EVER SINCE
British troops vanquished Qing dynasty forces in the Opium Wars of the
19th century, Chinese modernisers have dreamed of building world-class
armed forces with a strong navy at their core. China’s spears and
sailing ships were no match for steam-powered gunboats, wrote Li
Hongzhang, a scholar-official who helped set up the country’s first
modern arsenal and shipyard in Shanghai in 1865. If China systematically
studied Western technology, as Russia and Japan had, it “could be
self-sufficient after a hundred years”, he wrote.
It took longer than Li imagined, but today his dream is within reach. China’s navy
surpassed America’s as the world’s largest around 2020 and is now the
centrepiece of a fighting force that the Pentagon considers its “pacing
challenge”. The question vexing Chinese and Western military commanders
is this: can China continue on the same path, relentlessly expanding its
capacity to challenge American dominance? Or does a slowing Chinese
economy, and a more hostile, unified West, mean that China’s relative
power is peaking?
In recent months,
some American scholars have made the latter case, arguing that China
might soon attack Taiwan, the self-governed island that it claims, as
its relative advantages erode. “We live in an age of ‘peak China’,”
write Hal Brands and Michael Beckley, two American political scientists,
in a book released in August. “Beijing is a revisionist power that
wants to reorder the world, but its time to do so is already running
out.”
China’s supreme leader, Xi Jinping, certainly faces severe challenges, including an ageing population, runaway local-government debt and an American government bent on curbing the People’s Liberation Army’s (PLA) access to advanced Western technology. America is also overhauling its armed forces and galvanising alliances to prepare for a war over Taiwan. Yet there is still plenty of evidence that, in military terms, Chinese power is far from topping out.
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Take
China’s defence budget. It has risen by an average of over 9% annually
since Chinese leaders launched an ambitious military modernisation
programme in the late 1990s. In 2023 China’s official military budget is
projected to be $224bn, second only to America’s, which is about four
times bigger (see chart 1). Increasing defence spending at such a pace
is harder with a slowing economy.
Nonetheless defence spending is budgeted to rise this year by 7.2%, roughly in line with China’s forecast rate of nominal GDP
growth. The military budget excludes some key items such as weapons
development. Still, it is a useful trend indicator, suggesting that Mr
Xi is ring-fencing core defence spending at 1.6-1.7% of GDP—roughly the same as for the past decade.
If he can maintain that, based on the IMF’s current GDP
forecasts, China’s annual military spending will still be far smaller
than America’s by 2030, according to the Asia Power Index compiled by
the Lowy Institute, an Australian think-tank. But China will narrow the
gap substantially by then, it predicts, increasing military expenditure
in purchasing-power-parity terms by $155bn, compared with America’s
$123bn.
Even if his economy grows
slower than forecast, Mr Xi has considerable leeway to divert resources
to the armed forces from the civilian economy. And within the armed
forces, he can prioritise areas that he considers more strategically
important, for example by downsizing the army, which accounts for almost
half of the PLA’s 2.2m active-duty personnel.
Naval gazing
Defence
spending does not always translate into military power. That depends on
many other factors, including technology, alliances and goals. But in
China’s case, another useful indicator is the navy. It uses lots of
different equipment, including missiles and aircraft, and would
spearhead any effort to take Taiwan or project power globally. Building
ships is costly and needs a strong industrial base, so it reflects
economic health. It is also possible to compare China’s naval
shipbuilding plans with America’s, which are made public.
So
what do the numbers show? China’s navy has grown in the past two
decades from a puny coastal force of outdated ships to a largely modern,
home-made one that can conduct some missions far from China’s shores,
such as evacuating its citizens from Sudan in April. But it still falls
short of Mr Xi’s needs in several key ways—in particular by not having
enough large amphibious ships to guarantee a successful invasion of
Taiwan.
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That
will change over this decade, the Pentagon predicts, as the Chinese
navy retires the last of its older ships and adds larger, modern,
multi-role ones. It now has about 340 “battle force” vessels (ones that
can contribute to combat), including carriers, submarines, frigates and
destroyers. That number is likely to reach 400 by 2025 and 440 by 2030,
according to the Pentagon (see chart 2). Among the new ships will be
about a dozen more large amphibious ships.
Even
assuming low defence-budget growth, China’s navy would still grow to an
estimated 356 ships by 2033, adding three carriers and nine big
amphibious ships, according to the Centre for Strategic and Budgetary
Assessments (CSBA), a think-tank in Washington that has
designed a digital tool for assessing China’s military procurement
choices. “I don’t think the resource constraints are so formidable that
Chinese leaders will begin to think that their relative power advantages
are eroded,” says Jack Bianchi of CSBA.
America’s
navy, by comparison, had a battle force of 296 ships in April (about
half its cold-war peak) and expects that number to drop to about 290 by
the end of this decade. Thereafter, America may start to narrow the gap.
Its navy still has an official goal of 355 ships. But budget
constraints, political changes and other factors could make that
difficult to achieve even by 2040. And while China is focusing its
military build-up on Taiwan, America has to maintain a global presence.
Ship
numbers can be misleading. America’s vessels are still bigger and more
capable. Yet China is likely to catch up on those counts too in the
coming decade. It is already “largely composed of modern multi-role
platforms featuring advanced anti-ship, anti-air, and anti-submarine
weapons and sensors,” says the Pentagon. The Office of Naval
Intelligence states that Chinese naval-ship design and material quality
is in many cases comparable to America’s “and China is quickly closing
the gap in any areas of deficiency.”
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One
of China’s advantages is its vast shipbuilding industry, which is the
world’s largest, accounting for 44% of commercial ships produced
worldwide in 2021 (see chart 3). A single state-run company, the China
State Shipbuilding Corporation (CSSC), accounted for more
than a fifth of global orders that year. But it also produces most of
China’s navy ships, often at the same shipyards as commercial vessels.
For instance, the CSSC-owned Jiangnan shipyard (the one founded by Li Hongzhang in 1865) completed China’s third aircraft-carrier
in 2022 but has also made dozens of cargo ships, including for
Taiwanese customers. Combining production in this way helps to sustain
the shipyards in economic downturns, to apply civilian technology and
mass-production techniques to naval shipbuilding, and to circumvent
sanctions targeting the PLA, says Monty Khanna, a retired
rear-admiral in the Indian navy. America’s naval shipbuilders,
meanwhile, focus almost exclusively on defence contracts, making it hard
to scale up production or to sustain a stable supply of skilled
workers.
Forged in battle
Yet
there is one crucial area in which China will struggle to match America
for many years, if not decades: experience. China has not been to war
since one with Vietnam, fought largely on land, in 1979. It has not yet
perfected carrier operations in peacetime, let alone combat. And it has
not mastered the art of keeping its submarines hidden, while tracking
potentially hostile ones. America, by comparison, has honed those
capabilities over decades. China is also struggling to attract enough
well-educated recruits to operate its new ships.
There
is still, of course, a risk that Mr Xi goes to war before his armed
forces are ready. The most likely triggers for that would be Taiwan
formally declaring independence or America taking steps to significantly
enhance the island’s status or defences. As he grows older and more
vulnerable to ill health and political challenges, there is the
possibility that he miscalculates or grows impatient, as Vladimir Putin,
Russia’s president, apparently did over Ukraine.
Some
see signs of such impatience already in Mr Xi, who American officials
say has ordered his armed forces to develop the capability to take
Taiwan by 2027, the PLA’s centenary. But that does not mean he plans to attack by then, says the CIA. Many PLA
experts believe that 2027 is more of a short-term milestone designed to
maintain momentum towards the medium-term target of complete PLA modernisation by 2035. His ultimate goal is still to build a “world class” fighting force by 2049, the centenary of Communist rule.
Recent
war games suggest that China could perhaps win a conflict over Taiwan
this decade, but not for sure, and losses on all sides would be
devastating. The longer Mr Xi waits, the more the military balance tips
in China’s favour—and not just in conventional terms. The Pentagon
predicts China’s nuclear arsenal will almost quadruple in size by 2035.
Chinese strategists hope that will facilitate a peaceful solution by
persuading both Taiwan and America that conflict would be too costly.
“Peak China” proponents may be correctly predicting a fraught decade
ahead. But Mr Xi still has time on his side.■