The extent and nature of Chinese defense spending can serve as the parameters for the future course of China’s military power and China’s intentions as it continues military modernization. Recent scholarship on China’s defense spending concludes that its military budgets have been understated in official sources, although there is enormous controversy concerning how much and why. Even more controversial have been Western interpretations of China’s defense budget. Some believe there is now firm evidence that Beijing fully intends to challenge Washington for regional leadership in the Asian littoral and may even reach further to conduct extensive operations. Others have concluded from recent budgets that China is pursuing military power commensurate with its economic strength and sufficient to allow military actions to achieve reunification with Taiwan. Studying PLA funding can offer insights into the trajectory and dimensions of the People’s Liberation Army Navy (PLAN)’s modernization.

Current Spending

The People’s Liberation Army (PLA)’s official 2010 defense budget is $78 billion, ahead of Russia and Japan, and second only to that of the United States at $685 billion. Since 1990, the budget has enjoyed double-digit growth, with the exception of 2003 (in which growth was 9.6 percent) and 2010 (7.5 percent). From 1998-2007, China’s annual increase in defense expenditures averaged 15.9 percent, outpacing growth in GDP at 12.5 percent, but not government expenditure, at 18.4 percent. This episode followed a period of slightly slower defense budget increases averaging 14.5 percent from 1988-97, which nearly matched increases in state financial expenditure at 15.1 percent, but amid GDP growth of 20.7 percent and significant inflation. That period in turn represented a major transition from the 1978-87 era, when prioritization of economic development held defense expenditure growth at 3.5 percent and government budgets at 10.4 percent while focusing on GDP growth of 14.1 percent. …

It’s not easy for a traditional land power to go to sea, but China is trying.

China has been undergoing an historic shift in emphasis from land to naval power. Is its maritime buildup a strategic necessity or an ill-conceived diversion?

The People’s Republic of China is in the process of an astonishing, multifaceted transformation. If the explosive growth of China’s industrial economy over the past several decades is the most obvious component of that transformation, no less remarkable is China’s turn to the sea. With its stunning advance in global shipbuilding markets, its vast and expanding merchant marine, the wide reach of its offshore energy and minerals exploration, its growing fishing fleet, and not least, its rapidly modernizing navy, China is fast becoming an outward-looking maritime state. At a time when the U.S. Navy continues to shrink in numbers if not relative capability, while the traditional naval powers of Europe are in sharp decline, this is a development that deserves careful consideration by students of contemporary global affairs.

With but one notable exception, China’s rulers throughout history have traditionally emphasized land power over sea power. Of course, ordinary Chinese living on the country’s extensive coastline have always taken to the sea for their livelihood, but the economy of China has always been fundamentally rooted in its soil. To the extent that the Chinese engaged in commercial activities over the centuries, they did so primarily with a view to their large and largely self-sufficient internal market, readily accessible through China’s great navigable river systems as well as its many seaward ports. Moreover, prior to 1840, the Chinese faced virtually no sustained security threats on their ocean flank. Historically, the security threat that preoccupied China’s leaders was exposure to raiding or invasion by the steppe nomads of Inner Asia. This threat was always latent and sometimes lethal: More than one Chinese dynasty succumbed to the horsemen of the north. The strategic culture formed by this history and political geography was therefore a profoundly continentalist one.

Throughout most of the past two centuries, this strategic culture retained its power. In the 19th century, Qing China proved incapable of meeting the maritime challenge posed by the Western powers, even as it conquered vast new territories on its inner Asian periphery. In the First Opium War (1839–42), a British fleet penetrating to the heart of China’s riverine network threatened to shut down China’s internal commerce, forcing the regime to sue for peace; it was at this time that Britain acquired Hong Kong. In the 1880s, defeat of a Chinese fleet at the hands of the French sealed the end of China’s traditional influence in Indochina. By the last decade of the century, despite their acquisition of significant naval capabilities, the Chinese proved no match for their rapidly modernizing island neighbor. Humiliating defeat in the Sino-Japanese War of 1894–95 led to a Japanese protectorate in Korea and the loss of Taiwan. …

This article draws on Andrew S. Erickson, Lyle J. Goldstein, and Carnes Lord, eds., China Goes to Sea: Maritime Transformation in Comparative Historical Perspective (Annapolis, MD: Naval Institute Press, July 2009).

“So, how to look at China, and what does it all mean? The China Maritime Studies Institute at the U.S. Naval War College attempts to help us answer that question. Long-time Naval Institute contributors Andrew Erickson and Lyle Goldstein led their team in putting together a package of articles that examines China on multiple levels. Our coverage begins with Professor Nan Li’s look at how the evolving political strategies of the Chinese Communist Party leadership have fueled the growth of China’s People’s Liberation Army Navy-the armed forces branch most ably suited to fulfill its government’s mandate for ‘new historical missions.’ Retired Commander Peter Dutton discusses China’s interest in the South China Sea and how the nation’s interpretation of international laws produces tension and possible conflict with the United States.”

“While unmanned aerial vehicles get lots of press for their role in Afghanistan, unmanned underwater vehicles have also come into their own recently. Professor Goldstein and Shannon Knight discuss how China sees such vehicles as a way to close the perceived gap with the United States in undersea warfare capabilities. Finally, Professor Erickson offers an illuminating, detailed overview of the increasingly rapid growth of China’s satellite-surveillance program, which is developing a capability for monitoring the country’s near seas with pinpoint accuracy.”

Here are links to the CMSI articles:

Nan Li, “Scanning the Horizon for ‘New Historical Missions’,” U.S. Naval Institute Proceedings, Vol. 136, No. 4 (April 2010), pp. 18-23.

Cdr. Peter A. Dutton, JAGC, U.S. Navy (Retired), “Through a Chinese Lens,” U.S. Naval Institute Proceedings, Vol. 136, No. 4 (April 2010), pp. 24-29.

Lyle Goldstein and Shannon Knight, “Coming without Shadows, Leaving without Footprints,” U.S. Naval Institute Proceedings, Vol. 136, No. 4 (April 2010), pp. 30-35.

Andrew S. Erickson, “Eyes in the Sky,” U.S. Naval Institute Proceedings, Vol. 136, No. 4 (April 2010), pp. 36-41.

Click here to access other China Focus articles.

With 15 new satellites launched in 2008 alone and an ambitious program to produce more space-based surveillance technology, China is increasing its ability to monitor its near seas with deadly precision.

China is developing increasingly capable naval platforms, aircraft, and missiles that could hold U.S. Navy vessels and their supporting assets at risk in the Western Pacific. To employ these systems well, China will need effective information, surveillance, and reconnaissance (ISR). One element of ISR, an emerging network of space-based sensors, could improve the targeting capabilities of China’s People’s Liberation Army Navy (PLAN) and Second Artillery. This network promises to give the Chinese military unprecedented ability to monitor surface ships on China’s maritime periphery. It might permit China to precisely target such ships with both cruise and ballistic missiles. Thus, this network could facilitate the devastating multi-axis saturation attacks envisioned widely by Chinese analysts. …

This article is required reading for the Naval War College National Security Decision Making Department’s Strategy and Theater Security course.

It is widely believed in China that overland pipelines would greatly enhance the security of its oil supply. Market and geopolitical analysis, however, shows that they would not. Chinese decision makers must face the fact that, barring discovery of an economically viable large-scale substitute for crude oil, their nation’s dependence on seaborne imports will only increase. The Chinese would be better advised to explore cooperative steps to safeguard free markets and the seaborne flow of energy imports.

This article assesses the relative dependence of China (as a consumer) on seaborne oil flows between now and 2025. China’s oil security concerns will help shape its military and policy priorities fundamentally, with significant implications for the U.S. Navy in coming years. For the present, it underscores a question of fundamental importance concerning China’s strategic orientation: To what extent will China seek to transform itself from a continental to a continental-maritime power?

Chinese oil demand, growing rapidly, has reached 8.5 million barrels per day (mbpd), even amid the global recession. China became a net oil importer in 1993 and likely became a net gasoline importer by the end of 2009. While still a very significant oil producer, China is now the world’s second-largest oil user. It now imports half of its crude oil, with imports reaching a record 4.6 million bpd in July 2009. Seaborne imports, which overland pipelines will not reduce, constitute more than 80 percent of this total. At present, therefore, 40 percent of China’s oil comes by sea.

Chinese security analysts and policy makers worry about their nation’s “excessive” reliance on seaborne oil shipments. Many believe that by investing in pipelines to deliver oil from neighboring oil producers like Russia and Kazakhstan and building additional lines to “bypass” the Malacca Strait, China can protect its oil imports from possible interdiction during a conflict. A robust internal debate is being waged within China at multiple levels and across a number of disciplines regarding how to ensure access to oil supplies. At stake is the extent to which China should cooperate with international economic institutions versus seeking unilateral military solutions; should develop as a maritime versus continental power; and should focus on defending against state, as opposed to nonstate, actors.

Despite this diversity of opinion, a wide variety of influential Chinese experts, including scholars, policy analysts, and members of the military, believe that the United States can sever China’s seaborne energy supplies at will and in a crisis might well choose to do so. It is widely claimed, for instance, that “whoever controls the Strait of Malacca effectively grips China’s strategic energy passage, and can threaten China’s energy security at any time.” Such views are widely cited to justify pipeline construction, which is proceeding rapidly. China already has fifty thousand kilometers of oil and gas pipelines and will nearly double the amount, to ninety thousand, during the Twelfth Five- Year Plan (2011–15).

Yet as this analysis will demonstrate, China’s overland oil supply plans may largely be a “pipe dream,” driven by a combination of a misunderstanding of global oil market mechanisms, incomplete assessment of security issues, and the lobbying by sectoral and local commercial and political interests of a massively overtaxed national energy policy-making apparatus. Some projects—such as the line from Russia that is now under construction and an existing line from Kazakhstan—are indeed economically viable overland projects that will bring at least limited diversity to China’s oil supplies. Others, however, like the proposed lines through Burma and Pakistan, make much less economic and security sense. In the end, pipelines are not likely to increase Chinese oil import security in quantitative terms, because the additional volumes they bring in will be overwhelmed by China’s demand growth; the country’s net reliance on seaborne oil imports will grow over time, pipelines notwithstanding.

The first portion of the analysis will examine operational and prospective pipelines oriented toward China. At present, the Kazakhstan–China pipeline is operating at partial capacity, a Russia–China line could become operational by late 2010 (and is likely to be in commercial operation by 2011), the Burma–China pipeline is now under construction, and a China–Pakistan pipeline remains entirely aspirational. The second portion of the study will examine Chinese views of how pipelines might enhance China’s oil security and assess the potential for, and utility and disadvantages of, a pipeline-centric oil-security strategy. The final, and concluding, section will suggest how China might enhance its energy security at lower financial and diplomatic cost.

If developed and deployed successfully, a Chinese antiship ballistic missile (ASBM) system of systems would be the world’s first capable of targeting a moving aircraft carrier strike group from long-range, land-based mobile launchers that could make defenses against it difficult and/or highly escalatory.

Some assume that because the engineering problem proved unsolvable for the Soviet Union in the 1970s, it must remain unsolvable for China in the 21st century. The Soviets’ failure to solve a similar problem using vacuum tube and early transistor technology illustrates the difficulty of successfully attacking a carrier with a ballistic missile, but is by no means predictive. China enjoys the latecomer’s advantage in employing technology, has mastered ballistic missile technology, and has better satellite capabilities now than the Soviet Union had then. …

China’s anti-ship ballistic missile programme is showing signs of maturing. The missile could potentially deter or in wartime disable US carrier strike groups in the western Pacific. The development of the missile may motivate countermeasures from the US and other regional militaries.

It seems a cliché to cite Sun Zi’s maxim “in war, the way is to avoid what is strong and to strike at what is weak.” Yet, this universally accepted approach does seem to correspond to Chinese military planning. Nowhere is this more true than in such ballistic missile developments as its anti-ship ballistic missile (ASBM) programme, one of several weapons designed to exploit relative Chinese military strengths against relative military weaknesses of the United States.

Through this approach, China is working to make it more difficult for the US to intervene militarily in China’s maritime periphery. An ASBM, if developed and deployed successfully, would be the world’s first weapons system capable of targeting a moving aircraft carrier strike group from long-range, land-based mobile launchers. This could make defences against it difficult and raise the prospect of potentially highly escalatory strikes against launchers or associated targets in China.

However, there are various obstacles that could limit China’s ability to deploy ASBMs effectively, particularly the issues of joint service operations and information usage. Further, the missile deployment could act as a significant escalation in military rivalry and may only prompt US forces to deploy countermeasures rather than prevent carrier strike group employment. …

Although China has traditionally avoided basing its troops abroad, the People’s Republic of China’s (PRC) growing global interests and its military’s evolving missions are leading some Chinese analysts to suggest that Beijing may need to reconsider its traditional aversion to establishing overseas military facilities. In particular, the People’s Liberation Army Navy’s (PLAN) experience with anti-piracy operations in the Gulf of Aden that began in December 2008 appears to have sparked a debate over the efficacy of continuing to adhere to China’s oft-stated and longstanding policy of refraining from establishing any overseas military bases or other dedicated facilities capable of supporting military operations in distant regions. As the PRC’s global interests rapidly expand, Chinese security analysts are debating the potential value of such new steps as “establishing land-based supply and support facilities” with increased frequency and intensity. This suggests China may be on the verge of moving beyond its traditional approach. Indeed, some Chinese scholars and military officers are now calling for the establishment of such overseas support facilities to handle the logistics required by a more active role abroad for the Chinese military.

A radical departure from previous Chinese policy seems premature. Instead, statements by some Chinese scholars suggest that China may adopt a relatively cautious approach, which allows the PLA to more effectively carry out its new missions without requiring the formal alteration of Beijing’s longstanding approach to foreign basing. The most likely outcome is one in which China would follow an approach analogous to the “places not bases” strategy put forward by the U.S. Pacific Command in the 1990s: establish facilities capable of supporting expanded PLA participation in non-traditional security missions such as anti-piracy and humanitarian assistance and disaster relief operations, rather than developing a network of traditional military bases, which would be extremely expensive, politically and diplomatically controversial and highly vulnerable in the event of a crisis or conflict.

This article won the Naval War College Foundation Capt. Hugh G. Nott Prize (second place) in 2009 and has been posted on U.S. Fleet Forces Command Website.

For China, the ability to prevent a U.S. carrier strike group from intervening in the event of a Taiwan Strait crisis is critical. Beijing’s immediate strategic concerns have been defined with a high level of clarity. The Chinese are interested in achieving an antiship ballistic missile (ASBM) capability because it offers them the prospect of limiting the ability of other nations, particularly the United States, to exert military influence on China’s maritime periphery, which contains several disputed zones of core strategic importance to Beijing. ASBMs are regarded as a means by which technologically limited developing countries can overcome by asymmetric means their qualitative inferiority in conventional combat platforms, because the gap between offense and defense is the greatest here.

China is seeking to reduce its dependence on seaborne oil shipments. This involves the construction of new pipelines, some of which are more economically viable than others. However, this will not be sufficient to supply China’s expected growth in demand, leaving the country dependent on sea shipments.

Beijing is pursuing a two-pronged strategy to secure its energy, using the navy to protect maritime supply and building new pipelines. China’s growing reliance on seaborne oil shipments has led to an increasing willingness to secure vulnerabilities to its sea lines of communication. As a result, the People’s Liberation Army Navy (PLAN) has developed a major naval base at Sanya on the southern island of Hainan, and sent a two-destroyer mission to the Gulf of Aden in January to protect its shipping from piracy.

Concerned about its ability to ensure maritime energy security in the near term, Beijing is also working simultaneously to secure its oil supplies through diversification of supply routes. By delivering oil from neighbouring producers such as Russia and Kazakhstan and building additional pipelines to bypass the Strait of Malacca, China believes it can protect its oil imports from possible interdiction during a conflict. At present, a Kazakhstan-China pipeline is operational; a Russia-China line could become operational within 18 months; a China-Myanmar pipeline project is slated to begin construction in 2009; and a China-Pakistan pipeline remains entirely aspirational.