Taiwan Communiqué No. 102, September 2002

New warnings of China's military threat

DOD reports on military buildup

In mid-July 2002, the US Department of Defense issued a report to Congress on the rapid rise of China's military power. According to the report, China is modernizing its military with the goal of countering American power in the Pacific and forcing Taiwan to accept unification.

The report, the first assessment of the Chinese military under the Bush administration, said that despite major strides in improving its armed forces, China would still have trouble invading Taiwan.

But the report concludes that Beijing, aware of its military's technological deficiencies, has developed less conventional strategies for asserting its power in the region. Those strategies would employ a broader range of tactics and weapons, including computer viruses, naval blockades, increasingly accurate nuclear-tipped missiles and quieter diesel submarines, the report contends.

"These enhanced capabilities have given rise to and will sustain a trend in which China's war-fighting strategies increasingly favor coercive over annihilative approaches," the report said. "Beijing is pursuing the ability to force Taiwan to negotiate on Beijing's terms regarding unification with the mainland."

It also concludes, that China's military modernization could pose a threat to Japan and the Philippines, as well as Taiwan. It also estimates that China is spending far more than had been previously thought on its military — as much as $65 billion a year, more than triple the $20 billion China publicly reported in March.

Among the major concerns raised by the report were these:

* China is replacing its current arsenal of 20 DF-5 intercontinental ballistic missiles, which can strike the western United States, with a longer-range version. China is expected to have 60 of the longer-range missiles by 2010, the report concludes.

* China is expanding its inventory of short-range ballistic missiles, now at about 350, at the rate of 50 a year, and is improving the accuracy of those weapons. Many of those missiles are massed in Fujian Province bordering the Taiwan Strait.

* China has acquired two Sovremenny-class destroyers carrying Sunburn anti-ship missiles capable of sinking an aircraft carrier, and is purchasing two more destroyers (see "New signs of China's military expansion", Taiwan Communiqué no. 100, pp. 17-18).

* Russia has also sold China 4 Kilo-class diesel submarines, which are among the quietest in the world. The acquisition could significantly enhance China's ability to establish a blockade around Taiwan, the report contends. According to recent reports (see below) China has recently placed an order for eight more Kilo-class submarines.

Congressional Security Commission report

Also in mid-July 2002, the US-China Security Review Commission issued a report, warning that China is making dramatic economic and strategic advances against the United States, requiring a much tougher response to ensure compliance with trade laws and to prevent the spread of weapons of mass destruction.

The 200-page report from the bi-partisan commission reported that the Chinese leadership often portrays the United States as a "powerful protagonist and overbearing bully" but also views the United States as a declining power with exploitable military vulnerabilities. The report concludes that, despite the advent of China's entry into the World Trade Organization, the U.S. trade deficit with China will continue to worsen.

The report also determined that despite the popular perception of China as mostly a manufacturer of toys and other simple products, the Chinese have made huge strides in the production of advanced goods. The United States runs a trade deficit with China in a majority of the items on the Commerce Department's advanced technology product list, the report said, warning that a growing reliance on Chinese imports might eventually "undermine the U.S. defense industrial base."

The commission also warns that China is one of the world's leading sources for missile-related technology and nuclear materials for terrorist-sponsoring nations, presenting "an increasing threat to U.S. security interests, in the Middle East and Asia in particular." While China has made numerous multilateral and bilateral commitments to stop proliferation, "despite repeated promises [it] has not kept its word," the report said.

Congress created the commission at the end of 2000, when U.S.-China relations were at a low point. In the past year, especially after Sept. 11, relations have improved, and it is unclear if the report will generate renewed furor about Chinese intentions.

The report urges an "immediate review and overhaul" of U.S. sanction policies, including giving the president authorization to invoke economic sanctions against foreign nations that proliferate weapons of mass destruction or related technologies. The report also recommends the use of financial sanctions, such as denial of access to U.S. capital markets to companies involved in proliferation.

The report notes that the Chinese government and state-owned enterprises have raised more than $40 billion in the international capital markets in the past decade, including $14 billion in the United States in the past three years. But the report said the U.S. government lacks ways to monitor national security concerns raised by this development, requiring beefed-up disclosure and reporting requirements for Chinese companies at the Securities and Exchange Commission.

Eight more Kilo-class submarines

Russia's Kilo class submarine destined for China

Adding to the urgency of the two above mentioned reports, news reports in June and July 2002 indicated that China is buying more advanced weapon systems from Russia.

On 25 June 2002, the Washington Post reported that China is purchasing eight more Kilo-class submarines from Russia ("China to Buy 8 More Russian Submarines", 25 June 2002). The report indicated that China has begun negotiations with Russia in a $1.6 billion deal "…that will significantly boost its ability to blockade Taiwan

and challenge U.S. naval supremacy in nearby seas."

Four Russian producers are reportedly bidding to build the diesel-powered Project 636 Kilo-class vessels, which will be equipped with Klub long-range, anti-ship missile systems. The deal for additional submarines is part of a $4 billion weapons package that Russia has committed to provide China over the next four to five years. Included in the package are two more Sovremenny-class destroyers, adding to a pair China has already received, a new batch of S300 PMU2 anti-aircraft missiles and 40 Su-30MKK fighter-bombers.

The Washington Post report states that the $4 billion sale cements Russia's place as China's biggest military trading partner, far ahead of Israel and such former Soviet states as Ukraine. It also cements China's place as the world's biggest weapons importer, underscoring its race with Taiwan for military supremacy across the Taiwan Strait.

The Post also reports that China became the world's biggest importer of weapons in 2000, according to the Stockholm International Peace Research Institute. It maintained the No. 1 position last year, mostly through purchases of ships and combat aircraft worth close to $3 billion, more than twice any other buyer's acquisitions.