Stormweaver
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Of course, seven carrier groups can be easily sunk by tactical nuclear missiles. It depends on whether China is willing to escalate to defend its territory.
The United States sat by meekly while Russia invaded and annexed 20% of Georgian territory. I see no reason why China should not follow the Russian example and call the U.S. bluff on the South China Sea.
Interesting, that you bring in Nuclear weapons into the equation so easily. You probably know that the US will turn any country into glass, if nuclear weapons are used against her.
Like all the "long term" Chinese policy strategists [an approach that I admire], the West has been cutting into the Russian sphere of influence for quite some time with admittance of former Warsaw pact countries into NATO and the European Union. This war didn't really have any far reaching consequences...
Also, nuclear deterrence isn't war fighting... once you cast the die with first use, you will definitely get a disproportionate nuclear response.
One USN carrier group can be sunk by ASBMs, torpedoes, or anti-ship missiles. I think you grossly overestimate the military power of a single carrier group. This is the year 2011, not 1981. One USN carrier group isn't going to scare China. That is the reason the U.S. went to the trouble of assembling seven carrier groups for Summer Pulse in 2004.
The main reason why the US goes for these massive shows of force is because they believe in overwhelming the enemy with superior quantity and quality. If they can bring to bear the full might of the US Navy, then they definitely will do so. Ever since the First Gulf war, the US has been using massive forces at its command in large scale operations.