China Defence and Security Report Q3 2012

The China Defence and Security Report examines the country’s strategic position in Asia and the wider world. It provides an overview of the contemporary geopolitical challenges facing the country, and the challenges it may face in the future.

The report examines the trends occurring in the country’s current and future defence procurement, and the order of battle across its armed forces. The intention is to provide a clear and concise discussion of these issues. The report’s general conclusion is that China remains firmly on its long-established course of military modernisation, in spite of the friction that this modernisation path is causing.

On one side, tension with the United States has been on the rise, with the US rebalancing strategically to focus increasingly on the Asia-Pacific. The report concludes that while this need not necessarily lead to conflict between China and the US, the potential for misunderstandings between a Chinese side that feels targeted by the US pivot and a US that is wary of China’s motives is all too clear.

At the same time, tension between China and a number of its neighbours continues to be a cause for concern. Territorial disputes with Japan and South Korea fester, while angry confrontations with the Philippines and Vietnam in the South China Sea have resulted in those countries encouraging a greater US role in the region, contrary to China’s wishes.

Over the last quarter, BMI has revised the following forecasts/views: • BMI has updated its analysis of Sino-US relations, illustrating how China’s domestic politics have conspired to complicate attempts to improve the tenor of the strategic dialogue between Beijing and Washington.

• The status of China’s relations with other countries in the region – including Australia, Japan and South Korea – has also been brought up to date.

• New defence budget data for 2012 are included. • The decision to procure new Sukhoi fighter aircraft from Russia – in what would be China’s first acquisition of foreign fighter aircraft in a decade – is discussed.

• New export contracts are also covered: these include the surprise sale of offshore patrol vessels to Nigeria and reported first sales of China’s new L-15 advanced jet trainer aircraft.