Chapter 6 - China's
persists in taking the road of peaceful development and unswervingly pursues a
national defense policy defensive in nature. China's
national defense is the security guarantee for the survival and development of
is modernising its national defence and armed forces as an 'important guarantee
for safeguarding national security and building a moderately prosperous
society'. This chapter examines China's
defence policy, its underlying principles and key objectives. It looks at the
response of other countries to China's
military modernisation and its implication for regional security. Finally, it
considers the information that China
provides on its military spending and ambitions and assesses whether this helps
to build greater trust between China
and the outside world.
major goals of economic growth and political stability are, to a large extent,
reliant on the maintenance of regional security and stability. As China
continues to engage as a major participant in the global economy and becomes
increasingly reliant on overseas energy resources, it has a growing stake in
regional peace and stability. In
December 2004, Beijing released China's National Defense 2004 (the 2004 White
Paper). This report stated that the
key objectives of China's
national defence are:
...to step up modernisation of its national defence and its armed
forces, to safeguard national security and unity, and to ensure the smooth
process of building a moderately prosperous society in an all-round way.
The White Paper noted that 'the role played by military
power in safeguarding national security is assuming greater prominence'.
Department of Defence concurred with this representation of China's
broad military objectives. It recognised that increasing military capability
was important to China
and that it would:
... continue to view military strength as a key component of
comprehensive national power, vital to securing its territorial claims, protecting
its economic interests and building political influence.
The following section outlines the approach and
priorities that China
is taking to modernise its armed forces.
Building a modern military force
military policy is guided by two goals: the 'historic objectives of ensuring
that the army is capable of winning any war it fights and that it never
In 1985, with an emphasis on increased competency and
training rather than the size of its armed force, China
decided to downsize its military personnel by one million. According to its
White Paper on Arms Control, by 1987 the size of the People's Liberation Army
(PLA) had been reduced from 4.238 million to 3.235 million and by 1990, the
number of armed forces had been cut back to 3.199 million, downsized by an
overall total of 1.039 million. Since 1990, China's
armed forces have undergone a series of adjustments and their size has
continued to shrink with the decision to downsize its military by 500,000
within three years. In 2003, China
decided to further cut the number by 200,000 within two years and to reduce its
military size to 2.3 million. In
announced that it would complete the task of reducing the size of the army by
As part of its modernisation program, China
is using science and technology to build strong armed forces by investing in
developing new and high technology weaponry and equipment. This is intended to
foster a new type of highly competent military personnel and promote the
modernisation of its armed forces, with IT application as the main content. Indeed, improved competency and high
technology are central to China's
modernisation process. China
wants to build a strong military through advances in science and technology and
aims to have qualitative efficiency instead of relying on quantitative force:
'to transform the military from a manpower-intensive one to a
technology-intensive one'. While
the streamlining of the PLA is designed to reduce the number of ordinary troops
that are 'technologically backward', China
is also strengthening its Navy, Air Force and Second Artillery force. It wants
to ensure that the make-up of troops and the size of the services and arms are
most effective, with an increased proportion of new and high-tech units.
The Australian Department of Defence also noted that
the PLA's military modernisation program emphasises the exploitation of
technology and quality over quantity:
Key aspects of the program include: foreign acquisition and
indigenous production of modern weapons and defence systems; organisational
reform and the promotion of a joint approach to strategy and operations;
logistics reform, including a growing emphasis on commercialisation of support
functions; and personnel reforms such as improved training and education. The
bulk of the modernisation efforts and resources are focused on naval, air and
In keeping with the goal of achieving a high technology
defence force, the 2004 White Paper emphasised that the PLA wants to build an
informationalised force: that its objective is to 'win local wars under
conditions of informationalisation'.
Informationalisation is defined by analysts as 'the PLA's ability to use the
latest technologies in command, intelligence, training and weapon systems'. China
is seeking to achieve a gradual transition from mechanisation and
semi-mechanisation to informationalisation.
As for weaponry and equipment, China
has indicated that it is accelerating the modification of old and outmoded
weapons. The 2004 White Paper noted that:
By embedding advanced technology, developing new munitions, and
integrating command and control systems, the PLA has restored or upgraded the
tactical and technical performance of some current main battle weapons.
hopes to develop its defence-related science, technology and industry to ensure
the 'production and supply of military equipment to meet the needs of national
defense'. Its objective is to raise China's
'capability for weaponry and equipment research and production, and accelerate
the research and production of new and high-tech weaponry and equipment'. This development is to complement
and promote the growth of the national economy and improve the overall strength
of the nation.
In its 2004 White Paper,
China stressed that its
defence-related science, technology and industry 'takes a prudent attitude
toward the export of military products and related technologies, and strictly
complies with the policies and laws of the state on non-proliferation'. It added that China
has invariably adhered to three principles concerning the export of military
products. They are that such exports:
should only serve the purpose of helping the
recipient state enhance its capability for legitimate self-defence;
must not impair peace, security and stability of
the relevant region and the world as a whole; and
must not be used to interfere in the recipient
state's internal affairs.
In keeping with its foreign policy, China
maintains that its defence policy also looks to develop strong, amicable and
mutually beneficial relations with other countries. China's
2004 White Paper explained that:
...the PLA conducts military cooperation that is non-aligned,
non-confrontational and not directed against any third party. The PLA takes
part in the UN peacekeeping operations and international counter-terrorism
cooperation. While promoting military exchanges in various forms, the PLA works
to establish security dialogue mechanisms in order to create a military
security environment featuring mutual trust and mutual benefit.
According to the White Paper, China
has stepped up its bilateral and multilateral strategic consultation and
dialogues with countries concerned in security and defence areas which
'contribute to better mutual trust and mutual exchange and cooperation'. China's
foreign and defence policy seeks to promote 'international security dialogues
and cooperation of all forms'.
The Australian Department of Defence submitted that China's
expanding military capabilities are likely to be complemented by an expansion
in its cooperative international engagement with foreign forces, and even
possible participation in UN peacekeeping activities.
Priorities in China's
is at pains to stress that it will rely on its own strength for development and
'poses no obstacle or threat to any one'.
defence policy places a high priority on cooperating with other countries to
create a peaceful international environment, some countries remain concerned
about the direction China
is taking to modernise its military forces. The following section looks at two
aspects of China's
military modernisation process that trouble some countries (the U.S.
in particular): firstly, it considers China's
military build-up and the likelihood of it using force, especially against Taiwan,
and secondly, the lack of transparency in China's
military capability and future plans. The section then considers the shifting
balance of power in the East Asian region.
have never forsworn the use of force'
In its National Defence White Paper, China
stated that one of its basic goals and tasks in maintaining national security
is to 'stop separation and promote reunification, guard against and resist
aggression, and defend national sovereignty, territorial integrity and maritime
rights and interests'. As discussed further in Chapter 7, pro-independence
developments in Taiwan
are of great concern to the Chinese government. China
maintains that Taiwan
is 'part of the sacred territory of the People's Republic of China'.
It stresses that it is 'the sacred responsibility of the Chinese armed forces
to stop "Taiwan
independence" forces from splitting the country.'
The White Paper stated that relations across the Taiwan
Straits were 'grim':
The separatist activities of the 'Taiwan independence' forces
have increasingly become the biggest immediate threat to China's sovereignty
and territorial integrity as well as peace and stability on both sides of the
Taiwan Straits and the Asia-Pacific region as a whole.
It made clear that China
...never allow anyone to split Taiwan
through whatever means. Should Taiwan authorities go so far as to make a
reckless attempt that constitutes a major incident of 'Taiwan independence',
the Chinese people and armed forces will resolutely and thoroughly crush it at
In its 2005 Report on the Work of the Government,
Premier Wen stated that strengthening national defence and developing the army
constituted 'a task of strategic importance to our modernisation drive and an
important guarantee for safeguarding national security and reunification'. This reference to reunification
again clearly showed China's
resolve to ensure that Taiwan
does not separate from China.
The passing of the Anti-Secession Law in March 2005 was
a further demonstration of China's
determination to prevent Taiwan
seceding from China.
Mr Wang Zhaoguo,
vice chairman of the Standing Committee of the
National People's Congress (NPC), told the NPC that:
No sovereign state can tolerate secession and every sovereign
state has the right to use necessary means to defend its sovereignty and
Using non-peaceful means to stop secession in defence of our
sovereignty and territorial integrity would be our last resort when all our
efforts for a peaceful reunification should prove futile. The draft legislation
provides that in the event that the 'Taiwan independence' forces should act
under any name or by any means to cause the fact of Taiwan's secession from
China should occur, or that major incidents entailing Taiwan's secession from
China should occur, or that possibilities for a peaceful reunification should
be completely exhausted, the state shall employ non-peaceful means and other
necessary measures to protect China's sovereignty and territorial integrity.
The Chinese government has stressed that should they
employ non-peaceful means and other necessary measures to prevent secession:
...such means and measures would be completely targeted against
independence' forces rather in any way against our Taiwan
Following the passing of the law, Premier Wen
reportedly warned foreign interests against interfering over Taiwan:
Solving the Taiwan question is entirely an internal Chinese
affair and brooks no interference by any outside forces...We do not wish to see
any foreign interference, but we do not fear foreign interference should it
The anti-secession law is discussed further in the following
Many in the U.S.
believe that China
is shaping its military modernisation and increasing its fighting capability
with a conflict over Taiwan
in mind. A U.S. Department of Defense report has noted that:
In the short term, the PRC appears focused on preventing Taiwan
independence or trying to compel Taiwan
to negotiate a settlement on Beijing's
terms. A second set of objectives includes building counters to third-party,
including potential U.S.,
intervention in cross-strait crises. PLA preparations, including an expanding
force of ballistic missiles (long-range and short-range), cruise missiles,
submarines, advanced aircraft, and other modern systems, come against the
background of a policy toward Taiwan that espouses 'peaceful reunification'. China
has not renounced the use of force, however. Over the long term, if current trends
persist, PLA capabilities could pose a credible threat to other modern
militaries operating in the region.
It concluded that although the use of force against
Taiwan would be costly, Chinese leaders 'might use force if they believed they
had no other way to prevent Taiwan independence or, as implied in its
'anti-secession law', to guarantee reunification over the long term'.
A report to Congress from the U.S.–China Economic and
Security Review Commission found that:
is in the midst of an extensive military modernisation program aimed at
building its force projection capabilities to confront U.S.
and allied forces in the region. A major goal is to be able to deter, delay, or
complicate a timely U.S.
and allied intervention in an armed conflict over Taiwan
so China can
and force a quick capitulation by Taiwan’s
Some analysts maintain that China's
military build-up 'is tilting the balance of power in the Taiwan
Strait' and that its improved capabilities threaten U.S.
forces in the region. Vice Admiral
Lowell E. Jacoby, U.S. Navy Director in the Defense Intelligence Agency,
We believe China
has adopted a more activist strategy to deter Taiwan
toward independence that will stress diplomatic and economic instruments over
military pressure. We believe Chinese leaders prefer to avoid military
coercion, at least through the 2008 Olympics, but would initiate military
action if it felt that course of action was necessary to prevent Taiwan
Beijing remains committed
to improving its forces across from Taiwan.
In 2004, it added numerous SRBMs to those already existing in brigades near Taiwan.
It is improving its air, naval and ground capabilities necessary to coerce Taiwan
unification with the mainland and deter US
intervention. Last fall, for instance, a Chinese submarine conducted a
deployment that took it far into the western Pacific Ocean,
including an incursion into Japanese waters.
has put Taiwan
and the world on notice that it will not tolerate an independent Taiwan
and is prepared to use non-peaceful means to prevent its secession. It has also
made clear that Taiwan
is an internal matter of national sovereignty and it would not brook outside
interference. Consequently, China's
military modernisation takes close account of developments in Taiwan
and is geared, if needed, to prevent Taiwan
from splitting from China.
It provides a powerful deterrent against any move by Taiwan
toward asserting its independence. China
has, however, stressed that the use of force would be a last resort.
The following section looks at a range of views from
China's defence policy beyond
Some analysts believe that Chinese military
acquisitions indicate that the PLA is building military capabilities that could
be used beyond a conflict over Taiwan.
In July 2005, the U.S. Department of Defense released its annual report to
Congress titled The Military Power of the
People's Republic of China 2005. While indicating that presently 'China's
ability to project conventional military power beyond its periphery remains
limited', it noted:
All of China's SRBMs, although garrisoned opposite Taiwan, are
mobile and can deploy throughout the country to take up firing positions in
support of a variety of regional contingencies. China
is also developing new medium-range systems that will improve its regional
targeting capability. There are corresponding improvements in
intercontinental-range missiles capable of striking targets across the globe,
including in the United States.
On this issue, the U.S. Department of Defense report
Similarly, China's air and naval force improvements—both complete and in the
pipeline—are scoped for operations beyond the geography around Taiwan. Airborne early warning and control and aerial refuelling
programs for the PLA Air Force will extend the operational range for its
fighter and strike aircraft, permitting extended operations into the South China Sea, for
example. Naval acquisitions, such as advanced destroyers and submarines,
reflect Beijing's pursuit of an 'active offshore defense' to protect and
advance its maritime interests, including territorial claims, economic
interests, and critical sea lines of communication. Over the long term,
improvements in China's command, control communications, computers,
intelligence, surveillance and reconnaissance (C4ISR) capability, including
space-based and over-the horizon platforms, could enable Beijing to identify,
target and track foreign military activities deep into the western
Pacific and provide, potentially, hemispheric coverage.
The report warned of the consequences of the PLA's
continuing modernisation. It contained the following assessments:
China does not now face a direct threat from another nation. Yet, it
continues to invest heavily in its military, particularly in programs designed
to improve power projection. The pace and scope of China’s military build-up are, already, such as
to put regional military
balances at risk. Current trends in China’s military modernization could
provide China with a force capable of prosecuting a range of military
operations in Asia—well beyond Taiwan—potentially posing a credible threat to
modern militaries operating in the region...
...as China’s military
power grows, China’s leaders may be tempted to resort to force or coercion more
quickly to press diplomatic advantage, advance security interests, or resolve
response to China's
Generally, evidence before the committee assumed a far
less alarming tone. Air Power Australia's
submission to the committee, however, argued that China's
military advancements are for less benevolent purposes than simply maintaining
order or deterring attack. They indicated that the PLA is undergoing a 'deep
transformation' from an essentially defensive force to one capable of long
In contrast, Professor
from the Research School of Pacific and Asian Studies at the Australian
National University (ANU), told the committee that the PLA's modernisation
process has not been overtly threatening:
What surprises me is
that the defence modernisation program is so lacking in a sense of urgency in
the response to the threat that they see. Ten years ago we were talking about
going to go to solid fuel so that they could be mobile and less vulnerable. The
Americans gave them the MIRV technology anyway and they have never used it.
They have had their submarines sitting in the harbour—they cannot fire a
missile—for 10 or 15 years and they are gradually getting around to seeing if
they can find out how to do it properly one of these days. There is no sense of
urgency except on the east coast, which is where all the jewels are and where Taiwan is. So they want
a defensive military that can tackle the American military...and they want to
be able to sink an aircraft carrier. Sooner or later everybody is going to able
to sink aircraft carriers and aircraft carriers are going to go out of business
Professor James Cotton
from the Australian Defence Force Academy also questioned the level of anxiety
over China's current military capability, stating that their missile systems
still rely on liquid fuel and are 'enormously cumbersome and difficult to
operate and are uniquely vulnerable to interdiction'. He noted:
Go back to the United States
capability 20 years ago: it is going to be a long time before the Chinese even
have that capability.
suggested that increased military spending in China
related in large part to domestic political priorities:
...it is still an
unaccountable, self-elected and self-promoting group of people who are in
charge of the country. When you are in that position you stay in power by
cultivating interests and one of the most important interests in China currently is the
Chinese military. To some extent these people are given generous resources,
simply in order to maintain their loyalty and their role in the internal
political dynamics. This is not a question of an external threat; it is a
question of maintaining control over the domestic constituency.
Also, we need to bear
in mind that that military is required to ensure the loyalty of some parts of China where that loyalty has sometimes been in
question. In Xinjiang and in Tibet there are significant populations who are
still unhappy with being part of the People’s Republic of China. Both of these factors would explain why more
munificent provisioning of the military might be necessary than would otherwise
makes sense in terms of China’s external
Professor William Tow, Director of International Relations at the University of Queensland, also commented to the committee on the
perceived China threat:
has a real problem in its long-term military capabilities. They know what they
have to do: to develop niche capabilities, particularly in network warfare and
the other areas where they have looked at US military behaviour and essentially
said that this is work we have to become good at in order to become a peer
competitor strategically down the line with the United
States. The bottom line is that they are not
very good in many of these sectors. For example, we are still uncertain to what
extent they have mastered the solid fuel capabilities in order to move towards
a fully fledged SSBN nuclear submarine force. They have had problems with it
for years. They are perhaps better than we are, because of their Soviet
heritage, in mobile ballistic missile systems.
Frankly, they are still hamstrung. It does not really matter
what their budget is to a large extent until they are able to come to terms
with some of the types of issues that Western defence departments or defence
ministries come to terms with every day—interoperability, procurement and so
stressed, however, that China
should not be discounted as a peer competitor down the line. He stated:
It is just going to be much harder for them and it is going to
take a long time. So they have sensibly said, ‘Periphery warfare is the way to
go. We can develop fairly credible and formal capabilities by pursuing that
particular doctrine.’ Within that context the Taiwan
thing is obviously the priority.
In answer to a question about the reasonableness of China's
military spending given its perceived security threats, Professor
Director of the Strategic and Defence Studies Centre at the ANU, told the
...it is like most countries; you could ask the same question of
us, if you are a regional power—that it is a mixture of both. China
has a long history, as you well known, of being humiliated, divided and
occupied. In that sense, there is some understanding that they have a sense of
vulnerability and a history that they have not forgotten. Since the creation of
the People's Republic of China,
they have not been attacked. In that sense, I think it is fair to say
that—except for the early period, including the seventies, which we should not
forget—Chinese revolutionary warfare and the export of communism were still a
central and active part of the ideology.
The former Minister for Defence, Senator the Hon.
has stated that China's
modernisation is not a concern:
...we certainly accept
the right of China to modernise its armed forces. As the economy grows, as China plays a more forward role in the world,
it’s not surprising it wishes to improve its defence capabilities, so I
Even so, the uncertainty about the direction of China's
modernisation process and the amount it is spending on its military build-up
gives rise to unhelpful speculation about China's
In June 2005, U.S. Defense Secretary Donald
Rumsfeld asserted that China's
defence expenditures were much higher than Chinese officials had admitted. He
stated that the U.S.
estimates that China
has the 'third-largest military budget in the world and now the largest in Asia'. The U.S. Department of Defense's
Annual Report to Congress on China's
military power repeated the assertion that China
was the third largest defence spender in the world after the United
States and Russia.
In response to Mr Rumsfeld's suggestion that China's
actual military expenditure 'has been the top of Asia and the third world', a
Chinese government spokesman reiterated that China's military expenditure was
used largely to 'improve the living conditions of military officials and
soldiers'. He went on to state that assertions claiming China's military
spending ranked first in Asia were 'totally groundless'. He added:
has neither intention nor capacity to drastically develop a military build-up.
In fact, compared with other big countries, China's
defense expenditure always remains at a fairly low level.
He also asserted that 'any words or actions that
fabricate and drum up the China's
military threat are detrimental to regional peace and stability'.
on its defence budget
Analysts complain that the lack of transparency in China's
defence reporting is a major problem for them in assessing China's
maintains that its National Defence Law ensures that 'the necessary funds for
national defence, incorporates the entire expenditure in the state budget and
exercises management over it in accordance with the Budget Law of the People's
Republic of China'.
It argues that 'examined and approved by the National People's Congress,
China's defence budget is
open and transparent'.
Every March, as part of its annual state budget, the
Chinese government releases a single overall figure for national military
expenditure. The table below shows
stated expenditure for the past five years.
RMB Yuan (billion)
On military spending, China's
2004 defence White Paper indicated that China's
defence expenditure has 'long been lower' than major western countries. It
stated that in the past two years, the percentage of China's
annual defence expenditure to its GDP and to the state financial expenditure in
the same period has remained basically stable.
It reported that the increased part of the defence
expenditure has primarily been used for increasing the salaries and allowances
of the military personnel, further improving the social insurance system for
servicemen, supporting the structural and organisational reform of the
military; increasing investment in the development of high-calibre talents in
the military; moderately increasing equipment expenses.
The Embassy of the PRC's submission also emphasised the
relatively small proportion of China's
GDP that was spent on defence; less than two per cent in 2004.
In evidence to the committee, Dr
Head of International Relations at Bond
University, told the committee that
spending was relatively limited:
modernisation of the military occurs from a very low technological base of
development, so there would be increases expected there. It occurs within the
context of the first priority of funding being given to the civilian economies—agriculture,
industry, science and technology. Defence is then only the fourth priority.
...defence definitely has a lower priority than the economic
development side of things. For a country with such a low technological base in
the military, I think the level of military modernisation that has been
occurring is appropriate.
A number of commentators have, however, questioned the
reliability of the figures produced by China
on its military expenditure. One suggested that because China's
stated budget does not include defence acquisitions and other significant
categories, 'there is a cottage industry of analysts who attempt to assess the
true size of the budget'.
The U.S. Department of Defense is critical of the
opacity of China's
reporting on the state of its military forces and its military budget,
White Paper. In its Annual Report to Congress, the Defense Department claimed
leaders continue to guard closely basic information on the quantity and quality
of the Chinese armed forces. Although it welcomed the publication of China's
White Paper, it stated:
The paper explains China's public views on security and provides information on military-related
policies, organization and regulations. Although a modest improvement over
previous years, this newest Defense White Paper provides only limited
transparency in military affairs.
The report indicated that the U.S. Department of
Defense does not know the full size and composition of Chinese government
expenditure on national defence. It noted that 'secrecy envelops most aspects
of Chinese security affairs', further stating:
The outside world has little knowledge of Chinese motivations
and decision-making and of key capabilities supporting PLA modernisation.
Hence, the findings and conclusions are based on incomplete data. These gaps
are, of necessity, bridged by informed judgment.
It cited a number of perceived weaknesses in the
reporting system that results in opacity and prevents serious analysis by
outsiders. They include the wide variation in methodologies such as
calculations based on market exchange rates, purchasing power parity, or a
mixture of the two in varying proportions. The report noted that:
According to some estimates, the official budget does not
include foreign weapons procurement (up to $3.0 billion annually from Russia
alone), expenses for the paramilitary People’s Armed Police, funding to support
nuclear weapon stockpiles and the Second Artillery, subsidies to defense
industries, some defense-related research and development, and local,
provincial, or regional contributions to the armed forces.
Combined, these additional monies could increase actual defense
expenditures by two to three times the publicly available figure, suggesting
the defense sector in China
could receive up to $90.0 billion in 2005, making China
the third largest defense spender in the world after the United
States and Russia,
and the largest in Asia.
One group of analysts suggested that the inadequate
accounting methods used by the PLA is one reason for China's
low published spending figures:
Budgeted functions are hidden under construction, administrative
expenses, and under state organisations such as the Commission on Science,
Technology and Industry for national defense, which mix PLA and other state
activities. Further sources of income outside the national defense budget
include official local and regional government expenses for local army
contributions, pensions, militia upkeep and off-budget income from PLA
commercial enterprises and defense industries, as well as income from
international arms sales and unit-level production (e.g. farming).
Given the problems in assessing China's
military expenditure, the actual level of spending is frequently debated, but
is probably not known with certainty. U.S. Department of Defense studies
indicate that the published budget figures understate China's
defence expenditure by about one-half.
Most analysts estimate the real figure is at least three times more than the
public figure, with some suggesting
that Chinese military expenditure has reached or exceeded $100 billion.
The committee also received evidence highlighting the
confusion surrounding China's
military spending. In evidence, Professor
Cotton commented on the lack of
is in the unhappy position of not having democratic legislature to scrutinise
and restrict defence spending. It is simply not reviewed in a transparent
political process—the kind of process we are familiar with.
What do we know about China's
defence spending? What we do know is that, like all communist countries, what
it publishes as an alleged defence budget is, to be polite, not true. Let me
tell you what they do not include in their defence budget. It does not include
expenditure on military acquisitions, which in Australia
would account for one-third of our total budget. It does not account for heavy
subsidies to state owned defence industry. Almost all defence industry is China
is still state owned, not private. It does not include military exports. It
does not include its expenditure on space, a significant part of which,
including overhead satellite capabilities, is to do with military precision
capabilities. It does not include other covert programs. It does not include military
research and development. It does not include military pensions, which we do.
You see the things we publish for the parliament of Australia—volumes
that would fill this room several times over every year—on defence matters. China
does not publish its military order of battle. It does not say how many tanks
it has got or how many aircraft. You can argue that some of this is due to its
sense of vulnerability but, if it wants it to come into a multilateral
community of nations, it better start to cough on transparency.
Regarding the true level of expenditure, Professor
Dibb told the committee that:
The best estimate that we currently have is not to accept
necessarily the inflated estimates of the Pentagon but in my humble view the
figures put out by the International Institute for Strategic Studies in London.
It estimates that China
in the last year spent $US56 billion on defence. That makes it the largest
defence spender in our region, larger than Japan,
and the third largest in the world after the United
States and Russia.
The uncertainty of the nature and extent of China's
military build-up, coupled with China's
growing defence budget, has raised concerns regarding the U.S.–Chinese military
balance in Asia. The United
States is particularly concerned about China
concealing military developments. For example, the Annual Report to Congress on
military power stated:
One might expect some secrecy in technological and weapon system
development and tactical deception about location of units. China's
practice encompasses this and more. In recent years, for example, China
rolled out several new weapon systems whose development was not previously
known in the West.
When the U.S. Defense Secretary Donald
Rumsfeld visited China
in October 2005 he urged China
to provide more information about its military spending to clarify its
intentions. He said that China's
improvements in its strategic strike capability, with its missile forces
capable of reaching many areas of the world beyond the Pacific region, has made
the U.S. and
many regional countries question China's
intentions. He added: 'greater clarity would generate greater certainty in the
To the extent that defense expenditures are considerably higher
than what is published, neighbours understandably wonder what the reason might
be for the disparity between reality and public statements.
In October 2005, the
Australian reported that Mr Rumsfeld
would press the Chinese authorities for:
...greater transparency, greater discussion, so that we, the
United States, and perhaps the neighbours in the immediate region, would have a
much clearer understanding of what the Chinese intent was in developing the
capabilities they're developing.
According to the report, the U.S.
is concerned about a 'lack of transparency and our ability to appreciate and
understand and predict what China's
intent will be'.
Officials from the Australian Department of Defence
told the committee that Defence would 'like China
to be more transparent in its capability development and to explain the reasons
for the sorts of capabilities it is pursuing'. It noted that there are a
variety of views on China's
defence spending, but emphasised that transparency in the PLA's activities was
a more important issue than overall military expenditure:
Generally speaking, our
sense is that it is not out of proportion to China’s size, to its perception of its interests
and to its economic growth. I think that it is a difficult area when you are
talking about a country’s defence spending as a measure of its intent. The real
issue is: what is it spending on and what is it doing with those forces? That
is where you get the uncertainty and the ambiguity. So for us the level of
expenditure is less of a concern than the issue of transparency.
The department added:
...transparency is more likely to create stability than
nontransparency because it reduces the possibility of misunderstanding.
As noted above, Professor
Dibb stated that some countries—including China—have
a long way to go to improve the transparency of their military capabilities. He
noted that there is information regarded as state secrets by China that are
publicly accessible in many other countries, such as Japan, South Korea, Taiwan,
some ASEAN countries, and Australia and New Zealand. He stated: 'You receive
them in Senate estimates inquiries'.
The committee considered the role of the ASEAN Regional
Forum (ARF) in Chapter 3 and found that this forum plays an important role in facilitating
dialogue between countries and promoting a cooperative approach to regional
security. Recognising the potential to use the ARF to encourage greater
openness on security matters, Professor Tow
...if you have got white papers coming out each year in the ASEAN
Regional Forum context for the purposes of getting greater transparency on
strategic intentions, why not extend that to a process where you get white
papers published by a combined Australian DFAT-DOD interagency team, a commensurate
team in the United States and a commensurate team in China, with consultations,
blessed tacitly by the Chinese, between the Americans, the Australians and the
Taiwanese to ensure that the Taiwanese are not going to feel totally
marginalised in the process. It is not going to be a perfect process, but at
least ‘jaw-jaw is better than war-war’, as Churchill once
Jennings, Director of the Australian
Strategic Policy Institute, has argued that 'Australia
must do what it can to stop the U.S.
and China from
allowing suspicion to generate threatening military postures'. He suggested that
with the statement on Chinese military power that the Pentagon is required to
produce every 12 months. He told the committee:
...as a close and respected ally, we should be talking to the
Americans much more deeply about how the Pentagon chooses to write that
document. We should ask ourselves what we can say to the Americans about how to
think intelligently about Chinese military power.
we should ask defence planners what they would consider a reasonable military
posture for the Chinese. We should seek early access to US thinking about their
forthcoming Quadrennial Defence Review...and we should offer to share views on drafts
of future Pentagon reports on Chinese military power.
In Beijing we should
redouble efforts to encourage the Chinese to be more open about their defence
planning, to reveal true defence budget figures and to participate in
substantive bilateral strategic dialogues, for example, on force development
plans and strategic perceptions.
Transparency from the Chinese government, or a
perceived lack thereof, was a major issue raised during the course of this
inquiry. This was particularly the case with respect to the scope and intent of
military modernisation. Many analysts agree that increased transparency would
assist to develop greater trust between countries in the region and that
measures to encourage open discussion and reporting, such as initiatives taken
by the ARF, would be a positive step toward regional security.
The committee recognises that as China's
economy grows, the Chinese authorities will inevitably seek to update the
capabilities of the PLA. China's
growing investment in military capability has attracted a great deal of
attention from its neighbours and those concerned about regional security. Some
view the modernisation of China's military as a threat to regional stability,
while others note that the improvements in overall military capability need to
be set against the very low-technology starting point of China's armed forces. Transparency and detailed
information about China's
military budget and its current military capability, together with a clear understanding
of its future defence plans, is necessary for the rest of the world to be able
to assess accurately the implications of China's
Clearly there are very different interpretations on China's
military spending, its military capability and its long-term projections, as
well as on matters such as China's
commitment to non-proliferation. The U.S.,
in particular, has been highly critical of China's
lack of transparency and from the tone of the 2005 report to Congress on China's
military power, a disturbing level of distrust exists. This lack of mutual
confidence increases the risk of misjudgement and miscalculation and increases
the likelihood of heightened tensions, misunderstanding and disagreement,
especially in a crisis. It is important that both China
and the United States
build trust between them.
The uncertainty about China's
military budget and the capability of its forces creates an atmosphere of
mistrust and conjecture. Any steps taken by China to make its reports on
military spending and capability more informative, accurate and comprehensive
will at least remove the tendency for other countries to indulge in
As a political force, Australia
has little if any influence over China's
overall defence policy and over how the United
States will respond to what it believes are
military developments in China.
That is not to say that Australia
cannot take a constructive role in helping China
to open up further its military activities to greater scrutiny, to encourage China
and the United States
to improve the level of trust between them and to assist to create a climate in
the region where countries work together toward a safe and secure environment.
The committee believes that Australia
has an important role in encouraging both countries to work together to create
an atmosphere that supports open discussions about military and strategic
planning in the region.
The committee recommends that the Australian government
work with countries, which have a common interest in regional stability and
security, in the ARF, APEC and EAS to promote confidence building measures,
such as increased transparency in reporting on military spending and
capability, that will contribute to greater regional stability.
China–Australia Defence Relations
defence relationship with China
could provide a suitable pathway to encourage China
to be more open and transparent in its military modernisation. The Department
of Defence noted that 'Australia's
defence relationship with China
contributes to the strength of Australia's
broader bilateral relationship with China'. It submitted that:
importance as an interlocutor on strategic and defence issues is increasing...The
defence relationship between Australia
which has experienced a period of unprecedented growth in recent years, is now
better than it has ever been.
The department also noted:
The maintenance of the Australia-China bilateral defence
relationship will remain an objective of the Australian Government in
recognition of China's
current and future strategic significance.
defence relationship with China
appears to be entering a phase of consolidation where existing areas of
engagement will be developed further. The department's submission noted that
'nurturing senior officer ties is the centrepiece of Australia's defence
engagement program with the PLA and will continue to be so in the coming
These activities allow Australia
and China to
exchange views and to improve our understanding of each other's respective
strategic assessments and policies and build personal contacts at the senior
Details of recent senior PLA visits to Australia
and senior Australian Department of Defence visits to China
are listed at Appendix 5.
Chinese leaders are proud of China's
active military exchange programs and its cooperation with other military
forces. In their view, China
is creating a military diplomacy that is 'all-directional, multi-tiered and
defence White Paper recorded that China
has established military relations with more than 150 countries, has over the
past two years sent high-level military delegations to over 60 countries and
hosted over 130 delegations of military leaders from 70 countries. It has
invited military observers from overseas countries to observe military and
naval exercises and has sent delegations to observe military exercises in Russia,
Japan, the United
It engages in friendly naval visits and pursues active military academic
exchanges with foreign militaries.
The committee notes China's
increasing importance as a dialogue partner on strategic and defence issues and
the growth in the defence relationship with Australia
in recent years. It notes further China's
enthusiasm for military exchanges and for greater cooperation with countries on
military matters. China's
willingness to participate in military exchanges and joint exercises provides
an ideal starting point for countries such as Australia
to encourage China
to be more open and transparent in its military modernisation and defence
The committee believes that Australia,
as a country that has an open and accountable system for reporting on
government spending that enables both the Parliament and the public to
scrutinize defence expenditure, is well placed to encourage China
to adopt a more transparent reporting system.
The committee recommends that the Australian government
use its good relationship with China,
and its defence links in particular, to encourage China
to be more open and transparent on matters related to its military
modernisation such as its objectives, capability, and defence budget.
Arms control in the region
has stated that it attaches great importance to non-proliferation:
It pursues a policy of not supporting, not encouraging and not
assisting other countries to develop WMD. It resolutely opposes the
proliferation of WMD and actively participates in the diplomatic efforts of the
international community to deal with non-proliferation issues.
The 2005 U.S.–China Economic and Security Review
Commission's report to Congress had a different viewpoint. It found that:
proliferation activities are broad ranging; it continues to provide equipment
and technology, including dual-use goods and technologies, related to WMD and
their delivery systems to countries such as Iran
as well as conventional armaments to countries like Sudan.
It told Congress that:
improves its nuclear and missile capabilities, the potential damage from its
proliferation action increases. Given China's
poor track record on preventing proliferation, the presumption is that it will
continue to allow transfers of improved WMD-and missile-related technology to
countries of concern.
noted the 'singular lack of arms control' activities in the region. He stated:
If you want to modify the threat or the perceived threat of
Chinese military modernisation, you start talking the language of SALT in an
Asian context. You kickstart, if you will, the learning process. I think you
will find that the process
of China having
learned in so many other dimensions of Asian security politics over the past
decade or two will be repeated in this sector.
Jennings also referred to the absence of
effective arms control in the region. He was not, however, in favour of the Strategic
Arms Limitation Talks (SALT) model.
He preferred instead the model of 'the conventional armed forces agreement that
was signed in 1990, which really became a mechanism for NATO, in the Warsaw
Pact, to start negotiating on the number of conventional weapons, tanks and so
The committee notes that there are regional fora, such
as the ARF, that could start serious discussions on, and lay the groundwork
for, an arms control arrangement for the region. The potential exists to
promote such an agreement but the leadership and initiative of a group of
like-minded countries is needed to achieve results.
The committee notes the suggestions by Professor
Tow and Mr
Jennings for a regional arms control
agreement and recommends that the Australian government work with like minded countries
in the region to promote such an agreement.
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