I have to say BAH that you've made one of the most thoughtful responses so far. A lot of people here like to dance all around the issue of independence without thinking through how to actually achieve it. Congratulations for at least giving it an honest shot.
For sure, if Taiwan had nukes (and the ability to deliver them), China would lose their military advantage and independence would be far easier to achieve. However, I agree with Taffy that Taiwan won't be able to develop nukes. It takes years to do, it's difficult to hide, and there are too many leaks in Taiwan's military intelligence for this to happen secretly. So China would catch on, and possibly decide on a first strike or economic blockade. Equally critical, the USA has taken a very dim view of Taiwan's previous attempts to secretly develop nukes. Back in the 1980s, the supposedly anti-communist pro-ROC Reagan administration discovered that Taiwan was secretly developing the bomb and very publicly (and humiliatingly) forced the government to stop it. I was here at that time, and there was a brief but powerful surge of anti-Americanism.
I think you are correct that a big crisis in China presents the only real opportunity to declare independence. Also agree that the 1989 Tiananmen and 1996 missile crises were the two points in time when Taiwan might have made the move to independence, but could not muster the courage to go through with it. I'm not sure if/when those opportunities will present themselves again.
As to what China would actually do if Taiwan went ahead and made a declaration of independence, I don't think it would result in an immediate military invasion. China doesn't really want to take over a glowing pile of ashes. I think China's first response would be some sort economic embargo, perhaps followed by a military blockage of Taiwan's seaports if the newly-declared ROT government doesn't capitulate. Wealthy Taiwanese could be expected to panic, grabbing all the cash they can and heading for safe havens in Canada, the USA and Europe. Ditto for most of the vocal TI-supporting foreigners here on Forumosa, who would grab their money and head home, all the while telling the Taiwanese to "be brave" and "fight the good fight." Charles Hong, professional letter-writer for the Taipei Times, would (from his safe haven in Columbus, Ohio) be telling the Taiwanese to "never surrender."
Taiwan's economy would tank. Cutting off food imports would create a crisis. Plus without imports of coal, oil and natural gas, we'd soon be seeing an energy crisis as well. Hydro-electric could supply max 5% of Taiwan's needs, and nukes (if the new DPP government hasn't shut them down yet) about 20%, but with 75% currently running on fossil fuels, we'd have major blackouts. Transport fuel would be gone. Deprived of gasoline and diesel fuel, Taiwan's farmers would have a hard time getting domestically-raised food to market. The cities would starve. If that wasn't enough to force Taiwan to surrender, China could lob a missile into a city with very minor explosives - hit the World Trade Center or Taipei 101, and cause widespread panic even without any great loss of life. I can't imagine that the Taiwanese would hold up under this kind of pressure.
Would the USA come riding to the rescue? I sincerely doubt it. Many are assuming that China is getting ready to collapse any day now. I'm less convinced. Indeed, I think it's more likely that the USA will collapse first.
Maybe not what the Forumosa audience wants to hear, but history has seldom been anything but brutal.
Again, thanks for your response. Here's hoping for a crisis in China.