China: A Persistent but Manageable Strategic Challenge Published Nov. 26, 2024 By Maj. Anthony Rock Wild Blue Yonder--Maxwell AFB -- Introduction Is this the “Chinese century”?[1] Is the United States going to see its power and influence diminished at the expense of an assertive or aggressive China? Understanding the security challenge posed by China requires analyzing four significant factors: The PRC’s historical willingness to engage in limited, strategic warfare on its border How China’s economic development since the 1970s has produced internal stability Chinese military modernization How China’s current use of its outsized economic influence may impede its long-term security interests First, any discussion of the security challenge posed by China requires an understanding of how the PRC views the use of limited military force to achieve strategic ends. The PRC has initiated military conflicts on its borders and has mostly succeeded in keeping those conflicts limited in scope. Second, the security challenge posed by China is influenced by the internal stability of the PRC that allowed it to pursue its long-term development and strategic interests. Third, the security challenge is substantially affected by China’s military modernization—understanding the current state of that modernization as well as its likely future. Finally, the security challenge posed by China is deeply affected by how China (mis)uses its increased economic power and the backlash accompanying such actions. As part of this last factor regarding China’s economic influence, this article will explore Sino-Japanese and Sino-Australian relations. Those complex relationships provide a useful context for future Chinese relations with the U.S. and its Indo-Pacific partners. Viewing these factors, the article finds that the security challenge posed by China is significant but not existential. China’s rate of economic growth has already slowed and will continue to slow.[2] China will not be able to sustain the massive levels of economic development and military spending increases as growth slows, its population ages, and its spending on social services increases.[3] China will almost certainly remain a major trading partner for numerous countries in the Indo-Pacific but those countries will likely avoid closer security ties with China. Thus, the security challenge posed by China to the United States will likely be manageable insofar as the United States will likely be able to retain security relationships and alliances in the Pacific. PRC Willingness to Engage in Limited, Strategic Warfare on Its Borders Understanding the current and future security challenge requires understanding how the PRC makes decisions to go to war and contain the scope of warfare. Two prior conflicts—the Korean conflict and the Sino-Indian War of 1962—provide valuable lessons for potential future conflicts. In 1950, the CIA predicted that China would not enter the Korean conflict. It believed that Chinese involvement would risk turning the conflict into a general war and the Soviet Union would accordingly prevent such involvement.[4] Instead, the CIA believed that China and the Soviet Union were exploiting western fears of Chinese intervention to gain political concessions for the PRC’s nascent regime or to create an “atmosphere for obtaining a favorable settlement in Korea.”[5] These beliefs were strong enough that U.S. intelligence analysts discounted initial credible reports of large-scale PLA activity in Korea.[6] The Sino-Indian War of 1962 similarly featured significant miscalculations by China’s adversary. In this case, India’s leaders appeared to believe that China wanted to avoid escalating localized border disputes into broader conflict. India thus engaged in increasingly belligerent actions on the border.[7] China responded with military action that overwhelmed the Indian forces, then abruptly withdrew its forces from the areas in which they had advanced.[8] What can U.S. military strategists and policymakers learn from these military conflicts? First and foremost, in both cases, China communicated early warnings, telegraphing beforehand its intent to respond to actions by its adversaries.[9] Second, in Korea, the U.S. incorrectly believed fear of a broader war would be a sufficient deterrent. Instead, the PRC appeared to correctly estimate that the U.S. would not escalate by attacking the Chinese mainland. Third, in the case of the Sino-Indian War, the PLA voluntarily withdrew its forces before getting mired in a long-term war, leaving the border issue with India unresolved rather than attempting to hold disputed territory by force. In a similar vein, the U.S. should not discount statements by the PRC that telegraph an intent to reunify the mainland with Taiwan, including potentially by force.[10] Rather, the U.S. should take these statements at face value—not necessarily of a sign that China will invade Taiwan by force, but that it might do so. Another area of consideration is the scope of potential offensive operations against Taiwan. One might assume that once China launches such an operation, it will continue even in the face of protracted warfare.[11] However, U.S. strategists should also consider the possibility of smaller-scale Chinese operations. China has identified 2027 as the year to achieve the military capacity to conquer Taiwan by force and 2049 as the year by which to achieve “full reunification.”[12] U.S. strategists should thus recognize the potential, well before 2049, for some sort of PLA operation short of complete invasion and control. While a less-than-full-scale-invasion might forfeit surprise, it could also keep the U.S. speculating about the timing and scope of any subsequent operations—in other words, keep the U.S. off-balance strategically. Taiwan has a different magnitude of importance for China than the Sino-Indian border, but the U.S. should not forget China’s willingness to leave a serious territorial matter unresolved even when it enjoyed a military advantage. Additionally, any future Chinese decisions to go to war should be evaluated in the context of whether U.S. policies would be sufficient to deter a Chinese invasion. In Korea, U.S. intelligence wrongly believed that the risk of a broader war with the U.S. or U.N. forces would deter China. Similarly, over the next ten years or beyond, U.S. strategists should not assume that the mere possibility of a broader conflict will deter the PRC from invading Taiwan. Rather, strategists must consider how the PRC perceives the likely scope of U.S. reactions to such an invasion. If China believes that the U.S. would avoid escalation and not commit to large-scale conflict over Taiwan, such a belief might lead China to conclude that the U.S. deterrent power is low. Even threats of scorched-earth policies with respect to valuable resources in Taiwan might not be effective if China believe these threats to be empty. To make such threats more effective, the U.S., Taiwan, and other actors might have to put into place mechanisms that make retaliation or scorched-earth policies automatic in the event of a Chinese invasion.[13] Another possible deterrent could be the U.S. signaling that it would support Asian/Pacific allies such as Japan, South Korea, and Australia developing nuclear weapons if China invades Taiwan.[14] Like the possibility of a broader conflict with the U.S., however, such threats would only be as effective as their credibility. China’s Economic Development, Consequent Internal Stability and Impact on the Strategic Challenge After normalizing relations with the U.S. and many other nations, China has enjoyed a long period of strong economic development and growth, including “double-digit or near double-digit growth from 1982 to 2011.”[15] With this growth came a degree of legitimacy—or, as Dingxin Zhao described it, “performance legitimacy.”[16] This form of legitimacy has its roots in Chinese history, starting with the Wester Zhou Dynasty in 1045 BCE. The ruler’s “mandate of heaven” derives in part from his ability to take care of the people’s needs and has remained a factor throughout the PRC’s rule.[17] This growth has partially mitigated broader concerns about the PRC, including those regarding individual freedoms or corruption.[18] However, the “economic miracle” era is ending, either in the short or near term. In 2022, one analysis estimated that China’s economic growth would slow to 3 percent by 2023 and would average 2-3 percent between 2022 and 2050.[19] Then, in late 2023, another analysis estimated that China’s GDP growth in 2023 was closer to 1.5 percent than the 5 percent China claimed.[20] China’s reduction in Belt and Road Initiative (BRI) investments supports these analyses of economic slowdown.[21] The strategic challenge posed by China is driven in part by the internal stability the regime has enjoyed, which in turn is due to the regime’s ability to deliver results.[22] China claims that economic growth will continue, that gains will be distributed among the people, and that there will be significant increases in access to public services.[23] However, as noted, growth is slowing, and the PRC will be forced to spend more on social services—which may require increased taxes.[24] When these things occur, the regime may face new challenges to its internal stability and in maintaining its military. It could react in any number of ways—scaling back its military ambitions, on the one hand, or using military conflict to consolidate national unity. Furthermore, a continued reduction in BRI investments would reduce China’s global economic reach. Either way, the slower economic growth is a signal that the strategic challenge posed by China will likely remain manageable. How Chinese Military Modernization Affects the Strategic Challenge Chinese economic development allowed the country to undertake a massive military modernization project. That project did not begin right away; China held off on major modernization of the PLA for several decades, choosing instead to slowly develop the industrial capacity for advanced weaponry.[25] Since the 1990s, however, the PRC has invested in “double-digit increases in defense budgets.”[26] Even in 2023 and 2024, when China announced official military budget increases of 7.2 percent each year, think tanks believed the actual numbers might be even higher.[27] The modernization efforts have led to tangible results. For air assets, for example, the People’s Liberation Army Air Force now has hundreds of fourth-generation aircraft capable of operating missions in all-weather scenarios.[28] Furthermore, China has drastically improved other areas of its military capability, including its integrated air defense systems (IADS). RAND assessed trends from 1996-2017 in U.S. and Chinese operational capabilities in a potential conflict in Taiwan. When doing so, it determined that several areas of prior U.S. superiority gave way to parity as of 2017—including air superiority and airspace penetration.[29] When assessing the strategic challenge posed by China, the military modernization project itself serves as a reminder of China’s capacity to sustain massive, long-term improvements. Part of the reason for the project’s longevity has been the internal political stability. The bigger question will be whether China can sustain its defense budget increases over the next 10–20 years. Its economic slowdown would suggest that the defense spending increases are unsustainable. As a follow-up: if China cannot sustain those increases, it may not be able to use its military to project the sort of power it desires in the Indo-Pacific. Yet numerical increases alone cannot tell the whole picture. In 2024, U.S. defense spending was projected to be $824 billion; China’s was announced as $231 billion but assessed as $474 billion by Western analysts.[30] When analyzing competition in the Pacific, however, one must remember that the U.S. operates its military on a broader global scale. Thus, specific analyses of capabilities in the areas of likely conflict—such as RAND’s analysis—may be more useful when assessing China’s military capabilities and thus developing strategy to address China’s likely use of that military capability. China’s Use of Its Economic Influence and Possible Impacts on Its Long-Term Security Interests: Japan and Australia Deepen Economic Ties But Avoid Security Ties China has been Australia’s number one trading partner since 2017.[31] Meanwhile, Australia and the U.S. share close security ties.[32] With closer and increasing Sino-Australian economic trade, there is always the possibility of closer political and security-related ties. However, that has not been the case. Rather, Australia has become increasingly concerned about Chinese intervention in domestic Australian politics and Chinese assertiveness in the South China Sea and the Pacific at large.[33] Similarly, Sino-Japanese trade has substantially increased in recent years and has overtaken U.S.-Japanese trade. In 2023, for example, trade with the U.S. accounted for 15.0 percent of Japan’s total trade, whereas trade with China accounted for 22.2 percent of Japan’s total trade.[34] And yet U.S. bases remain in Japan, with the Japanese population confident that the U.S. military is there to defend Japan.[35] China, recognizing its influence as the major trading partner for many Asian-Pacific countries, sometimes uses that influence aggressively. In 2010, for example, China responded to a Sino-Japanese diplomatic crisis involving a Chinese boat captain by halting shipments of rare earth minerals to Japan.[36] Meanwhile, in response to Australia calling for an impartial inquiry into China’s handling of the COVID-19 pandemic, China threatened to boycott Australian exports of beef and wine—a massive economic blow to Australian domestic producers.[37] Such actions are part of the PRC’s attempt to aggressively counter any challenges to its authority. However, these actions toward trading partners, especially in response to those trading partners’ concerns about Chinese domestic or Taiwan policy, may well backfire. Scholar Ezra Vogel, for example, believes that Japanese attitudes toward Taiwan (driven in part by Japan’s historical ties to Taiwan) will serve as a possible ceiling on the level of Sino-Japanese trade and investment Japan will tolerate.[38] Japan is not ending its trade with China; however, perhaps in recognition of the strategic risk associated with over-dependence on China, it is exploring alternatives. Its Free and Open Indo-Pacific framework could help develop economic and security ties with Indo-Pacific countries.[39] Conclusion China has utilized its long period of economic growth to achieve internal stability and modernize its military. China has historically telegraphed its strategic interests, made explicit threats to go to war, and then done so even when faced with seemingly significant deterrents. That challenge will not go away but likely will be mitigated by China’s economic slowdown and the backlash from China misusing its outsized economic influence. Some may disagree with this assessment. One could argue that China is a more formidable adversary and that its military, buttressed by strong future economic growth, will act decisively and aggressively. Such a view might propose the U.S. return to the “strategic clarity” posture discussed late in the first Trump administration.[40] Or, on the other hand, one could see China’s economy in the next 20 years as unable to compete with Western powers in the “ability to devote resources to science and innovation, military spending, or financing overseas infrastructure projects.”[41] Or even still: one could see a future China beset with internal instability as a threat because it might feel compelled by said instability to take urgent action in Taiwan.[42] These views are not without merit. However, China’s growth is not going away; it is merely slowing. Moreover, the PRC has shown substantial staying power and adaptability, especially after normalizing relations with the U.S. and other states. Ultimately, the challenge will remain here to stay, but it is one that can be managed by U.S. policymakers who view the challenge with clear eyes and open minds about ways to adapt to the challenge. Major Anthony Rock is an Air Force JAG officer. He served on active duty from 2016 to 2023 and currently serves in the Reserves. This article was adapted from a paper Major Rock wrote for the course China in an Era of Strategic Competition, a combined ACSC/AWC offering. Major Rock is a federal employee in his civilian capacity. The views in this article are his personal views and do not represent any official policy or position. [1] Joseph E. Stiglitz, “The Chinese Century,” Vanity Fair, December 4, 2014; “The Chinese Century Is Well Under Way,” The Economist, October 27, 2018. [2] Daniel H. Rosen et al., “Through the Looking Glass: China’s 2023 GDP and the Year Ahead,” Rhodium Group, December 29, 2023; Roland Rajah and Alyssa Leng, “Revising down the Rise of China,” Lowy Institute, March 14, 2022. [3] Thomas Fingar and Jean C. Oi, “China’s Challenges: Now It Gets Much Harder,” The Washington Quarterly 43, no. 1 (January 2, 2020): 73. [4] Selection of Intelligence Memorandums,” 1950, Truman Library, 437–38. [5] “Selection of Intelligence Memorandums,” 1950, Truman Library, 438. [6] “Selection of Intelligence Memorandums,” 1950, Truman Library, 458. [7] Central Intelligence Agency, “Sino-Indian Border Dispute: Section 3: 1961-62,” May 5, 1964, 35. [8] Central Intelligence Agency, “Sino-Indian Border Dispute: Section 3: 1961-62,” May 5, 1964, 62–63. [9] Allen S. Whiting, “China’s Use of Force, 1950–96, and Taiwan,” International Security 26, no. 2 (October 1, 2001): 124. [10] Academy of Military Sciences, “The Science of Military Strategy,” trans. China Aerospace Studies Institute, 2013, 122. [11] Allen S. Whiting, “China’s Use of Force, 1950–96, and Taiwan,” International Security 26, no. 2 (October 1, 2001): 126. [12] Sam LaGrone, “Milley: China Wants Capability to Take Taiwan by 2027, Sees No Near-Term Intent to Invade,” USNI News (blog), June 23, 2021; Nathan Beauchamp-Mustafaga et al., Deciphering Chinese Deterrence Signalling in the New Era: An Analytic Framework and Seven Case Studies (RAND Corporation, 2021), 4–5. [13] Jared M. McKinney and Peter Harris, “Broken Nest: Deterring China from Invading Taiwan,” The US Army War College Quarterly: Parameters 51, no. 4 (November 17, 2021): 30–31. [14] Jared M. McKinney and Peter Harris, “Broken Nest: Deterring China from Invading Taiwan,” The US Army War College Quarterly: Parameters 51, no. 4 (November 17, 2021): 31. [15] Thomas Fingar and Jean C. Oi, “China’s Challenges: Now It Gets Much Harder,” The Washington Quarterly 43, no. 1 (January 2, 2020): 70. [16] Dingxin Zhao, “The Mandate of Heaven and Performance Legitimation in Historical and Contemporary China,” American Behavioral Scientist 53, no. 3 (November 2009): 416. [17] Dingxin Zhao, “The Mandate of Heaven and Performance Legitimation in Historical and Contemporary China,” American Behavioral Scientist 53, no. 3 (November 2009): 418–26. [18] Thomas Fingar and Jean C. Oi, “China’s Challenges: Now It Gets Much Harder,” The Washington Quarterly 43, no. 1 (January 2, 2020): 68. [19] Roland Rajah and Alyssa Leng, “Revising down the Rise of China,” Lowy Institute, March 14, 2022. [20] Daniel H. Rosen et al., “Through the Looking Glass: China’s 2023 GDP and the Year Ahead,” Rhodium Group, December 29, 2023. [21] Matthew Mingey and Agatha Kratz, “China’s Belt and Road: Down but Not Out," Rhodium Group, January 4, 2021. [22] For a more in-depth discussion of the interplay between economic growth and legitimacy in both ancient and modern China, see generally Dingxin Zhao, “The Mandate of Heaven and Performance Legitimation in Historical and Contemporary China,” American Behavioral Scientist 53, no. 3 (November 2009): 416–33. [23] People’s Republic of China, “Outline of the People’s Republic of China 14th Five-Year Plan for National Economic and Social Development and Long-Range Objectives for 2035,” ed. Ben Murphy, trans. Etcetera Language Group, Inc. (Xinhua News Agency (translated: Center for Security and Emerging Technology), May 12, 2021), 9. [24] Thomas Fingar and Jean C. Oi, “China’s Challenges: Now It Gets Much Harder,” The Washington Quarterly 43, no. 1 (January 2, 2020): 73. [25] Thomas Fingar and Jean C. Oi, “China’s Challenges: Now It Gets Much Harder,” The Washington Quarterly 43, no. 1 (January 2, 2020): 79. [26] Thomas Fingar and Jean C. Oi, “China’s Challenges: Now It Gets Much Harder,” The Washington Quarterly 43, no. 1 (January 2, 2020): 79. [27] Aadil Brar, “US and China Defense Budgets Compared,” Newsweek, March 6, 2024. [28] U.S. Department of the Army, “Army Techniques Publication No. 7-100.3: Chinese Tactics,” August 9, 2021, 3–2. [29] RAND, “An Interactive Look at the U.S.-China Military Scorecard” (RAND Corporation, 2017). [30] Aadil Brar, “US and China Defense Budgets Compared,” Newsweek, March 6, 2024. Brar reported the official Chinese figures. For the analysis placing the Chinese defense budget for 2024 closer to $474 billion, see M. Taylor Fravel et al., “China’s Defense Spending: The $700 Billion Distraction,” War on the Rocks, September 2, 2024. [31] Patrick Köllner, “From Honeymoon to Hangover: Resetting Australia’s Relations with China,” German Institute for Global and Area Studies, 2018. [32] Scott Morrison, “‘Where We Live’ Asialink Bloomberg Address,” June 26, 2019. [33] Patrick Köllner, “From Honeymoon to Hangover: Resetting Australia’s Relations with China,” German Institute for Global and Area Studies, 2018. [34] Numbers derived from author’s personal calculation of data available for 2023 on Japan External Trade Organization website, https://www.jetro.go.jp/en/reports/statistics.html. The author added Japan’s total imports and exports with the PRC and Hong Kong and calculated these as a percentage of the total imports and exports for all countries. The author then added Japan’s total imports and exports with the United States and calculated these as a percentage of the total imports and exports for all countries. [35] Yukio Hatoyama, “US-China Rivalry and Japan’s Strategic Role,” The Washington Quarterly 44, no. 2 (June 17, 2021): 10. [36] Andrew D. Taffer, “Threat and Opportunity: Chinese Wedging in the Senkaku/Diaoyu Dispute,” Asian Security 16, no. 2 (February 12, 2019): 7. [37] “The Deterioration of Australia–China Relations,” Strategic Comments 26, no. 3 (March 15, 2020): 3. [38] Ezra F. Vogel, 2019. Understanding China-Japan Relations 1945-2019. The specific remarks about a possible ceiling in investment come at approximately 1 hour and 10 minutes into the video. [39] Mireya Solís, “China, Japan, and the Art of Economic Statecraft,” Global China, February 2020, 7. [40] Michael Mazza, “Congressional Initiatives Shifting US Towards Strategic Clarity,” AEI, July 29, 2020. [41] Roland Rajah and Alyssa Leng, “Revising down the Rise of China,” Lowy Institute, March 14, 2022. [42] Allen S. Whiting, “China’s Use of Force, 1950–96, and Taiwan,” International Security 26, no. 2 (October 1, 2001): 128.