China has the largest standing army in the world with 2,285,000 personnel and an annual budget US$114.3 billion. As the US shifts its focus to Asia, Alexander Neill, head of the Asia Security Programme at the Royal United Services Institute, writes about Chinese military advances that challenge regional balances:

China is developing a range of capabilities linked to the space and cyber domain in order to sidestep the overwhelming might of the US military in the Pacific region. The PLA calls this fighting “local wars under informationized conditions.”

China recognized almost two decades ago that in the mid-term the PLA could be no match for US conventional forces. So it began working on what was dubbed “unrestricted warfare”—combining multiple methods to defeat a superior opponent.

At the same time Party leaders launched adventurous civilian acquisition projects in the high-tech domain to increase Chinese competitiveness and to boost indigenous production capabilities.

The PLA has been running military projects mirroring these civilian acquisition ventures. Sometimes involving dual-use technologies, the military and civilian strands have often been indistinguishable.

Neill says one of the PLA’s most sensitive advances has been the secret deployment and testing of advanced anti-satellite (ASAT) and Anti Ballistic Missile (ABM) weapons systems.

Two years ago, China successfully intercepted one of its own ballistic missiles as it streaked through space. This test coincided with the Pentagon’s sale of Ballistic Missile Defence (BMD) Patriot systems to Taiwan.

Some experts believe a Chinese ASAT campaign against a careful selected group of US satellites could have catastrophic effect on the US military.

This capability, combined with the potential for China to develop its own Ballistic Missile Defence umbrella, suggests that the space domain will be a new theatre for US-China rivalry.

In addition to its “sea denial” and space warfare strategies, China is also expanding its conventional capabilities, said Neill

It is thought that China plans to build three aircraft carrier battle groups, each armed with 40 fighters, up to eight warships, three nuclear-powered attack submarines and a number of support vessels. The PLA Navy’s retrofitted Varyag carrier, currently under sea-trials, will serve as a training platform.

All said, China’s military capabilities are still in transition. The Chinese have modernized much over the past 10 years or so, but the PLA is far from being a lean, mean red machine. You can read Neill’s thoughts in full here.

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Ray Kwong is senior advisor to the USC US-China Institute, a charter member of the Asian International Business Advisory Group, a Forbes contributing writer and columnist for the Hong Kong Economic Journal. He is currently facilitating talks between China and U.S. interests on such matters as clean energy economics, nanotechnology and commercial aerospace. While it sounds way cooler than it really is, he is also a member of the Bloomberg BusinessWeek Market Advisory Board and the McKinsey Quarterly Executive Panel. You can follow him on Twitter @raykwong. Eyeball Ray's posts from Forbes ChinaTalk.
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