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In a blunt warning to China, the report stated that Beijing would face enormous costs for using military force to try to reunite the island with the mainland.

A war would leave China fighting an insurgency in Taiwan and facing “U.S.

intervention,” as well an undermining of the Chinese economic modernization.

“A conflict would also severely damage the image that Beijing has sought to project in the post-Tiananmen years and would taint Beijing’s hosting of the 2008 Olympics, for which China’s leaders would almost certainly face boycotts and possibly a loss of the games,” the report said.

Domestic unrest in China also could be set off by a Taiwan conflict, “a contingency that Beijing appears to have factored into its planning,” the report stated.

An appendix to the report discloses for the first time the locations of Chinese military units, including ground forces, air bases and naval forces.

On China’s nuclear forces, the report states that China is adding to its relatively small nuclear arsenal and may be exploring “new options.”