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Annual Report to Congress: Military and Security Developments Involving the People’s Republic of China 2012 - Cover

Annual Report to Congress:
Military and Security Developments Involving the People’s Republic of China 2012

Chapter 2: Force Modernization Goals And Trends


Since the early 1980s, China’s leaders have sustained an ambitious and broad-based military modernization program intended to transform the PLA into a modern force. Throughout this modernization drive, Taiwan contingency planning has dominated the agenda. Even though cross-Strait tensions have subsided since 2008, Taiwan remains a critical mission, and the PLA continues building capabilities aimed at Taiwan and at deterring, delaying, or denying possible third party intervention in a cross-Strait conflict. At the same time, the mandate of the new historic missions has provided the justification for new capabilities to accomplish diverse missions farther from China. Chinese military investments reflect these requirements and have led to the fielding of equipment and capabilities that support the PLA’s traditional set of core missions (such as defending China’s security, sovereignty and territorial integrity), and an expanding array of new missions at home and abroad.

Military Expenditure Trends

On March 4, 2012, Beijing announced an 11.2 percent increase in its annual military budget to roughly $106 billion. This increase continues more than two decades of sustained annual increases in China’s announced military budget. Analysis of 2000-2011 data indicates China’s officially disclosed military budget grew at an average of 11.8 percent per year in inflation-adjusted terms over the period.

Estimating actual PLA military expenditures is di'cult because of poor accounting transparency and China’s still incomplete transition from a command economy. Moreover, China’s published military budget does not include several major categories of expenditure, such as foreign procurement. Using 2011 prices and exchange rates, DoD estimates China’s total military-related spending for 2011 ranges between $120 billion and $180 billion.

Emerging Capabilities and Limitations This increased military spending has fueled improved training and the acquisition of new equipment and capabilities across China’s military forces.

Air and Air Defense Forces. Once oriented solely on territorial defense, the PLA Air Force is transforming into a force capable of off-shore offensive and defensive operations. Mission areas include strike, air/missile defense, strategic mobility, and early warning/reconnaissance. China is also investing in stealth technology, as evidenced by the flight testing of its first stealth aircraft prototype, beginning in January 2011. In response to the new historic missions’ requirements to protect China’s global interests, the PLA Air Force is attempting to increase its longrange transportation and logistics capabilities, to achieve greater strategic projection. However, it is likely the PLA Air Force’s primary focus for the coming decade will remain building the capabilities required for Taiwan contingencies.

The PLA Air Force is currently in the beginning stages of developing ballistic missile defenses and the air-space integration needed for early warning. China continued to modernize its ground-based air defense forces with the introduction of a new medium-range surfaceto- air missile (SAM) system in 2011. Current and future air defense systems development emphasizes multi-target engagement capability, net-centric operations, survivability, and robust electronic protection.

Naval Forces. The PLA Navy primarily focuses on improving anti-air and anti-surface warfare capabilities, as well as developing a credible at-sea nuclear deterrent. The additional attack submarines, multi-mission surface combatants, and fourth-generation naval aircraft entering the force are designed to achieve sea superiority within the first island chain and counter any potential third party intervention in a Taiwan conflict. China is also developing a near-continuous at-sea strategic deterrent with the JIN-class SSBN program. The JIN-class SSBN was built as a follow-on to China’s first generation XIA-class SSBN. The PLA Navy is also acquiring ships capable of supporting conventional military operations and HA/DR missions, including several amphibious transport docks and the ANWEI-class (Peace Ark) hospital ship. The PLA Navy will likely commission the KUZNETSOV-class (formerly the Varyag) aircraft carrier, currently undergoing sea trials, in 2012. The carrier will initially serve as a training platform for fixed-wing aircraft and as an additional asset for helicopter-borne HA/DR operations, until its full fixed-wing air regiment achieves operational capability in several years.

Missiles—Second Artillery Corps. The PLA Second Artillery Corps is modernizing its shortrange ballistic missile force by fielding advanced variants with improved ranges and payloads. It is also acquiring and fielding greater numbers of conventional medium-range ballistic missiles (MRBMs) to increase the range at which it can conduct precision strikes against land targets and naval ships, including aircraft carriers, operating far from China’s shores beyond the first island chain. Similarly, China continues to produce large numbers of advanced groundlaunched cruise missiles capable of standoff, precision strikes. By 2015, China will also field additional road-mobile DF-31A (CSS-10 Mod 2) intercontinental ballistic missiles (ICBMs) and enhanced, silo-based DF-5 (CSS-4) ICBMs. The PLA Second Artillery Corps faces several challenges in its force structure, including integrating both new and planned systems.

Ground Forces. Along with other branches of the PLA, China’s large ground force is undergoing significant modernization, and has steadily improved capabilities in most areas. In mid-2011, the PLA began to transform its ground forces into a modular combined arms brigade-focused force structure. The PLA fielded new rotary wing aviation assets in 2011, with the initial fielding of a new, domestically-produced attack helicopter, the Z-10, as well as major growth in the number of multi-purpose helicopters in army aviation units across the force. As 2011 ended, numerous indicators pointed to the start of an expansion of the majority of army special forces units. An improved amphibious assault vehicle has also entered service in key PLA units.

Throughout the PLA, growing numbers of modern heavy-armor, long-range strike artillery, and increased-range air defense weapons have entered service in selected units. Concurrent with this modernization, the ground force has emphasized combined arms operations and long-range mobility. China’s ground forces remain challenged by a lack of combat experience and self-identified limitations in the leadership abilities of its command staff, particularly at operational levels. These problems have long been exacerbated by a lack of realism in training. However, the PLA began executing plans in 2011 designed to help overcome these issues by 2020, including increased force-on-force training against dedicated opposing force units, adopting simulator use for training, developing automated command tools to aid command decisions, and increasing the education levels and science and technology training of PLA commanders and staff officers.

C4ISR Capabilities. Acquiring comprehensive command, control, communication, computers, intelligence, surveillance, and reconnaissance (C4ISR) systems is a key component of China’s military modernization and is essential for executing integrated joint operations. The PLA is focused on developing C4ISR systems that will allow the military to share information and intelligence data, enhance battle- field awareness, and integrate and command military forces across the strategic, campaign, and tactical levels. A fully integrated C4ISR system, as envisioned by PLA leaders, would enable the PLA to respond to complex battle- field conditions with a high level of agility and synchronization. To accomplish that vision, the PLA will need to overcome deficiencies in system integration and interservice coordination. Nevertheless, improvements in these systems will continue to enhance PLA battle- field awareness and lead to greater integration among the separate PLA services.

Space and Counterspace Capabilities. In the space domain, China is expanding its spacebased surveillance, reconnaissance, navigation, meteorological, and communications satellite constellations. China continues to build the Bei- Dou (Compass) navigation satellite constellation with the goal of establishing a regional network by the end of 2012 and a global network by 2020. China launched the Tiangong space station module in September 2011 and a second communications relay satellite (the Tianlian 1B), which will enable near real-time transfer of data to ground stations from manned space capsules or orbiting satellites. China continues to develop the Long March V rocket, which will more than double the size of the low Earth and geosynchronous orbit payloads that China will be capable of placing into orbit. In parallel, the PRC is developing a multidimensional program to limit or deny the use of space-based assets by adversaries during times of crisis or conflict. In addition to the direct-ascent anti-satellite weapon tested in 2007, these counterspace capabilities also include jamming, laser, microwave, and cyber weapons. Over the past two years, China has also conducted increasingly complex close proximity operations between satellites while offering little in the way of transparency or explanation.

China’s space and counterspace programs are facing some challenges in systems reliability. Communications satellites using China’s standard satellite launch platform, the DFH-4, have experienced failures leading to reduced lifespan or loss of the satellite. The recent surge in the number of China’s space launches also may be taking its toll. In August 2011, in the third satellite launch in seven days for China, a Long March 2C rocket (carrying an experimental Shijian 11 satellite), malfunctioned after liftoff and failed to deliver the satellite into orbit.

Cyber Espionage and Cyberwarfare Capabilities. In 2011, computer networks and systems around the world continued to be targets of intrusions and data theft, many of which originated within China. Although some of the targeted systems were U.S. government-owned, others were commercial networks owned by private companies whose stolen data represents valuable intellectual property. In the hands of overseas competitors, this information could diminish commercial and technological advantages earned through years of hard work and investment. Intrusions in 2011 occurred in key sectors, including companies that directly support U.S. defense programs.

Authoritative writings and China’s persistent cyber intrusions indicates the likelihood that Beijing is using cyber network operations (CNOs) as a tool to collect strategic intelligence.

In parallel with its military preparations, China has increased diplomatic engagement and advocacy in multilateral and international forums where cyber issues are discussed and debated. Beijing’s agenda is frequently in line with Russia’s efforts to promote cyber norms under a UN framework. In September 2011, China and Russia were the primary sponsors of an Information Security Code of Conduct that would have governments exercise sovereign authority over the flow of information in cyberspace. China has not yet accepted that existing mechanisms (such as the Law of Armed Conflict), apply in cyberspace. However, China’s thinking in this area may evolve as its own exposure increases through greater investment in global networks. Technology Transfer, Strategic Trade Policy, and Military Modernization. The PRC continues to modernize its military by incorporating Western (mostly U.S.) dual-use technologies, which have also assisted its overall indigenous industrial, military industrial, and high-technology sector development.

One of the PRC’s stated national security objectives is to leverage legally and illegally acquired dual-use and military-related technologies to its advantage. China has a long history of cooperation between its civilian and military sectors and openly espouses the need to exploit civilian technologies for use in its military modernization. In this context, the cumulative effect of U.S. dual-use technology transfers to China could also make a substantial material contribution to its military capabilities. For example, interactions with Western aviation manufacturing firms may also inadvertently provide benefit to China’s defense aviation industry.

Through its advisory role within the U.S. export control process, DoD will continue to identify and mitigate risk, and seek to prevent critical advanced technologies exports to China that could be diverted to unauthorized end-use or to third-country end-users of concern, or contribute to overall modernization of China’s military and defense industrial base.

Espionage. Chinese actors are the world’s most active and persistent perpetrators of economic espionage. Chinese attempts to collect U.S. technological and economic information will continue at a high level and will represent a growing and persistent threat to U.S. economic security. The nature of the cyber threat will evolve with continuing technological advances in the global information environment.

Sensitive U.S. economic information and technology are targeted by intelligence services, private sector companies, academic/research institutions, and citizens of dozens of countries. China is likely to remain an aggressive and capable collector of sensitive U.S. economic information and technologies, particularly in cyberspace.

Civil-Military Integration. China’s defense industry has benefited from China’s rapidly expanding civilian economy, particularly its science and technology sector. Access to foreign advanced dual-use technology assists China’s civilian economic integration into the global production and research and development (RffD) chain. For example, with increasing globalization and integration of information technologies, companies such as Huawei, Datang, and Zhongxing, with their ties to the PRC government and PLA entities, pose potential challenges in the blurring lines between commercial and government/military-associated entities.

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