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ANNUAL REPORT TO CONGRESS
Military Power of the People's Republic of China
2007

Chapter One
Key Developments

"Never before has China been so closely bound up with the rest of the world as it is today."
- China's National Defense in 2006

Several significant developments in China over the past year relate to the questions Congress posed in Section 1202 of the National Defense Authorization Act for Fiscal Year 2000 (P.L. 106-65).

Developments in China's Grand Strategy, Security Strategy, and Military Strategy

  • Beijing released China's National Defense in 2006 in December, its fifth Defense White Paper since 1998, to describe China's security perceptions, national defense policies, and the goals of its modernization programs. As declaratory policy, the paper reflects a modest improvement in transparency, but it does not adequately address the composition of China's military forces, or the purposes and desired endstates of China's military development.
  • Beijing released China’s Space Activities in 2006 in October – the previous edition was published in 2000. The paper reviews the history of China’s space program and presents a roadmap for the future. The paper lso discusses China’s cooperation with various partners in space activities. It remains silent on the military applications of China’s space programs and counterspace activities.
  • In January 2007, China successfully tested a direct-ascent, anti-satellite (ASAT) missile against a Chinese weather satellite, demonstrating China’s ability to attack satellites operating in low-Earth orbit. The test put at risk the assets of all space faring nations and posed dangers to human space flight due to the creation of an unprecedented amount of debris.
  • Evidence in 2006 suggests that China revised the 1993 Military Strategic Guidelines for the New Period, the People’s Liberation Army (PLA) guidance documents for military strategy and forces development. The specific contents of the guidelines are not known.
  • PRC President Hu Jintao and Russian President Vladimir Putin proclaimed 2006 as “The Year of Russia” during their March meeting in Beijing, the leaders’ fifth meeting in less than twelve months. Building on their joint exercise in 2005, the two leaders agreed to increase military exchanges and hold eight cooperative military activities in 2007.
  • Reflecting increasing concerns over energy and resource needs, 2006 saw the largest annual increase in new energy contracts signed by China, including new agreements with Saudi Arabia and several African countries. China’s effort to court African nations in 2006 culminated with a November summit in Beijing attended by 40 heads of state and delegates from 48 of the 53 African nations.
  • In March 2006, China formally launched its 11th Five Year Plan (2006-2010), which includes ambitious calls for a 20 percent reduction in energy consumption per unit of Gross Domestic Product (GDP) by 2010, a doubling of China’s 2000 GDP by 2010, and an overall GDP of $4 trillion by 2020. The plan stresses coordinated development, and greater investment and urbanization in the rural interior, to address income disparities and social unrest.
  • In 2006, according to the World Bank, China became the world’s fourth largest economy, surpassing Great Britain by 0.004 percent in national production as measured by the World Bank’s “Atlas” model.
  • Official reports claim the number of “mass incidents” declined 22 percent in 2006. Nevertheless, these incidents, directed mainly at local policies and officials, reflect continued popular dissatisfaction with official behavior related to property rights and forced relocations, labor rights, pensions, pollution, corruption, and police brutality.

Developments Related to China's Regional Strategy

  • China responded to North Korea’s ballistic missile launches over the Sea of Japan in July and nuclear test in October by voting in favor of UN Security Council Resolutions 1695 and 1718 and by continuing efforts to use diplomatic means, specifically the Six Party Talks, which China hosts, to address North Korea’s nuclear programs. The Talks, which involve the United States, Japan, South Korea, Russia, and North Korea, as well as China, produced agreement in February 2007 on initial steps to implement the September 2005 Joint Statement on denuclearizing the Korean Peninsula.
  • The visit of new Japanese Prime Minister Shinzo Abe to China in November helped to ease somewhat tensions between Tokyo and Beijing. However, issues such as territorial disputes in the East China Sea, over the Senkaku/Diaoyutai islands, and China’s efforts to block Japan’s quest for a seat on the UN Security Council remain sources of friction.
  • In October 2006, a People’s Liberation Army (PLA) Navy SONG-class diesel-electric submarine broached the surface in close proximity to the USS KITTY HAWK aircraft carrier in waters near Japan. This incident demonstrated the importance of long-standing U.S. efforts to improve the safety of U.S. and Chinese military air and maritime assets operating near each other. In 2006, these efforts produced a two phased bilateral search and rescue exercise with the PLA Navy (one phase off the U.S. coast, the second off the PRC coast).
  • In 2006, China conducted two counterterrorism exercises with Shanghai Cooperation Organization (SCO) partners, and hosted the fifth anniversary of the founding of the SCO in Shanghai in June.
  •  

  • China is increasing its role in the Asia-Pacific Economic Cooperation (APEC) group, the Association of Southeast Asian Nations (ASEAN), and the ASEAN Regional Forum (ARF). The United States has encouraged this increased participation, and cooperated with China to co-chair an ARF seminar on nonproliferation. During the October 2006 ASEAN Summit, PRC Premier Wen Jiabao proposed expanded security and defense cooperation between China and ASEAN.
  • In November 2006, PRC President Hu Jintao made the first visit to India by a PRC head of state in ten years, demonstrating the importance China places on improving ties with India while preserving its strategic relationship with Pakistan.

Developments in China's Military Forces

China is pursuing long-term, comprehensive transformation of its military forces to improve its capabilities for power projection, anti-access, and area denial. Consistent with a near-term focus on preparing for offensive Taiwan Strait contingencies, China deploys its most advanced systems to the military regions directly opposite Taiwan.

Ballistic and Cruise Missiles. China is developing and testing offensive missiles, forming additional missile units, upgrading qualitatively certain missile systems, and developing methods to counter ballistic missile defenses.

  • By October 2006, China had deployed roughly 900 mobile CSS-6 and CSS-7 short-range ballistic missiles to garrisons opposite Taiwan, expanding at a rate of more than 100 missiles per year. Newer versions of these missiles have improved range and accuracy.
  • China is modernizing its longer-range ballistic missile force by adding more survivable systems. The road-mobile, solid-propellant DF-31 intercontinental-range ballistic missile (ICBM) achieved initial threat availability in 2006 and will likely achieve operational status in the near future, if it has not already done so. A longer range variant, the DF-31A, is expected to reach initial operational capability (IOC) in 2007. China is also working on a new submarine-launched ballistic missile, the JL-2 (IOC 2007-2010), for deployment on a new JIN-class (Type 094) nuclear-powered ballistic missile submarine, also in development.
  • China continues to explore the use of ballistic and cruise missiles for anti-access missions, including counter-carrier and land attack, and is working on reconnaissance and communication systems to improve command, control, and targeting.

Naval Power. China's naval forces include 72 principal combatants, some 58 attack submarines, about 50 medium and heavy amphibious lift vessels, and approximately 41 coastal missile patrol craft.

  • China received the second of two Russianmade SOVREMENNYY II guided missile destroyers (DDG) in late 2006. These DDGs are fitted with anti-ship cruise missiles (ASCMs) and wide-area air defense systems that feature qualitative improvements over the earlier SOVREMENNYY-class DDGs China purchased from Russia.
  • China is building and testing second-generation nuclear submarines with the JIN-class (Type 094) nuclear-powered ballistic missile submarine and the SHANG-class (Type 093) nuclear-powered attack submarine, which began sea trials in 2005.
  • China took delivery of two KILO-class submarines from Russia, completing a contract for eight signed in 2002. China operates twelve KILOs, the newest of which are equipped with the supersonic SS-N-27B ASCM, and wireguided and wake-homing torpedoes.
  • The PLA Navy's newest ship, the LUZHOUclass (Type 051C) DDG is designed for anti-air warfare. It will be equipped with the Russian SA-N-20 SAM system controlled by the TOMBSTONE phased-array radar. The SA-N- 20 more than doubles the range of current PLA Navy air defense systems marking a significant improvement in China's ship-borne air defense capability.
  • The LUZHOU-class DDG complements ongoing developments of the LUYANG I (Type 052B) and LUYANG II (Type 052C) DDGs. The LUYANG I is fitted with the Russian SA-N-7B GRIZZLY SAM and the YJ-83 ASCM. The LUYANG II is fitted with an air defense system based on the indigenous HHQ-9 SAM.
  • In 2006, China began producing its first guidedmissile frigate (FFG), the JIANGKAI II (Type 054A). The JIANGKAI II will be fitted with the medium range HHQ-16, a vertically launched naval surface-to-air missile currently in development.
  • At the 2006 Zhuhai Air Show, PRC military and civilian officials asserted China's interest in building an aircraft carrier.

Air Power. China has more than 700 combat aircraft based within an un-refueled operational range of Taiwan and the airfield capacity to expand that number significantly. Many aircraft in the PLA force structure are upgrades of older models (e.g., re-engined B-6 bombers for extended ranges); however, newer aircraft make up a growing percentage of the inventory.

  • The PLA Air Force (PLAAF) is deploying the F-10 multi-role fighter to operational units. The F-10, a fourth generation aircraft, will be China's premier fighter in the coming decades.
  • China is now producing the multi-role Su- 27SMK/FLANKER (F-11A) fighter under a licensed co-production agreement with Russia following an initial production run of Su-27SKs (F-11). China is employing increasing numbers of the multi-role Su-30MKK/FLANKER fighterbomber and its naval variant, the Su-30MK2.
  • Chinese aircraft are armed with an increasingly sophisticated array of air-to-air and air-to-surface weapons, satellite and laser-guided precision munitions, and cruise missiles.
  • China's first indigenously produced attack helicopter, the Z-10, is undergoing flight testing. The Z-10 will fire the Red Arrow 8E anti-tank guided missile, offering combat performance equal to the Eurocopter Tiger, but below that of the AH-64 Apache.
  • Improvements to the FB-7 fighter program will enable this older aircraft to perform nighttime maritime strike operations and use improved weapons such as the Kh-31P (AS-17) antiradiation missile and KAB-500 laser-guided
  • munitions.

Air Defense. In the next few years, China will receive its first battalion of Russian-made S- 300PMU-2 surface-to-air missile systems. With an advertised intercept range of 200 km, the S- 300PMU-2 provides increased lethality against tactical ballistic missiles and more effective electronic countermeasures. China also is developing the indigenous HQ-9 air defense missile system, a phased array radar-based SAM with a 150 km range. As noted above, a naval variant (HHQ-9) will deploy on the LUYANG II DDG and a vertical launch naval SAM (HHQ-16) will deploy on the JIANGKAI II FFG.

Ground Forces. China has about 1.4 million ground forces personnel with approximately 400,000 deployed to the three military regions opposite Taiwan. China has been upgrading these units with tanks, armored personnel carriers, and additional artillery pieces. In April 2006, China made its first delivery of the new third generation main battle tank, the ZTZ-99, to units in the Beijing and Shenyang military regions.

Amphibious Forces. The PLA has deployed a new amphibious assault vehicle (AAV) and developed a range of modifications for existing vehicles including flotation tanks and mounted outboard engines. Its newer amphibious vehicles have greater stability and performance in open water. Increased amphibious training, including multiple training evolutions in a single year, is building proficiency among China's amphibious forces.

Developments in Chinese Military Doctrine

  • China continues to focus on capabilities to operate under "informatized" conditions with an emphasis on integrated joint operations, joint logistics, and long-range mobility.
  • In June 2006, the PLA released new guidance to increase realism in training and to expand the use of simulators and opposing forces in training evolutions.
  • In December 2006, the leaders of the command colleges for the PLA Second Artillery Corps, the PLA Navy, PLA Air Force, and PLA ground forces signed a cooperative education agreement paving the way for joint professional military education.
  • In December 2006, the National Defense Mobilization Committee issued the "Outline of National Defense Education for all Citizens," to standardize defense education across China. The goals of such education include "arousing patriotism . and raising the citizens' awareness of their national defense duty."

Assessment of Challenges to Taiwan's Deterrent Forces

There were no armed incidents in the vicinity of the Taiwan Strait in 2006 and the overall situation remained stable, as it was for most of 2005. Beijing reacted responsibly to Taiwan President Chen Shui-bian's decision to suspend the National Unification Council and National Unification Guidelines in early 2006. However, China's military modernization and the deployment of advanced capabilities opposite the island have not eased, with the balance of forces continuing to shift in the mainland's favor. Tension could also increase as Taiwan prepares for its next presidential election planned for March 2008.

  • Taiwan appears to be reversing the trend of declining defense expenditures. In 2005, Taiwan leaders announced plans to increase defense spending to three percent of GDP by 2008. In 2006, this figure was approximately 2.4 percent of GDP. The 2007 defense budget requests funds at a level of 2.8 percent of GDP, with a planned 2007 supplemental request expected to raise this figure to 2.85 percent.
  • Taiwan abandoned the strategy of using a Special Budget to procure major defense systems approved for sale by the United States in 2001. It will attempt instead to fund the programs in the regular defense budget and budget supplementals. Taiwan's Legislative Yuan has yet to pass these funding bills, however.
  • Consistent with the provisions of the Taiwan Relations Act, Public Law 96-8 (1979), the United States continues to make available defense articles, services, and training assistance to enable Taiwan to maintain a sufficient selfdefense capability. In September 2006, Taiwan accepted delivery of the last two of four KIDDclass DDGs.



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