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To: DJBEINO who wrote (5812)	8/12/1999 6:55:00 PM
From: stock talk	Read Replies (2) \| Respond to of 9582

bloomberg.com Top World News Thu, 12 Aug 1999, 6:49pm EDT China Mobilizes 500,000 Reservists to Ready for Taiwan Action, Paper Says By Laura Kreutzer China Mobilizes 500,000 Reserves, S. China Post Says (Update1) (Includes more Pentagon comment in graphs 6-10) Hong Kong, Aug. 12 (Bloomberg) -- China's army has mobilized 500,000 reservists in Fujian province to prepare for possible military action against Taiwan, the South China Morning Post reported, citing an unnamed Chinese defense source. U.S. officials in Washington played down the report. ''We have not seen any extraordinary developments or signs that (China) is mobilizing for military action in the Taiwan Straits,'' said a Defense Department spokesman, Navy Lieutenant Commander Terry Sutherland. ''We're looking into it,'' White House National Security Council spokesman David Leavy said of the report. Cross-straits tensions have grown in the last month since Taiwan President Lee Teng-hui described the relationship between Taiwan and China as ''state-to-state.'' Chinese leaders say the island is a province. President Bill Clinton says the U.S. has a ''one-China'' policy, and expect the Beijing and Taipei governments to resolve matters peacefully. The South China Morning Post said most of the Chinese forces -- who include reservists, militiamen, and demobilized soldiers - - were drawn from Fujian province, with others coming from the Nanjing Military Region. The mobilization shows that Beijing has not ruled out the possibility of a ''large scale engagement,'' the newspaper said. Efforts to Modernize Pentagon spokesman Ken Bacon sought to downplay China's long- range efforts to modernize its 5-million-man army, which includes 2.5 million People's Liberation Army troops and well over 1.5 million reserve militia. ''The fact of the matter is China has not put as high a premium on military modernization as it has on economic and agricultural modernization,'' Bacon said. ''China has a very large military force but it's not a highly modern military force,'' Bacon said. ''They are working on ways to improve the force. They have a long way to go in terms of technological improvements. This does not seem to be their primary national development goal by any stretch of the imagination.'' One military shortfall remains logistics, the Pentagon said in its annual declassified survey of China and Taiwan military capabilities. ''The PLA has made only incremental improvements in its ability to support large-scale, long-term, high-operational-tempo engagements,'' said the report entitled ''The Security Situation in the Taiwan Strait.'' Taiwan's benchmark stock index, which has dropped about 15 percent in the month since Lee's remarks, rose to a two-week high today amid expectations China won't take drastic action against Taiwan. Taiwan will hold presidential elections in March and Chinese leaders ''may just wait and deal with the new president,'' said Albert King, manager of China Securities Investment Trust Co.'s US$300 million Taiwan Fund.