The report describes the balance as I have, stating:
The security situation in the Taiwan Strait is largely a function of dynamic interactions among Mainland China, Taiwan, and the United States. The PLA has developed and deployed military capability to coerce Taiwan or to attempt an invasion if necessary. PLA improvements pose new challenges to Taiwan’s security, which has historically been based upon the PLA’s inability to project power across the 100 NM Taiwan Strait, natural geographic advantages of island defense, Taiwan’s armed forces’ technological superiority, and the possibility of U.S. intervention.
That is, China is trying to create a force capable of invading Taiwan while deterring America from intervening, or at least delaying us while they conquer Taiwan. Taiwan tries to make their island tougher to take to deter China or buy time for America to intervene. And we try to build our forces to interfere with China's attack at the earliest possible moment. Our job is complicated by being far away from Taiwan while China is close by.
But as I've noted, this ability to defend Taiwan despite our distance basically rested on the pillar of past Chinese inability to mount an invasion (the days of the "million-man swim" put down of the PLA's invasion plan). That day is passing. And the report comments that despite cross strait detente, China still vows to absorb Taiwan--by force if necessary.
The report does say that Taiwan is building their war reserve stocks, which is important to actually fight an extended campaign to defend themselves. That is good.
And the report states we have maintained the ability to defend Taiwan against Chinese attacks. Also good.
An invasion by the PLA, the report states, would be a significant military and political risk given the state of China's military and the challenges of executing a large-scale invasion in the face of American intervention.
However, despite Taiwan's recent efforts to reverse declining defense spending, China continues to move the balance of force in the strait toward China. In particular, the report notes that Taiwan no longer dominates in the air as the report as recently as 2002 stated.
The question is, how long can we judge that Taiwan can hold on long enough--in the face of continued Chinese advances in their military capability--for America to intervene? And when that treadmill strategy is no longer feasible, how do we adapt to the new situation to help Taiwan defend itself?
Also, as I've argued, the report notes that Taiwan stands in the way of Chinese power projection capabilities, quoting a PLA Academy of Military Science textbook:
If Taiwan should be alienated from the Mainland, not only [would] our natural maritime defense system lose its depth, opening a sea gateway to outside forces, but also a large area of water territory and rich resources of ocean resources would fall into the hands of others.... [O]ur line of foreign trade and transportation which is vital to China’s opening up and economic development will be exposed to the surveillance and threats of separatists and enemy forces, and China will forever be locked to the west of the first chain of islands in the West Pacific.
Even if we did not have a moral obligation to help a fellow democracy resist being conquered by a decidedly unfree China, we'd have an interest in keeping China bottled up in the western periphery of the Pacific as long as we are unsure of whether China will be a partner or enemy.
Really, what will we do when the annual report states that we can no longer be judged capable of rushing to Taiwan's defense with any reasonable chance of winning?
