American Economic - Masthead Fighting For American Companies - Fighting for American Jobs United States Business and Industry Council
Current Trade Deficit:    
Pentagon Report Details China's Rise and Lack of U.S. Strategy
William R. Hawkins
Wednesday, August 10, 2005
Photo of William R. Hawkins
William R. Hawkins is Senior Fellow for National Security Studies at the U.S. Business and Industry Council.

On July 19, the Department of Defense finally released its annual report on “The Military Power of the People’s Republic of China.”  The report had been delayed since March because agencies outside the Pentagon (mainly the State and Commerce Departments) had been trying to water down the perception that Beijing is a rising threat to the United States. The muted tone of the report’s early chapters indicate that this vetting process was at least partially successful. However, the report is correct to note that “insights into China’s national strategies are difficult to acquire. To assess China’s intent, analysis of official Chinese strategy documents and White Papers must be augmented by examination of what China has accomplished in recent years and is attempting to accomplish in the future.”

It is always wiser to assess capabilities than intentions. World events move much faster than it takes to develop and deploy modern weapons. A well-armed regime can decide to take hostile action at a moment’s notice. An inferior adversary, however, may harbor dark ambitions, but be unable to advance them. The DoD report thus properly looks at China’s expanding capabilities, and what they might allow Beijing to do.  

The report’s emphasis on the changing balance of power between China and Taiwan has gotten considerable attention, but this contentious relationship is not nearly the whole story. “Although the principal focus of China’s military modernization in the near term appears to be preparing for potential conflict in the Taiwan Strait, some of China’s military planners are surveying the strategic landscape beyond Taiwan. Some Chinese military analysts have expressed the view that control of Taiwan would enable the PLA Navy to move its maritime defensive perimeter further seaward and improve Beijing’s ability to influence regional sea lines of communication.” General Wen Zongren, Political Commissar of the elite PLA Academy of Military Science, is quoted as saying that taking control of Taiwan is of  “far reaching significance to breaking international forces’ blockade against China’s maritime security. . . . Only when we break this blockade shall we be able to talk about China’s rise. . . . [T]o rise suddenly, China must pass through oceans and go out of the oceans in its future development.”

The report ponders the implications of the Chinese build-up: “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.”

The report mentions China’s growing need for foreign sources of metals and fossil fuels as a “driver of strategy,” citing how these account for 60 percent of China’s total imports. It is pushing Beijing into closer ties with a variety of regimes hostile to the United States, such as Iran and Venezuela. The Pentagon is not alone in noting this. In the summer issue of The National Interest journal, Ian Bremmer, president of the Eurasia Group, writes, “It is China’s urgent need for secure, long-term access to energy supplies and raw materials that is driving Beijing to define China’s national interests much more broadly – and well beyond China’s traditional spheres of influence. That dynamic is bringing U.S. and Chinese interests into conflict in unprecedented ways.”    

At the moment, China does not have a military that can match the United States, and Beijing know this. “According to intelligence community estimates, China’s defense industries are inefficient and dependent on foreign suppliers for key technologies,” says the report, which lays out Beijing’s “Three-Ways Policy” to weapons development: “1) foreign import, 2) joint development (China plus a foreign entity), and 3) domestic development. Beijing would prefer to produce systems indigenously, but is not yet capable and must rely heavily on foreign sources. Priorities for technology acquisition – microelectronics, nanotechnology, space systems, innovative materials, propulsion systems, missile systems, computer-aided manufacturing and design, and information technologies.”

How will Beijing pay for these advancements? “Continued economic growth and reform are essential to PLA modernization....Broad-based growth and modernization also expands China’s economic capacities in industry, technology, and human resources, enabling its leaders to accelerate military modernization in relative terms,” says the report, noting that China’s “economy could expand to almost $6.4 trillion by 2025.... Based on past patterns, China’s defense sector will probably benefit from continued overall economic performance.”

Because China is currently dependent on outside support, the Pentagon is critical of those countries helping Beijing to expand its capabilities. “Russia and Israel have been China’s primary foreign sources of weapon systems and military technology” according to the report.  But the Pentagon is also very concerned about increased European aid.  “The consequences of an EU arms embargo lift would be serious and numerous,” warns the report. “Lifting the embargo could allow China access to military and dual-use technologies that would help China to improve current weapon systems and to improve indigenous industrial capabilities for production of future advanced weapons systems.” Even with the embargo, European military technology has been getting to China: During the July 27 House Armed Services Committee hearing on the Pentagon report, chairman Duncan Hunter (R-CA) noted, “According to testimony from State Department officials, [China] will also acquire fire control and search radars from members of the European Union.” Such sales get around the “weapons ban” because they are not considered “lethal” themselves; they just help guns and missiles become more lethal.

The Pentagon report provides another example of these “non-lethal” transfers: “In 2001, China bought British Spey Mk202 engines to install on the FB-7 fighter-bomber until a license-produced version could be manufactured.” The FB-7 is being configured to attack naval targets – meaning the U.S. fleet. “Over the last thirty years, China also has benefitted from the sale of munitions and dual-use technologies from France, Germany, Italy, and the United States,” says the report.

This sole citation of the United States as a source of China’s rising power leaves a large gap in the report’s analysis. The report mentions that “senior economic policy officials are trying to manage bilateral trade.” But this is something of a non-sequitur as the last several U.S. administrations have adhered to free trade theory and have left trade with China to the “magic of the market.”  Unfortunately, nothing is said about the strategic consequences of that trade as currently conducted.  In fact, it is the massive U.S. trade deficit with China, $162 billion in 2004 and likely to hit $200 billion this year, that provides Beijing with the hard currency needed to buy foreign weapons, military technology, and related industrial equipment. But it is the role of American corporations in China, as joint venture partners, investors in Chinese infrastructure and educators of Chinese workers, engineers and managers, that is building the economic base for Beijing great power ambitions.

Last May 16, the Fortune Global Forum opened in Beijing, an event “limited to chairmen, CEOs, and presidents of major multinational corporations.” Chinese President Hu Jintao addressed the meeting. Event materials stated, “Already a dominant force in trade, China will overtake the US to become the world's largest economy by mid-century....  The focus of the 2005 Forum will be how multinationals can tap into the enormous potential of China.” The October 4, 2004 issue of Fortune magazine was devoted entirely to China and reported that for Fortune 500 executives, China is “absolutely center stage right now.”

Besides boosting China’s material capabilities, American corporations also feel they must promote Beijing’s political agenda as well. On its website, the second largest U.S. defense contractor displays the following statement: “Boeing supports the ‘One China’ policy and mutual engagement. Boeing leadership was effective in promoting U.S. approval of China’s accession to the World Trade Organization and permanent normal trade relations between the US and China.”
Transnational business influence is very strong in the Bush administration, which is one reason the Pentagon report was delayed and attempts were made to weaken its warnings about the rising Chinese global strategic challenge.

The United States needs to formulate an integrated international economic, political, and military strategy if the nation is to survive not just as a superpower ensuring the security of Americans, but also as a leading first-world economy, providing a high standard of living for all its people.

William R. Hawkins is Senior Fellow for National Security Studies at the U.S. Business and Industry Council.