US Department of Defense, Military and Security Developments Involving the People’s Republic of China, 2014

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Executive Summary
THE PEOPLE’S REPUBLIC OF CHINA (PRC) continues to pursue a long-term, comprehensive military modernization program designed to improve the capacity of its armed forces to fight and win short-duration, high-intensity regional contingencies. Preparing for potential conflict in the Taiwan Strait, which includes deterring or defeating third-party intervention, remains the focus and primary driver of China’s military investment. However, the Chinese People’s Liberation Army (PLA) also is placing emphasis on preparing for contingencies other than Taiwan, including potential contingencies in the South and East China Seas.  The October 2013 MANEUVER-5 exercise in the Philippine Sea, which included participation from all three PLA navy fleets- the North Sea fleet, the East Sea Fleet, and the South Sea Fleet– was the largest PLA Navy open-ocean exercise seen to date.  Additionally, China conducted the three-part MISSION ACTION series of joint military exercises over a six week period during September and October.  These exercises combined PLA ground, navy and air forces in large-scale maneuvers along China’s southern and southeastern coasts.  As China’s interests, capabilities, and international influence have grown, its military modernization program has also become increasingly focused on military investments for a range of missions beyond China’s coast, including sea lane security, counterpiracy, peacekeeping, and humanitarian assistance/disaster relief (HA/DR).

China’s leaders describe modernization of the PLA as essential to preserving and sustaining what they view as a “period of strategic opportunity” to advance China’s national development during the first two decades of the 21st century. China’s leaders see this period as providing an opportunity to focus on fostering a stable external environment to provide the PRC the strategic space to prioritize economic growth and development and to achieve “national rejuvenation” by 2049. At the same time, Chinese leaders express a desire to maintain peace and stability along their country’s periphery; expand their diplomatic influence to facilitate access to markets, capital, and resources; and avoid direct confrontation with the United States and other countries. This strategy has led to a growing Chinese presence in regions all over the world, and particularly on its periphery, creating new and expanding economic and diplomatic interests.  China’s expanding interests have led to friction between some of its regional neighbors, including allies and partners of the United States.

Although the dialogue between the United States and China is improving, outstanding questions remain about the rate of growth in China’s military expenditures due to the lack of transparency regarding China's intentions.  In 2013, China announced a 5.7 percent increase in its annual military budget to $119.5 billion, continuing more than two decades of sustained annual defense spending increases.  China sustained its investments in strategic forces modernization, as well as key anti-access/area-denial (A2/AD) capabilities such as advanced intermediate- and medium-range conventional ballistic missiles, long-range land-attack and anti-ship cruise missiles, counter-space weapons, and offensive cyber capabilities.  China’s military investments provide it with a growing ability to project power at increasingly longer ranges.  In 2013, this included at-sea testing of China's first aircraft carrier and continued development of fifth generation fighter aircraft.

During his visit to California in June 2013 for a summit with President Obama, China’s President Xi Jinping and President Obama affirmed that China and the United States should continue working together to build a “new model” of relations in order to expand practical areas of cooperation and constructively manage differences in the bilateral relationship. During a robust number of high-level U.S.-China political and military engagements in 2013, leaders from both countries agreed that “enhanced and substantive” military dialogue and communication would foster greater understanding and expand mutual trust. Within that framework, the U.S. Department of Defense seeks to continue building a military-to-military relationship with China that is sustained and substantive, while encouraging China to contribute constructively to efforts with the United States, our allies and partners, and the greater international community to maintain peace and stability. As the United States builds a stronger foundation for a military-to-military relationship with China, it also will continue to monitor China’s evolving military strategy, doctrine, and force development and encourage China to be more transparent about its military modernization program. In concert with its allies and partners, the United States will continue adapting its forces, posture, and operational concepts to maintain a stable and secure Asia-Pacific security environment.