[throwaway2037]

Here is my reasoning for China threatening to use a nuclear bomb against the US. Imagine a series of events like this:

  1. Chinese naval blockade of Taiwan
  2. US will send navy + air force from Japan bases.
  3. No shots fired between US and China (too risky due to both nuclear powers).
  4. Optional: China may immediately claim sovereignty over Taiwan without negotiations with Taiwanese gov't.
  5. China will declare that any attack on Chinese military (in the area) or military aid to Taiwan will be viewed as an "invasion" (whatever that term really means).  Thus, China will declare that the use of nuclear weapons is valid to protect against invasion by US military.
  6. This declaration will be interpreted by US as a nuclear threat.
  7. China will refute this US claim.
  8. Conclusion: US-China stalement with words only.  China takes Taiwan.

To refine my earlier post, simply threatening to (nuclear) bomb / torpedo a US navy carrier strike group is enough. No need to threaten US territory. I'm not sure ICMBs from mainland China can reach mainland US, but they can certainly hit Hawai'i and other US posessions. Also, they have nuclear warheads on subs. I doubt they will work on first try, but the threat is great enough to force US to standdown.

Lastly, I don't like or support any of this, but, it is the most likely scenario.