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Military

ANNUAL REPORT TO CONGRESS
Military Power of the People's Republic of China
2008

Chapter Two
Understanding China's Strategy


“冷静观察, 站稳脚跟, 沉着应付, 韬光养晦, 善于守拙, 绝不当头.”

"Observe calmly; secure our position; cope with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership."
- Deng Xiaoping

Overview

China’s leaders have not publicly articulated an explicit, overarching “grand strategy” that outlines national strategic objectives and the means to achieve them, nor are the linkages between the occasional strategic pronouncement and actual policy decisions in China apparent, especially during periods of crisis or instability. Although such vagueness may reflect a deliberate effort to conceal intentions and capabilities, as implied in Deng Xiaoping’s “24-character strategy” above, it may reflect genuine uncertainties, disagreements, and debates among China’s leaders over preferences for long-term goals and objectives. PLA military writers draw freely from a range of ancient and modern sources, including classical strategists from China’s imperial past as well as Chinese Communist Party icons. Given the wide range of such writings and the very real possibility that the PLA authors may be writing specifically for foreign consumption, the study of PLA grand strategy remains a fundamentally inexact science. Still, it is possible to make some generalizations about China’s strategy based on strategic tradition, historical pattern, official statements and papers, and emphasis on certain military capabilities and diplomatic initiatives.


The "24 Character Strategy"

In the early 1990s, former paramount leader Deng Xiaoping (d. 1997) gave guidance to China's foreign and security policy apparatus that has come to be known as the "24 character strategy." Although this strategy has evolved somewhat, core elements of Deng's statement continue to be referenced and quoted by senior PRC national security officials and academics, especially in the context of China's diplomatic and military affairs. Taken as a whole, the "24 character strategy" remains instructive in that it suggests a strategy to maximize future options through avoiding unnecessary provocations, shunning excessive international burdens, and building up China's power over a long-term.

President Hu Jintao's own ideological formulation - "Harmonious World," which emphasizes "diversity" and "equality" in international relations along with traditional PRC foreign policy dictums of "noninterference" and the "democratization of international relations" - was endorsed at the October 2007 17th Party Congress. Although "Harmonious World" reflects an evolution in the general tone and conduct of China's foreign and security affairs, Hu's ideology does not overturn or supercede Deng's "24 character strategy."

Strategy with Chinese Characteristics

PRC strategy is one of maintaining balance among competing priorities for national economic development and maintaining the type of security environment within which such development can occur. China’s leaders have described the initial decades of the 21st Century as a “20-year period of opportunity,” meaning that regional and international conditions will generally be peaceful and conducive to China’s rise to regional preeminence and global influence.

In discussing strategy, PLA leaders and strategists rarely use a Western “ends-ways-means” construct. Rather, they discuss strategy in terms of “comprehensive national power” (zonghe guoli - 综合国力). Comprehensive national power (CNP) is the concept by which China’s strategic planners use qualitative and quantitative variables to evaluate and measure China’s standing in relation to other nations. CNP incorporates both soft, internally oriented indicators of strength – e.g., economic prosperity, domestic cohesion, and cultural influence – and hard, externally oriented measures such as the size of a state’s nuclear arsenal, territory, military capability, diplomatic influence, and international prestige. The tendency to perceive a link between internal and external dimensions of strength and weakness, as evidenced by the composition of CNP, indicates that China’s decision-makers might see internal turmoil as an invitation to hostile external forces – or possibly as the work of such forces. By the same token, an external challenge might be perceived to be tied to domestic enemies.

Insights on China’s Strategy and Priorities

China’s leaders appear to have adopted a coherent set of enduring strategic priorities, which include the perpetuation of CCP rule, sustained economic growth and development, maintaining domestic political stability, defending China’s national sovereignty and territorial integrity, and securing China’s status as a great power. Less clear are the specific strategies and plans Beijing has developed to achieve these objectives, the decision-making structures that guide strategy development and execution, and the manner and direction in which these priorities may adjust in response to changes in the security environment.

Regime survival and the perpetuation of Communist Party rule shapes the strategic outlook for China’s leaders and drives many of their choices. As a substitute for the failure of communist ideology to unify the population and mobilize political support, the CCP has relied on economic performance and nationalism as the basis for regime legitimacy; however, each contains risks that may serve to undermine Party leaders’ efforts to sustain political control. For example, while China’s leaders have stoked nationalist sentiment to manipulate public opinion, deflect domestic criticism, or bolster diplomacy, such as the widespread anti- Japanese demonstrations in 2004 or the anti-U.S. demonstrations in Beijing and other major cities in China following the 1999 mistaken bombing of the PRC Embassy in Belgrade, they are aware that protests can be difficult to control once begun. Similarly, China’s rapid economic growth – vital to the success of China’s leaders – has led to increased economic inequality and dislocation, official corruption, and environmental degradation.

To maintain China’s level of economic growth, China’s leaders emphasize the need to gain access to markets and resources in other countries. In addition to these economic priorities, China’s leaders are enhancing bilateral and multilateral political relationships globally to increase China’s influence and ability to ensure its interests and preferences are protected (e.g., in the United Nations and to restrict Taiwan’s diplomatic space). These combined and increasingly complex interests influence China’s approach to, and diplomatic and security relations with, many countries, and, in particular, those in Africa and Latin America.

Economic development plays an especially central role in informing the decision-making of China’s leadership. Regime legitimacy, territorial integrity, international political power, great power status, and military modernization are all fundamentally influenced by China’s continued economic development.

Preserving China’s territorial integrity and internal stability shapes how Party leaders view potential instability along China’s periphery – e.g., North Korea, Central Asia, Pakistan, and Burma – which could escalate or spill over into China. Concern over territory and internal stability also influences how Beijing approaches China’s land and maritime territorial claims, since any challenge to PRC sovereignty could potentially undermine the authority of the Party. China has settled territorial disputes with many of its neighbors in recent years, most importantly Russia. However, disputes with Japan in the East China Sea, with India along their shared border, and with Southeast Asian nations in the South China Sea are not resolved, and occasionally flare up.

Resource Needs as a Factor in China’s Strategy.

As China’s economy grows, dependence on secure access to markets and natural resources, particularly metals and fossil fuels, is becoming a more significant factor shaping China’s strategic behavior. Although China is expected to continue to rely on coal as its primary fuel source, consumption of petroleum and other liquid fuels will likely grow significantly due, in large part, to growth in the transportation sector. For example, automobile ownership in China is expected to rise from 27 million cars in 2004 to nearly 400 million by 2030. China plans to increase natural gas utilization from three percent to eight percent of total consumption by 2010. Similarly, China plans to build some 30 1,000-megawatt nuclear power reactors by 2020, increasing nuclear power from two to six percent of total electricity output – and prompting China’s search for foreign uranium supplies.

China currently consumes approximately 7.58 million barrels of oil per day and, since 2003, has been the world’s third largest importer of oil and second largest consumer, after the United States. China currently imports over 53 percent of its oil (around 4.04 million barrels per day in the first three quarters of 2007), with the vast majority coming by ship and transiting through the Malacca or Lombok/ Makkasar Straits. By 2015, China’s oil consumption will rise to 10-12 million barrels per day. China is also working with Russia to develop the East Siberia- Pacific Ocean oil pipeline, with a 1.6 million barrels per day capacity, to ensure China’s continued access to Russian oil and reduce dependence on sea-borne shipping for oil imports.

In 2004, China began building its strategic petroleum reserve. The first phase, to be completed by 2008, will hold 100 million barrels or the equivalent of 25 days of China’s net oil imports. The second phase is planned to add 200 million barrels, covering approximately 42 days of net oil imports. After 2010, work on the third phase may increase net storage capacity to about 500 million barrels, but without significant improvements to China’s transportation and distribution networks, gross storage capacity may prove insufficient to cushion severe disruptions.


China's Territorial Disputes

Since 1998, China has settled eleven territorial disputes with six of its neighbors. However, disputes continue over exclusive economic zones (EEZ) and ownership of potentially rich oil and gas deposits, including some 7 trillion cubic feet of natural gas and up to 100 billion barrels of oil in the East China Sea, which has contributed to friction with Japan. Japan maintains that an equidistant line should separate the EEZs, while China claims an Extended Continental Shelf beyond the equidistant line to the Okinawa Trench - extending almost to Japan's shore. In the South China Sea, China claims exclusive sovereignty over the Spratly and Paracel island groups - claims disputed by Brunei, the Philippines, Malaysia, Taiwan, and Vietnam. In December 2007, China announced the establishment of "Sansha City" to assert "indisputable sovereignty" and jurisdiction over the islands of the South China Sea "and the adjacent waterways."

The South China Sea plays an important role in Northeast Asian security considerations. Over 80 percent of crude oil supplies to Japan, South Korea, and Taiwan flow through the South China Sea - making these countries especially dependant on South China Sea shipping routes. In 2007, Vietnam reported repeated incidents with the PLA Navy in the waters near the Spratly Islands. In April, Vietnam's coast guard reported that PLA Navy vessels had captured four Vietnamese fishing boats, detaining and fining 41 fishermen; and, in July, a PLA Navy ship fired on Vietnamese fishing vessels, reportedly sinking one ship, killing a fisherman, and injuring several others.

Although China has attempted to prevent these disputes from disrupting regional relations, statements by PRC officials underscore China's resolve to maintain its claims in these areas. For example, on the eve of a broadly successful October 2006 visit to India by President Hu Jintao, PRC Ambassador Sun Yuxi told Indian press, "the whole of what you call the state of Arunachal Pradesh is Chinese territory . . . we are claiming all of that - that's our position." In November 2007, despite a general improvement in bilateral relations over the course of the year, PRC troops destroyed an abandoned Indian bunker near the tri-border area in Bhutan, ignoring the protests of Indian officials.

China’s reliance on foreign energy imports has affected its strategy and policy in significant ways. As recently as 1996, China relied primarily upon three countries, Oman, Yemen, and Indonesia, for 70 percent of its oil imports. Since then, China has pursued long-term supply contracts with a diverse range of supplier nations including Chad, Egypt, Indonesia, Kazakhstan, Nigeria, Oman, Russia, Australia, Saudi Arabia, Sudan, and Venezuela. In 2006, China’s top three suppliers were: Saudi Arabia (16 percent), Angola (16 percent), and Iran (12 percent). Through the first nine months of 2007, six percent of China’s crude oil imports had come from Sudan. Currently, slightly over half of China’s imported oil comes from the Middle East and almost a quarter from Africa.

China has also pursued equity positions in a variety of overseas energy assets and investments, although these remain small compared to investments by the international oil majors. China’s national oil companies have invested in oil ventures (oil field development, and pipeline and refinery projects) in Kazakhstan, Turkmenistan, Nigeria, Sudan, and in over 20 other countries in North Africa, Central Asia, Southeast Asia, Latin America, and North America.

The extent to which Beijing’s concerns over the security of its access to energy supplies shapes China’s defense policy and force planning is not known. However, it is apparent that these concerns influence China’s thinking about the problems of defense planning. China’s 2006 defense white paper states explicitly in its description of the security environment that “security issues related to energy, resources, finance, information and international shipping routes are mounting.” It also defines the PLA’s primary tasks as “upholding national security and unity, and ensuring the interests of national development.”


The PLA appears to be debating how to translate these tasks into doctrinal evolution, resource allocations, force structure changes, and contingency planning. However, as China’s current ability to project and sustain power at a distance remains limited, the PLA, at least for the near and mid-terms, will face an ambition-capability gap. Currently it is neither capable of using military power to secure its foreign energy investments nor of defending critical sea lanes against disruption.

Looking to the future, China’s leaders may seek to close this gap by developing: extended-range power projection, including aircraft carrier development; expeditionary warfare; undersea warfare; antiair warfare; long-range precision strike; maritime C4ISR; expeditionary logistics and forward basing; training and exercises, especially in open water; and a more activist military presence abroad.

Factors Shaping Pathways to China’s Future

Since initiating its “reform and opening up” policy in 1978, China has made tremendous economic progress and has overcome many developmental challenges. In thirty years, these reforms have lifted hundreds of millions of its citizens out of poverty, improved domestic stability, and increased China’s influence in international affairs. China continues to face many problems, but the CCP’s accomplishments cannot be overlooked.

The United States welcomes the rise of a peaceful and prosperous China. However, there are forces – some beyond the control of China’s leaders – that could divert China from a peaceful pathway. Which pathway China pursues, or finds itself upon, will be determined in large part by the choices of China’s leaders, which are influenced by a set of drivers and inhibitors that will both enable and constrain their ability to achieve their objectives.

Economics. Continued economic development, central to China’s emergence as a regional and global power, remains a foundation of the CCP’s popular legitimacy and underwrites its military expansion and modernization. Consistent economic growth is the bedrock of China’s future development. Since 1978, China’s economic growth has improved the quality of life of many of China’s citizens, has garnered support for the CCP, and has contributed to regional and global economic growth. However, underlying weaknesses (e.g., undervalued currency, non-performing loans, inefficient state-owned enterprises, and economic disparity between urban and rural areas) threaten continued economic growth. Economic shocks, setbacks, or even modestly slower growth could lead to higher unemployment, inflation, and significant unrest, potentially giving rise to greater reliance on nationalism to maintain popular support for the CCP. Unexpected increases in resource demands, shrinking demand for labor and manufacturing, global resource shortages or price shocks, or restricted access to resources could also impact China’s strategic outlook and behavior, and may force China’s leadership to re-examine its resource allocation priorities, including those for the military. Since China’s leaders have limited experience handling an economic correction or recession in a complex market economy, it is not certain whether their responses would ease or exacerbate temporary dislocations.

Demographic Pressures. Population shifts and social dislocations are stressing an already weak social safety net. Demographic stresses will become greater in the future, creating a structural constraint on China’s ability to sustain high growth rates. Between 2000 and 2030, over 400 million people – a population greater than the entire United States – will transition from the countryside into urban residences. As a result of this shift, China is expected to account for half of global building construction during that period. China’s population is also aging rapidly; China’s population of 146 million senior citizens will increase to an estimated 290 million by 2025. Accommodating the needs of a large senior citizen population will present challenges to the CCP’s ability to maintain economic growth, growing defense budgets, and perhaps domestic stability.

Domestic Political Pressures. CCP leaders are confronted with popular demands for improved government responsiveness and accountability, posing challenges to their ability to maintain domestic stability and their monopoly on political power. Beijing’s response has been to enact administrative reforms and expand avenues for expert – and occasionally public – input as evidenced by the emergence of non-governmental organizations (NGOs) throughout China focused on addressing the concerns of the population, while preserving one-party rule. However, political dissent remains criminalized, the media and internet remain tightly controlled, independent trade and labor unions are suppressed, ethnic Tibetan and Uighur minorities are repressed, and religious groups not recognized by the regime continue to be harassed. The Party is wary of any unsanctioned organization in China, even if non-political, fearing these organizations could facilitate organized opposition.

The emergence of an educated middle class that demands greater participation in political decisionmaking and greater leeway for self-expression has the potential to challenge the CCP’s unwillingness to allow for independent political organization or dissent. Already, people in China are finding ways to obtain and disseminate information Party censors attempt to block. It is unclear if the Party will be able to manage these aspirations and challenges, which have the potential to undermine Beijing’s sense of domestic control and stability, with attendant effects on its grand strategy.

Corruption. Official corruption in China is pervasive, structural, and persistent, due to the high degree of state involvement in the economy and the weakness of the rule of law. In 2001, 65 percent of embezzlement cases involved multiple officials, indicating the activity of independent networks of elites colluding at the expense of the state. China’s National Audit Agency uncovered $170 billion of misappropriated and misspent public funds between 1996 and 2005, and academic research estimates that the direct costs of corruption in 2003 amounted to as much as $86 billion (three percent of GDP), an amount that was more than double China’s announced defense budget for that year. Corruption also directly affects the PLA; bribery for advancement and promotion, unauthorized contracts and projects, and weapons procurement are all identified by the PLA as corruption problems. Beijing’s response so far has focused on the use of criminal prosecution to deter bad behavior. Half of provincial transportation chiefs in China have been sentenced to jail terms (some have been executed) for corruption. Shanghai Communist Party Chief Chen Liangyu was dismissed in September 2006 for allegedly misusing Shanghai’s municipal social security fund. Although the PRC’s public actions indicate a greater awareness of the problem, enforcement of anti-corruption measures remains ineffective.

Environment. A 2007 World Bank report prepared in consultation with Chinese environmental authorities offered the following conclusions:

    • The combined health and non-health cost of outdoor air and water pollution on China’s economy comes to around $100 billion a year (or about 5.8 percent of China’s GDP).

    • Air pollution, especially in large cities, is leading higher incidences of lung diseases, including cancer, respiratory system problems, and therefore higher levels of work and school absenteeism.

    • Water pollution is also causing growing levels of cancer and disease particularly in children under the age of five. It is also exacerbating China’s water scarcity problems, bringing the overall cost of water scarcity to about one percent of GDP.

China’s leaders are concerned that these environmental problems could undermine the CCP by threatening China’s economic development, public health, social stability, and international image. In the spring of 2006, China’s top environmental official, Zhou Shengxian, announced that there had been 51,000 pollution-related protests in 2005 (almost 1,000 per week). Pollution and deforestation in China have worldwide implications. China may have overtaken the United States as the world’s largest emitter of atmospheric carbon dioxide. Japan and South Korea both suffer from acid rain produced by China’s coal-fired power plants and yellow dust storms that originate in the Gobi desert. The PRC’s public actions, such as arrests of public officials and new environmental controls, indicate a greater awareness, but China’s leaders’ ability to manage environmental degradation as a long-term political, if not strategic problem, remains uncertain.

Cross-Strait Dynamics. A potential military confrontation with Taiwan, and the prospect of U.S. military intervention, remain the PLA’s most immediate military concerns. China’s current strategy toward Taiwan appears to be one of containing and preventing what it perceives as moves by Taipei toward de jure independence, rather than seeking a near-term resolution. A perceived shift in military capabilities or political will – on either side – or a change of the internal political landscape on the mainland or Taiwan, could cause Beijing to calculate its interests, and its preferred course of action, differently.

Regional Concerns. With China close to, or an interested party in, many of the world’s “flashpoints” (e.g., Taiwan, North Korea, Burma, the Spratly Islands, the Senkaku/Diaoyutai Islands, Afghanistan, and Pakistan), China’s leaders seek to prevent regional instability that may spill across China’s borders and interfere with economic development or domestic stability. Changes in regional balances could lead to shifts in China’s military development and deployment patterns, likely with consequences for neighboring states. Examples of such changes include disruptions on the Korean Peninsula (e.g., a North Korean collapse), democratic revolutions in Central Asia which would represent both nearterm and long-term security challenges for Beijing, a downturn in relations with Japan leading to greater mistrust, or perceived threats to China’s ability to access foreign resources and transport them back to China. Conversely, an upturn in relations with Japan would probably lead to positive developments, such as greater trust and economic integration.



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Unconventional Threat podcast - Threats Foreign and Domestic: 'In Episode One of Unconventional Threat, we identify and examine a range of threats, both foreign and domestic, that are endangering the integrity of our democracy'