But although Beijing was doing its best Tuesday to spin the defense budget increase as a warning shot, Taiwan may not be the primary motor driving Beijing's military spending. The primary function of the People's Liberation Army lies not across the Taiwan Strait or anywhere else in the region; China's military's primary purpose remains maintaining order at home. And as the social consequences of its transition to capitalism manifest in mounting threats to domestic stability, the military becomes an increasingly indispensable instrument of power to the leadership in Beijing. But the military is not unaffected by the social turmoil arising from the economic changes, and ratcheting up its budget may look like a sound investment for the increasingly nervous leadership in the capital.
Still, saber-rattling over Taiwan will remain a mainstay of domestic politics, particularly when the leadership feels the need to underscore patriotic themes in times of uncertainty. And that saber-rattling can easily generate a momentum of its own, especially when it's matched by belligerent nationalist rhetoric in Taiwan. That leaves the U.S. in something of a bind: Washington is bound, by its Taiwan Relations Act, to ensure the island's ability to defend itself. In 1996 that commitment brought Washington and Beijing to the precipice of confrontation, after President Clinton moved a naval battle group into the Taiwan Strait to avert an invasion. But the prospect of putting U.S. forces into harm's way on China's doorstep has never been an appealing one, which fuels the argument in Washington for enhancing Taiwan's own ability to defend itself. But Beijing is insisting that it would be forced to up the ante if Washington upgrades Taiwan's defenses. And so the bidding war is under way in the latest round of high stakes poker.