Military and Security Developments Involving the People's Republic of China/Chapter 5
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KEY TAKEAWAYS
- The PRC's long-term goal is to create an entirely self-reliant defense-industrial sector—fused with a strong civilian industrial and technology sector—that can meet the PLA's needs for modern military capabilities.
- The PRC has mobilized vast resources in support of its defense modernization, including through its MCF Development Strategy, as well as espionage activities to acquire sensitive, dual-use, and military-grade equipment. The PRC has substantially reorganized its defense-industrial sector to improve weapon system research, development, acquisition, testing, evaluation, and production.
- In 2022, the PRC announced its official annual military budget would increase by 7.1 percent, continuing more than 20 years of annual defense spending increases and sustaining its position as the second-largest military spender in the world. The PRC's published military budget omits several major categories of expenditures and its actual military-related spending is significantly higher than what it states in its official budget.
In 2022, China's defense budget marginally increased from $229 billion. According to a PRC "work report," the new defense budget aligned with PRC military goals associated with its 2027 and 2035 military modernization program. PRC state media reported that the part of the defense budget increase over the prior year focused on modernizing the PLA's training with realistic simulation and use of virtual reality; accelerating improvements in logistics capabilities, defense science, and technology; and enhancing the military's strategic capacities.
China is continuing to reorganize its defense, science, and commercial industries to ensure PLA access to the resources, technologies, and expertise required to militarily surpass the United States and develop capabilities for complex future military contingencies. China's efforts include developing and incorporating military-AI and other emerging disruptive technologies (EDT) to build an "intelligentized" force sufficiently equipped with high-tech weapons and advanced communications and information technologies to wage and win dynamic wars. While China's MCF strategy supports acquisition of foreign materiel, technology, and expertise through overt and illicit means, China is also accelerating efforts to build domestic capacity in these areas and reduce its vulnerabilities to foreign supply chokepoints.
MILITARY EXPENDITURES TRENDS
In 2022, the PRC announced a nominal 7.1 percent annual military budget increase to $229 billion, which is approximately 1.3 percent of gross domestic product. This year’s budget continues more than 20 years of annual defense spending increases and sustains the PRC’s position as the second-largest military spender in the world after the United States. The PRC’s defense budget has nearly doubled during the past 10 years—data from 2013 through 2022 indicates China’s official military budget grew 6 percent annually after adjusting for inflation. The PRC can support continued growth in defense spending for at least the next five to 10 years, based on economic data and growth projections.
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China: Official Defense Budget (2013–2022)
China’s Estimated Military Expenditures. The PRC’s published military budget does not include details of expenditure breakouts, including R&D and foreign weapons procurement. In 2022, China’s actual military-related spending could be significantly higher than its officially announced defense budget. Actual PRC military expenses are difficult to calculate, largely due to the PRC’s lack of transparency. United Kingdom and Europe-based think tanks estimate that the PRC’s actual 2022 defense budget is at least 30-40 percent higher than the PRC’s announced budget.
China’s Estimated Defense Budget Growth. If China’s official defense budget continues to increase annually by an average of 6 percent, the PLA can dedicate more money for training, operations, and personnel costs. Economic forecasters project that China’s economic growth will slow during the next 10 years, from about 3 percent in 2022 to around 4 percent in 2025, which could slow future defense spending growth. Assuming accurate economic projections and a steady defense burden, China will remain the second-largest spender after the United States.
| REGIONAL COMPARISON OF THE PRC’S 2022 OFFICIAL DEFENSE BUDGET | |
| 2022 $ Billion | |
| PRC (official defense budget) | $229 |
| India | $74.4 |
| Japan | $51.9 |
| Russia (national defense budget) | $90.9 |
| South Korea | $42.5 |
| Taiwan | $16.8 |
PLA PERSONNEL COSTS
China is facing adverse demographics such as an aging population and low-birth rates. The PLA could respond to the demographics issues by raising pay standards to support recruitment and retainment efforts, which would place upward pressure on PLA personnel spending relative to other defense spending categories. The PLA is giving priority to recruiting college graduates with science and engineering backgrounds and those experienced in operating high-tech weapons, suggesting the PLA will have to compete with the private sector to attract top talent.
DEVELOPMENTS AND TRENDS IN ITS DEFENSE INDUSTRY
Key Takeaways
- China’s hypersonic missile technologies have greatly advanced during the past 20 years and many of the PRC’s missile programs are comparable to other international top-tier producers.
- China is the world’s top ship-producing nation by tonnage and is capable of producing a wide range of naval combatants, gas turbine and diesel engines, and shipboard weapons and electronic systems, which makes it nearly self-sufficient for all shipbuilding needs.
MISSILE AND SPACE INDUSTRY
China produces a wide range of ballistic, cruise, air-to-air, and surface-to-air missiles, many comparable in quality to those of other international top-tier producers, for domestic military use and export. China has the world’s leading hypersonic arsenal and has dramatically advanced its development of both conventional and nuclear-armed hypersonic missile technologies during the past 20 years. Beijing fielded its first missile with a hypersonic glide vehicle in 2020 and tested a new hypersonic weapon system in 2021, building on previous progress in hypersonic weapons development. China also advanced its scramjet engine development in 2022, which has applications in hypersonic cruise missiles. In April 2019, the PLAN revealed during its 70th anniversary celebration that its new guided-missile cruiser can employ long-range land attack cruise missiles and, in 2022, launched the YJ-21 hypersonic missile designed to defeat aircraft carriers. In 2022, Beijing made its first delivery of a surface-to-air missile system to a European nation, Serbia. China is developing beyond-visual-range air-to-air missiles and exploring dual-mode guidance capabilities, which uses both active radar and infrared homing seekers that improve target-selection capabilities and make the missiles more resistant to countermeasures.
China’s space industry, managed by the PLA, is rapidly expanding its intelligence, surveillance, reconnaissance, navigation, and communication satellite constellations. The successful completion of the Tiangong Space Station in 2022 and its planned expansion demonstrates the industry’s continued progress. China’s domestic space market is dominated by state-run enterprises; however, increased investment has enabled private space companies to successfully launch orbital satellites in the past 4 years. In 2020, China launched its first satellites for an ongoing new space-based internet-of-things project with container monitoring and maritime communications applications and, in 2021, designated satellite internet as a national infrastructure project.
NAVAL AND SHIPBUILDING INDUSTRY
China, the top ship-producing nation in the world by tonnage, is increasing its shipbuilding capacity for all naval classes: submarines, surface combatants, and auxiliary and amphibious ships. China also has developed unmanned underwater systems, publicly revealing a long-range system in 2019. China domestically produces naval gas turbine and diesel engines as well as almost all shipboard weapons and electronic systems for its shipbuilding sector, making the industry nearly self-sufficient for all shipbuilding needs. In 2022, China launched its first domestically designed and manufactured aircraft carrier, featuring an electromagnetic catapult launch and arresting devices. The carrier will be able to deploy up to 70 aircraft, including J-15 fighters and Z-9C antisubmarine helicopters.
ARMAMENTS INDUSTRY
China’s production capacity is improving in nearly every PLA ground system category: main and light battle tanks, armored personnel carriers, assault vehicles, air defense artillery systems, and artillery systems. Notably, China began testing unmanned Type-59 tanks in 2018 as part of its military modernization program. In November 2022, China unveiled an unmanned model of its VT-5 light tank, which is an export variant of the Type-15 light tank. The Type-15 entered PLA service in 2018 and was meant to replace aging Type-62 light tanks that first entered service in 1962. China is capable of producing ground weapon systems at or near world-class standards; although customers also cite persistent quality deficiencies with some exported equipment, inhibiting the PRC’s ability to expand its export markets.
AVIATION INDUSTRY
China is advancing its domestic aviation industry through two major state-owned aircraft corporations, the China Aviation Industry Corporation (AVIC) and the Commercial Aircraft Corporation of China (COMAC). AVIC designs and produces China’s military aircraft, including the J-20 fifth-generation fighter, the Y-20 heavy transport, and the future H-20 flying wing stealth bomber. COMAC produces large passenger aircraft and has begun to export the ARJ21 regional jet to Indonesia, in line with its efforts to expand into the international commercial airliner market. COMAC has also delivered its first narrow-body C919 airliner to China Eastern Airlines, but cooperation with Russia on the wide-body CR929 may be stalled because of the effects of Western sanctions on Russia.
China’s decades-long effort to improve domestic aircraft engine production is starting to produce results, with the J-10 and J-20 fighters beginning to switch to domestically produced WS-10 engines, although some Russian AL-31F engines may remain in use. China’s first domestically produced high-bypass turbofan, the WS-20, has also entered flight-testing on the Y-20 heavy transport aircraft and probably has begun to replace previously imported Russian engines. UAV development has also proceeded rapidly with new flight tests of experimental craft such as the Y5U transport UAV. China’s military aviation industry has continued to export UAVs abroad, including its sale of nine armed drones to the Democratic Republic of Congo this year.
DRIVE TO DOMINATE EMERGING TECHNOLOGIES
China seeks to be an innovation superpower that is largely non-reliant on foreign technology and serves as a global center for high-tech industries. The goal of attaining self-sufficiency in key S&T sectors—a theme of PRC state plans going back decades—was recently reiterated in the 14th Five-Year Plan. As part of this self-sufficiency drive, Beijing has mobilized its bureaucracies to rapidly develop the country’s capacity for domestic innovation. Published in 2006, the National Medium-and-Long-Term Plan for the Development of Science and Technology (2006-2020) was a landmark policy that formalized China’s push for domestic innovation while also calling for the assimilation and “re-innovation” of advanced foreign technologies. In 2015, with the Made in China 2025 plan, Beijing sharpened its emphasis on technological independence by establishing import substitution quotas across a range of core technologies. The plan also called for the reform of state-owned enterprises, the establishment of regional innovation centers, and the leveraging of private sector capabilities in order to leapfrog foreign technological competitors and create a superior innovation ecosystem.
China is particularly focused on dominating a range of emerging, dual-use technologies that promise to be both disruptive and foundational for future economies. In its 14th Five-Year Plan, China prioritized the advancement of next-generation artificial intelligence, quantum information, brain science and biotechnology, semiconductors, and deep space, deep sea, and polar-related technologies. Beijing has a clear understanding of its remaining S&T deficiencies and wields industrial policies and the country’s massive tech transfer apparatus in an effort to close these gaps. China also sustains high levels of R&D funding and offers significant subsidies to domestic companies working on frontier technologies.
Artificial Intelligence. China is a global leader in AI technology and aims to overtake the West in AI R&D by 2025 to become the world leader in AI by 2030. China has designated AI as one of its priority, national-level S&T development areas and assesses that advances in AI and autonomy are central to intelligentized warfare, the PRC’s concept of future warfare. Beijing views the integration of military and civilian institutions as central for developing AI-enabled military capabilities and has established military-civilian R&D centers and procured commercially-developed AI and robotic technologies to ensure PLA access to cutting-edge AI technologies. Although, Chinese researchers are world leaders in certain AI applications, such as facial recognition and natural language processing, and Chinese companies are marketing domestically-designed AI chips. While China remains reliant on certain foreign capabilities to produce AI hardware, such as advanced semiconductor fabrication factories and electronic design automation software, Chinese researchers continue to explore new materials and design concepts for next-generation semiconductors.
Brain Science. In 2021, Beijing funded the China Brain Plan, a major research project aimed at using brain science to develop new biotechnology and AI applications. That year, China also designed and fabricated a quantum computer capable of outperforming a classical high-performance computer for a specific problem. China was also domestically developing specialized refrigerators needed for quantum computing research in an effort to end reliance on international components. In 2017, China spent over a billion dollars on a national quantum lab which will become the world’s largest quantum research facility when completed.
FOREIGN ARMS ACQUISITION
China uses foreign suppliers to overcome limitations in its domestic production capabilities, particularly with helicopters and aircraft engines. Only a few states have been willing to supply military materiel to China, such as Russia and Ukraine. As its aerospace industry improves over the next decade, China very likely will decrease its foreign acquisitions to a point of only maintaining an import relationship with foreign suppliers positioned to quickly fill niche gaps in the PRC’s inventory.
- Helicopters. In 2019, China signed four contracts with Russia worth a total of $1.7 billion for 100 Mi-171 helicopters. Russia began producing helicopters for these contracts in 2020 and Beijing expects at least one of the orders to be completed in 2022. As of 2021, China sought at least 36 Russian Ka-52K ship-borne heavy attack helicopters to operate from Type 075 amphibious assault ships while it develops a domestic alternative.
- Aircraft Engines. China has a longstanding reliance on Russian- and Ukrainian-built engines for fixed and rotary wing aircraft produced domestically. China is developing new engine designs to lessen its reliance on foreign engines, such as the WS-15 to replace Ukrainian AI222 engines that power its L-15 trainer aircraft. Russia’s war on Ukraine probably will impede China’s ability to acquire military equipment and maintenance services from either country.
ESPIONAGE ACTIVITIES SUPPORTING CHINA’S MILITARY MODERNIZATION
There have been multiple U.S. criminal indictments since 2015 involving espionage by PRC nationals, naturalized U.S. citizens, or permanent resident aliens from the PRC, as well as U.S. citizens. These include procuring and exporting controlled items to China and economic espionage, according to a U.S. Department of Justice summary of major U.S. export enforcement. The PRC’s efforts to acquire sensitive, dual-use, or military-grade equipment included aviation technologies, radiation-hardened power amplifiers and supervisory circuits, radiation-hardened integrated circuits, monolithic microwave integrated circuits, accelerometers, gyroscopes, naval and marine technologies, signals decoders, syntactic foam trade secrets, space communications, military communication jamming equipment, and dynamic random access memory. Cases from 2022 include the following:
- In November 2022, an MSS intelligence officer was sentenced to 20 years in prison for attempting to steal technology and proprietary information from companies based both in the United States and abroad. The MSS intelligence officer attempted to steal technology related to a U.S. aviation company’s exclusive composite aircraft engine fan module—which no other company in the world has been able to duplicate—in order to advance China’s commercial and military aviation efforts. The MSS intelligence officer also openly talked about efforts to obtain U.S. military information in addition to commercial aviation trade secrets. The espionage operation was executed with full coordination between the MSS and China’s aviation entities.
- In September 2022, a federal district court jury convicted a Chinese national of acting illegally within the United States as an agent of the PRC. The Chinese national was tasked by the MSS with providing biographical information on certain individuals for possible recruitment. The individuals included Chinese nationals who were working as engineers and scientists in the United States, some of whom worked for U.S. defense contractors. This tasking was part of an effort by the MSS to obtain access to advanced aerospace and satellite technologies being developed by companies within the United States.
PRC CYBER-ENABLED ESPIONAGE ACTIVITIES
The PRC presents a sophisticated, persistent cyber-enabled espionage and attack threat to military and critical infrastructure systems through its efforts to develop, acquire, or gain access to information and advanced technologies.
Detected PRC cyberspace operations have targeted telecommunications firms, managed service providers (MSPs), and software developers. Key U.S. targets include proprietary commercial and military technology companies and research institutions associated with defense, energy, and other sectors.
The PRC seeks to create disruptive and destructive effects—from denial-of-service attacks to physical disruptions of critical infrastructure—to shape decision-making and disrupt military operations at the initial stages and throughout a conflict. China’s activities in cyberspace constitute a fundamentally different, more complex, and more urgent challenge to the United States national security today than they did a decade ago.
CHINA’S ARMS EXPORTS
China is the fifth-largest arms supplier in the world, and sells nearly every category of conventional military equipment including UAVs, MANPADS, submarines, naval surface vessels, surface to air missile systems, and fighter aircraft to customers worldwide.
Many developing countries buy Chinese weapons systems because they are less expensive than other comparable systems. Although some potential customers consider arms made by the PRC to be of lower quality and reliability, many of China’s systems are offered with enticements such as donations and flexible payment options, which make them appealing options for buyers.
China’s arms sales operate primarily through state-run export organizations such as AVIC and North Industries Corporation (NORINCO). Arms transfers also are a component of the PRC’s foreign policy, used in conjunction with other types of assistance to complement foreign policy initiatives undertaken as part of China’s BRI.
- Fixed-Wing Aircraft. China offers three combat aircraft for export: the FC-31 fifth generation multirole combat aircraft, the JF-17 light combat aircraft, and the J-10 multirole combat aircraft. As of 2022, China had not sold any FC-31s and had sold J-10s only to Pakistan. China co-produces the JF-17 with Pakistan, which has been sold to Burma, Iraq, and Nigeria. China has supplied strike-capable Caihong and Wing Loong UAVs to countries including Algeria, Pakistan, Egypt, Indonesia, Iraq, Jordan, Kazakhstan, Saudi Arabia, Serbia, and the UAE.
- Precision-Strike Weapons. As of 2021, China had exported ballistic missile systems, including the M20, BP-12, and Joint Attack Rocket and Missile System (JARM), as well as long-range satellite-guided rocket systems. Although China typically does not disclose the countries purchasing these types of arms, in 2021, Burma displayed an SY-400 transporter erector launcher (TEL) and in 2017 Qatar displayed a JARM.
- Air Defense Systems. In April 2022, Beijing made its first delivery of a surface-to-air missile system to a European nation, Serbia. Serbia displayed the PRC-produced FK-3 medium- to long-range semi-active radar homing/radio-command guidance air defense system. The FK-3, an export-variant of the HQ-22, fires missiles that can reach Mach 6 and range 100 km.
- Naval Combatants. China is a supplier of major naval vessels, highlighted by Pakistan’s 2015 purchase of eight Yuan-class submarines for more than $3 billion. Thailand also purchased one Yuan-class submarine in 2017 and is interested in purchasing two more. As of April 2022, China had not delivered any Yuan submarines, although it had delivered two Ming-class submarines to Bangladesh in 2016 and one to Burma in 2021. In 2017 and 2018, China sold two frigates to Bangladesh and four to Pakistan, respectively. In September 2019, China made its first-ever sale of a landing platform dock ship to Thailand.