Why would anyone in middle America worry about the Taiwan thing?

... Because the Taiwan Strait may look peaceful now, but this is one of the points on the whole world where a major war may break out, which may involve -- or most likely, in my opinion, will involve -- the United States, whether the United States wants it or not.

How important is it to this area?

Two values are at stake so far as America is concerned. The first is shared democratic value. The second is the strategic value of Taiwan.

Let's go to the first point. A democratic Taiwan serves as a beacon to comparative China. It is the in the best interests of the United States that China evolves eventually into a democratic country. Taiwan and China share in the same cultural heritage. If Taiwan can make ourselves transform into a democracy, then there's no reason China cannot. Therefore the communist leaders of China saying that Western-style democracy is not suitable for China -- it makes no sense.

... The point is nobody wants to go to war with China. Certainly the United States does not want to go to war with China, and the United States should see to it that China evolves into a democracy. To help preserve Taiwan's democracy is a good way to lose China in that direction.

How important as a shipping channel is the Taiwan Strait area in the South China Sea? How do you rate that today?

As early as 1992, 52 percent of the global shipping in tonnage pass through the two straits adjacent to Taiwan -- that is the Taiwan Strait and Bashi [Channel] separating Taiwan from the Philippines. ... Mind you, in the twentieth century, America went to war twice to defend the freedom of high seas.

That was in 1914 and 1940?

Yes. World War I and World War II.

So it would be just as damaging then for today if the Communist Party had control of the Taiwan Strait?

Yes, because as I say, 52 percent of the global shipping in tonnage have passed through the two straits adjacent to Taiwan, as early as 1992. This is not my figure; this is a figure that is provided by the U.S. National Defense University.

Can you tell me what is happening in the military in China? There are divisions being moved from some of their border areas down towards the area opposite Taiwan. Is that true? What has happened?

Well, as a result of the end of the Cold War, and especially as a result of the collapse of the Soviet Union, China started to move its troops from the borders down to an area that is Taiwan and the South China Sea. So this entire new situation -- the end of the Cold War -- has brought peace to most parts of the world, but not to Asia. That's the situation.

The problem we have today is that China poses a military threat to Taiwan -- there is no question about it. But of all the threats posed by Chinese army to Taiwan, the single greatest threat is almost insurmountable. Why? Because since the 1996 Taiwan missile crisis, China accelerated its deployment of N-9 missiles and N-11 missiles. As of today, there are 409 N-11 missiles targeting Taiwan right opposite Taiwan on the Fujian province -- a situation against which we, Taiwan, have no defense.

The situation today is analogous to this: I, China, point the gun at you, Taiwan, and I say to you, "I have the right to use the gun against you and tell the rest of the world we preserve this right. Will you, Taiwan, try to get a bulletproof jacket from America? I, China, kill America. Yankee, stay home! Yankee, go home! You imperialist -- don't interfere with our internal affairs."

And I turn to Taiwan and say, "You threaten peace and stability in Western Pacific, but you attempt to acquire a bulletproof jacket and then tell the rest of the world, 'Taiwan is a troublemaker. Taiwan is provocative because you, Taiwan, tried to get bulletproof jacket.'" That's the situation in today's Taiwan Strait.

So you think that you have got to get a missile defense shield?

We wish we [wouldn't] need to. We wish China would remove or dismantle their missiles deployed...targeting on us, and we hope the United States could persuade China to do so. That's in the best interests of all parties concerned. Most of all the people of China would benefit from this; we would benefit from this.

But if they don't remove them?

But do you think we have a right and we should acquire bulletproof jacket or we shouldn't? That's the question.

And what is the answer?

Well, we are not Jesus. If you stamp on my face, I don't turn the other cheek for you to stamp.

So you think that, while you are faced with a huge missile threat from China, eventually you would like to see a missile defense shield in this area?

Yes, when all other fails, this is the only way. To succumb to China as a threat is not a way to preserve peace and security in this part of the world. For the United States to abstain from the peace -- to side with China against Taiwan -- is not in the U.S.'s best interests, and is not in the interests of the people of China.

What would you do about those missiles? What could they do? How powerful are those missiles?

If they are nuclear-tipped, then one is enough. But assuming they are not nuclear-tipped, then they could be damaging to Taiwan's infrastructures -- power stations, bridges and everything else. It's going to be devastating if they use them, but this is not to say that they can conquer us. ...

Are they prepared to use force in this area, or are they playing a long-term game which may last 50 years?

Both are possible. Assuming China's behavior is predictable, then they are unlikely to use force against us. But China's behavior in the last half century has been unpredictable, to say the least.

Back in 1950, nobody expected China to interfere in the Korean War, but China did. In 1962, against all assessment, China started war on the Tibetan borders. In 1979, China invaded Vietnam in what they call [punishing] the Cuba of the East. At that time, nobody expected China to do this, so "unpredictable" is the best way to characterize the Chinese behavior.

China [has] a series of insurmountable domestic problems, and they are in the process of failing to address those domestic crisis in provinces. The Chinese Communist Party may become divided, or China itself may break up. In order to save its own skin, [the leadership] may [move] to a war or conquest as a way to divert domestic attentions. So those possibilities cannot be ruled out. ...

How serious are the demonstrations that one occasionally hears about which are going on in China? How widespread is the dissent?

Even by their own admissions, the corruption of Communist Party officers into this channel makes the corruption of the nationalists back in the late 1940s look like a Mary Poppins business.

The income gap in China today is the worst. ... The gap has widened in the last nine or ten years, and they will have to lay off something like 50 million to 100 million people in order to give those off the state-controlled industries. They have to do this in five or ten years

Right now, there are about more than 20 million people who [have] no social security net to take care of their basic needs. Right now, you have 80 million peasants wondering from one city to another cities in search of jobs. Of the ten worst polluted cities in the whole world according to the environmental agency, eight are inside China. China has accounted to 23 percent of the global population and China's supplies of fresh water is less than 6 percent.

China used to be proud of its self-sufficiency of oil. Beginning of 1994, they started to import oil. Now import will increase according to several estimates. By the year 2030, China will have to import more than 70 percent of their oil from the Middle East, from the Gulf -- much in the same way as Taiwan's, South Korea's and Japan's dependence on Middle Eastern oil -- it's no different. And the same tanker will pass through the same Strait of Malacca, South China Sea, and beyond that, too, will sail through Taiwan Strait to reach the south port of China.

This is, in some ways, a frightening scenario. On the other hand, they are growing rich in some ways faster than Taiwan. At the moment, you have got America and Taiwan pouring millions of pounds, billions of pounds of investment into them. But why do they seem to be doing that? [China is] spending that money on new systems on the military.

Yes, and this is really one of the greatest ironies of our time. It is Taiwan's market connections which enable China to transform itself from a net importer with the United States to a net exporter.

Last year, China raked in $87 billion -- billion, not million -- for foreign exchange just from U.S. trade. They used some of the foreign exchange to purchase high tech aircraft and whatever, but they also used some of the hard currency earned from America to acquire conventional arms from Russia, beginning with the acquisitions of 27 in 1994. Over the years, they have purchased so many destroyers equipped with the SSN-32 designed to take on American aircraft carriers and other SU-30s and other sophisticated weapons, middle-range air-to-air missile, etc.

In Taiwan, this is one of the ironies of our time. We assisted them to import what they need, and in turn, they used a certain percentage of that foreign exchange to acquire arms to target us and intimidate us.

So this is very dangerous. Should Taiwan and America be thinking, "We should hold back for a minute?"

... There is another way to do it, to help the other Chinese to have a decent life. But in the process, also make sure that China moves in the directions of democracy and freedoms and respect for human rights. That's the best way to do it. ...

So you approve of the new technology?

Yes, but we also have to make sure that China does not misuse the new wealth to threaten neighbors, to deny these are the standard to the people. There are some Americans that refer to this as cultural exchange engagement, engaging China. But when it comes to military containment -- containment not in the sense of containing Soviet Union at the height of the Cold War -- but containment in the sense that the U.S. should construct or erect alliances with Japan, Australia, Western Pacific. A democratic alliance, not to contain China, but rather serve as a hatch to make sure China will not move into the directions of today's Hitlers, Hitlers of the twenty-first century.

Recently America [sold some arms to Taiwan]. Are you satisfied with what happened?

Yes, in a sense we're pleased that the U.S. has agreed to sell us some things which we have requested for over two decades. We have requested the Aegis to defend ourselves against Chinese missile attacks. The U.S. has postponed a decision, but all those are peripheral. The real question is make sure China does not use their armed forces to threaten Taiwan, to try to bring about change in the Taiwan Strait in the unilateral fashion.

By ourselves, we can do a great deal. But we cannot deter China by ourselves alone. We need the help from those democracies who care for law and order, peace and security in the Western Pacific. The best way to do so is to unite the U.S.-led coalitions, including Japan, Australia and other Western democracies -- not to contain China, but to make sure China moves in the direction of democracy and freedom.

The number one beneficiary of such a cause is, of course, imperial China. We are not trying to ask China to do something against their best interests. We are trying to induce China to move in directions so that neighboring countries could coexist peacefully with China. ... To succumb to China is not going to be the peace of our times; it's going to be the beginning of potentially a war. To sell out Taiwan to Hitler in order to see a peace is no way to preserve peace. It's an encouragement to aggressors. ... American interests consist in preserving a democratic Taiwan as a beacon, showing the people of China the way out of totalitarianism.