a lot of specialized amphibious warfare ships because they don't think they need them--not because they don't intend to invade or accept an inability to invade. How about that?
I wrote a scenario for Chinese success 8 years ago. Yes, it requires a lot of things to go right. But today after years of Chinese efforts to nullify Taiwan's defensive advantages, China could afford for more to go wrong.
And the scenario is based on a historical example of just such an invasion.
Further, we make too much of the complexities of urban warfare and counter-insurgency. These are problems that we try to overcome with complex methods. I imagine that China would have no problem leveling Taipei in order to take the capital. And if I was in charge of the post-major combat operations phase after capturing Taiwan, I'd deport lots of the Taiwanese to colonize Tibet and western China's Moslem regions, and replace the Taiwanese with Han settlers.
I hope that the level of effort China would need to gather even the first wave would trigger defensive reactions from Taipei to Tokyo and Washington. But I don't assume that we'd correctly intepret those signs or react properly. The more capable Taiwan is, the more obvious those signs might be, so Taiwan has great incentive to build up their forces even if they'd lose a full-scale war. Increase the chance of failure to Peking by denying them the element of surprise and maybe China holds off.
I just don't assume China can't invade Taiwan. I assume they've decided that the time is not right because potential diplomatic and economic fallout is too high, that the casualties would be too high, and that time is on their side for the military balance equation. If any of those factors that have kept China from invading change or become moot (say, China going into economic crisis, making worries about an invasion of Taiwan triggering an economic crisis pointless), China will throw an invasion force across the Taiwan Strait. China might lose that campaign, but that's a separate question from whether China has the capabilities to attempt that conquest.
Or is Taiwan not a core interest of Peking these days?