Last May, the Taiwanese army shortened a military exercise aimed at countering a hypothetical invasion by China. The reason? An endangered turtle species needed protection on offshore islands. A few months earlier, an artillery range in Taiwan's Yulin County was closed. The cause? Complaints about the noise.

With tensions high between Taiwan and China, the readiness of Taiwan's military and of its people to support the military have become key factors in the balance of power across the Taiwan Strait. This issue is also important to the United States, which, if Taiwan's military were to collapse, could be forced to defend the island from Chinese attack.

The matter has come into sharp focus since early July, when Taiwanese President Lee Teng-hui announced that he wants China to start treating Taiwan as an equal in talks between the two, not as a renegade province. The Beijing government responded angrily to this abandonment of the longstanding diplomatic convention known as the "one China" policy and has refused to rule out the use of force if Taiwan makes further moves toward asserting formal independence from the mainland.

Such threats naturally raise questions about Taiwan's military footing. But as important as are the tanks and missiles in Taiwan's arsenal, it is the willingness of its people to bear up under continuous threats from Beijing--and to fight a war if need be--that could ultimately determine the fate of this self-ruled island of 23 million, military experts say.

Indeed, civilian morale here is critical because China's main coercive options just now--military threats; a possible blockade of Taiwan's ports; seizure of sparsely populated islets around the main island; or tactical missile attacks--would not bring victory unless Taiwan surrenders. A recent Pentagon report said that any full-scale amphibious invasion China could mount across the 100-mile-wide Taiwan Strait would face enormous obstacles. Less polite analysts call it the "million-man swim."

Nonetheless, analysts say, both military readiness and public morale here fall short of what could be needed to repel a determined campaign of intimidation--or outright attack--by Beijing, although Taiwan's new defense minister, Tang Fei, is getting high marks for recognizing the problems.

"What makes us vulnerable or strong is not F-16s or the lack of them, it's our vulnerability to psychological warfare from Beijing," said Andrew Yang, a leading security analyst in Taipei. "Right now, we are weak in civil defense. We are weak in a sense of forthcoming danger. Unlike Israel, we are totally oblivious to these things."

In 1996, for example, China staged massive military exercises across the strait from Taiwan and fired ballistic missiles near the island. The Taipei stock market plummeted 1,000 points, and $15 billion in investment capital fled the country.

Concerned about Taiwan's defensive capacity, the Pentagon began a program two years ago under which a steady stream of advisers have come here to assess military weaknesses, particularly in the light of technological advances. "The Taiwan army is facing a large number of software issues," a former Defense Department official said. "We decided it would be prudent to help them along."

Democracy has brought many things to this island--a directly elected president, a free press, a rambunctious legislature, environmental awareness. But it has also constricted Taiwan's military, diminishing both its stature and its budget--and in some cases, its ability to defend the island. Taiwan's wartime oil reserve, for example, has shrunk from a 120-day supply to 18 days worth because environmentalists forced the government to scrap an armada of oil tankers anchored offshore.

Under a generation of martial law, which ended in 1987, Taiwan's military routinely sucked up half the state budget; now it gets about 20 percent annually. Taiwan's legislature cut the defense budget again this year to an estimated $11 billion. China, on the other hand, has been increasing military spending for the past 10 years to around $30 billion a year, according to Western estimates.

In a rare interview, Tang, the defense minister, said the legislature has assured him that the cuts will stop. "These are problems faced by any democratic society," said Tang, a former air force officer. "We're doing more computer-simulated exercises these days. We're trying to reduce the disturbances to the public."

Western experts say Tang was one of the first to comprehend the crisis facing the armed forces, and he has been working to trim about 40,000 men from the military to create a leaner, more efficient force of about 400,000. He is also trying to cut hundreds of generals from the payroll and has instituted a program to seek out and employ high-tech specialists by offering attractive salaries and benefits.

Tang is also pushing to professionalize the military. But while polls routinely say that 80 percent of Taiwanese people would fight if the island were attacked, in the two years that the island has had an ROTC program, only 100 people have signed up.

"Are you joking?" said Lee Bing-nan, a physics major at Taiwan University, when asked if he would consider a career defending his country. "I'm going to the U.S. to study to avoid service and then make lots of money. Only dumb guys join the army."

Tang has taken the lead in pushing for the people of Taiwan to recognize their defense weaknesses, a fundamental break from a past in which some senior commanders, in the words of a former U.S. military officer, "didn't think there was any need to defend this place because they thought reunification with China was inevitable."

This year, Tang became the first defense minister to acknowledge that China's missile and submarine forces are far more advanced than Taiwan's. Tang also has steered the Defense Ministry through waters roiled by the current debate in Taiwan, the United States and China over the possibility that Taiwan might be included in a U.S.-sponsored regional missile-defense system. The prospect is viewed by some in Taiwan as more of a political stick to use against Beijing than a practical means of defending Taiwan. Others see it as a major drain on Taiwan's defense budget with no guarantee that it will work.

"This issue has become too hot," Tang said. "Many people don't understand the situation." Taiwan, he said, is working hard to complete a less theoretical missile-defense system, using Patriot anti-missile batteries and early-warning radar. Taiwan also hopes to buy four Aegis missile-tracking destroyers from the United States, but the sale has yet to be approved. In fact, the Taiwanese navy has only enough skilled seamen to man just one such vessel, noted Chien Chung, of Taiwan's war college.

Talk of possible missile attacks, Chinese seizure of offshore islands or an economic blockade worry many Taiwanese, because such acts might not be viewed in Washington as sufficient cause to become involved in Taiwan's defense. Under a vaguely worded U.S. law called the Taiwan Relations Act, the United States is mandated to support Taiwan in times of crisis, and for too long, many analysts say, this has lulled the Taiwanese into a dreamy sense of security--that no matter what the crisis, the Americans will handle it.

"We've got to realize that we have to defend ourselves," said Yang, the defense analyst. "Short of a full-blown amphibious attack, the Americans won't necessarily be coming."