XT, the danger lies in Chen Shui-bian. He is the first president from a party other than the Kuomintang, and his DPP party rose to prominance by openly advocating independance. Once he was a viable candidate, and now as president, he has had to moderate his public stance, but no one doubts what he really wants. His big recent move has been to advocate constitutional reforms opening the way for national referendums. (Gee, what issue might the people of Taiwan want to have a referendum on?)
The danger is also that everyone except the Taiwanese has painted themselves into corners.
The US, especially a GWB administration, is going to have a hard time explaining why it wouldn’t support 20 million people who make up one of the larger economies in the world, and who vote for freedom and democracy and a soverign nation. The foreign policy Bush is advocating demands it: Taiwan is a loyal ally, and a vital US trading partner. Assuming China starts the actual shooting, any US administration, and the nation, would lose massive amounts of credibility if they wimp out (especially considering that it wouldn’t involve ground troops).
On the other side, the government of the PRC keeps hold of what little popular support they have by playing the nationalism card … the saber rattling is in large part for domestic political consumption. For the task at hand – a air/sea conflict with Taiwan – China’s military is a joke (quality trumps quantity in modern air warfare). But they’ve ratcheted up the rhetoric so much that if Taiwan declares independance, they will have to initiate a military response or risk a coup or worse … which they would then lose, thereby almost ensuring a coup or worse.
Meanwhile the Taiwanese have freedom of action. When the popular support for independance, building every year, reaches critical mass, they can start to look for the opportunity to set the wheels in motion. And the more eyes on them the better … Olympics, anyone?
To directly address the OP:
–Is China serious about this or is this just them rattling sabers?
Both.
–If China IS serious, how do they think they can pull something like that off militarily?
The smart ones don’t, the rest are delusional.
–What will the US do?
Shoot down scores of 40-year old MiGs.
–What will Europe do?
Wring their hands, dither, call for talks, and hope that when it all shakes out they’ll have a larger market share in China.