This article aims at first examining the theories of asymmetrical warfare and asymmetrical conflicts, including the concepts, definitions, and impacts on military strategies. Second, it reviews how China's People's Liberation Army (PLA) has embraced such warfare, regarding its capabilities, constraints and options, since the first Persian Gulf War, followed by Taiwan's ways of reactions. The authors argue that the PLA has developed rather mature concepts of "asymmetrical warfare", "unlimited warfare", and "local wars under high-tech and high information conditions" and may combine the three to achieve multiple reinforcing effects for a victory on future battlefields. Taiwan should react to this by effectively upgrading and maintaining its military technology superiority over China. Taiwan's defense top priority should be on developing a joint navy-air force with effective deterrence and focus on an integrated study of asymmetrical conflicts and related countermeasures.