The U.S. Department of Defense’s Annual Report on the Military Power of the People’s Republic of China, released on July 12, pointed out Taiwan’s growing vulnerability to China’s pre-emptive, multipronged blitzkrieg. In acquiring advanced weapons from Russia and frequent large-scale joint-force military exercises, the People’s Liberation Army (PLA) has been steadily developing a credible capacity to coerce Taiwan into submission through a strategy of “rapid war, rapid resolution,” which will preempt any chance of third-party intervention. The U.S.-China Security Review Commission’s report to Congress, released on July 15, predicted that in three to five years the PLA will have the military capability to pursue a forceful absorption of Taiwan.
So why is the military balance of power shifting so rapidly in the PRC’s favor?
For one thing, China has been increasing its defense budget by a double-digit percentage each year for the last ten years. Its annual defense spending is now estimated to be some US$80 billion. During the same period, Taiwan’s has been steadily shrinking. The defense share of its total government budget was 35.2 percent for the fiscal year beginning in 1990. This was reduced to 18.0 percent for the July 1, 1999 to December 31, 2000 period. The defense budget for this 18-month period was US$12.6 billion.  For fiscal year 2003 the defense share is 14.7 percent of the total budget. Thus, while China has increased its defense budgetby more than threefold, Taiwan has cut its defense budget to less than half.
Why such a drastic reduction in defense spending in the face of the growing PLA menace? First, Taiwan’s has modernized its military forces, which involved a reduction in overall troop strength, with an emphasis on smaller rapid reaction units with greater mobility and firepower. Other reasons may include unrealistic expectation of help from U.S. forces, which is not guaranteed and may not arrive in time, and an overly complacent view of China’s intentions and capabilities. Government finances have also deteriorated. The Ministry of Finance has pointed out that this year’s budget deficit will be larger than last year. Total debt currently stands at US$106 billion. In addition, the DPP government is under pressure to fund social welfare programs such as national health insurance and the retired workers’ pension program.
Regardless of the reasons for the decline, it appears that the budget cut has gone too far in light of Taiwan’s growing susceptibility to a massive PLA surprise attack. A few years ago, then Defense Minister Tang Fei sought a significant increase in Taiwan’s defense budget at the Legislative Yuan. He was quoted as saying that Taiwan’s defense budget was 2.5 percent of the gross domestic product compared to Israel’s corresponding figure of 10 percent. Minister Tang’s proposal to raise the figure to 3.5 percent of GDP, however, was forgotten in the turmoil that followed the great earthquake that hit Central Taiwan soon thereafter. It is well known that Israel’s military forces are far superior to those of its neighbors and America’s commitment to Israel’s national survival is far stronger than U.S. support for Taiwan. Yet Israel feels compelled to spend a four-times greater share of its GDP on national defense. It is quite possible that the pattern of Taiwan’s defense spending betrays ignorance and negligence regarding the nation’s security needs.
During Bill Clinton’s presidency Taiwan had a hard time acquiring badly needed weapons systems from the United States. The Bush administration, in contrast, offered Taiwan a robust program of arms sales. But now, thanks to budgetary constraints, Taiwan is hesitant to purchase weapons.
Since the Democratic Progressive Party took power, Chen Shui-bian’s administration has been conniving with business interests to encourage the outflow of Taiwan’s capital, technology and high-tech manpower to China, causing factory shutdowns, high unemployment and bank insolvency on the island. Yet the policies of actively opening Taiwan to Chinese investments and visitors and promoting direct mail, trade and transportation links continue unabated. According to President Chen, this economic integration is intended to bring about some form of political integration. This policy, combined with Taiwan’s perceived indifference towards its own national defense, has caused Washington’s policy establishment to increasingly question Taipei’s resolve in defending Taiwan’s sovereignty and democracy. The resultant weakening of U.S. support for Taiwan is palpable in the halls of Congress and among the think tanks. Professor Nancy Tucker’s recent paper “If Taiwan chooses unification, should the United States care?” is but the tip of an iceberg. 
Beyond a hefty increase in defense spending, Taiwan urgently needs to implement many measures to bolster its national security. Right now the citizens are generally ignorant of the impending PRC military aggression. They do not know what to do in the event of a missile attack or enemy bombardment. In the absence of a sound civil defense system, the chances of heavy civilian casualties and widespread panic are high. The military’s ability to absorb the PLA’s initial assault and to launch an effective defense is hampered by the failure to build hardened shelters for key military assets. Its readiness suffers from years of perfunctory and infrequent exercises. Some analysts believe thousands of PRC intelligence operatives and special forces soldiers are already in place inside Taiwan. Unless incarcerated or sent back to China, these elements could wreak havoc with Taiwan’s power plants and water supply, oil reserves, transportation and other infrastructure in tandem with the PLA’s military actions.
If Taiwan wishes to preserve the status quo, that is, to maintain its status as a de facto independent nation in accordance with the will of the majority of the Taiwanese people, then an agonizing reappraisal of its calamitous defense posture is long overdue.
1. The Republic of China Yearbook 2000, p. 124
2. Washington Quarterly, Summer 2002
Li Thian-hok is a prominent member of the Taiwanese American community and a commentator based in Pennsylvania.