CSDS POLICY BRIEF • 18/2024
By Masayuki Masuda and Alexander Mattelaer
21.6.2024
Key issues
- China’s growing power and increasingly aggressive military posture in the Indo-Pacific poses short- and long-term challenges.
- Any military contingency pertaining to Taiwan would result in a global economic shock that is even more severe than Russia’s invasion of Ukraine in 2022.
- China’s military rise in the Indo-Pacific dramatically shrinks the reservoir of military power the US can make available for underpinning European security.
Introduction
China’s growing power and increasingly aggressive military posture in the Indo-Pacific poses short- and long-term challenges, not only for its direct neighbours but also for nations far beyond the region itself. China’s leader, Xi Jinping, has accelerated the military build-up to transform the People’s Liberation Army (PLA) into a “world-class” military by the mid-century. The PLA has expanded its nuclear forces in an effort to achieve a goal to ‘establish a strong strategic deterrence system’ aimed at making external intervention prohibitively expensive. In addition, the PLA is fielding growing numbers of increasingly sophisticated conventional military capabilities, especially in the maritime domain. It has integrated the latter into grey-zone operations that are seemingly aimed at enforcing its maritime claims over contested territories and waters.
All of this has fuelled growing suspicions in the region about China’s power and the revisionist challenge it represents to the status quo. Various neighbouring countries are responding by boosting their own defence capabilities and strengthening alliance relationships with the United States (US), as the latter are critical for maintaining strong theatre-level deterrence. Further overseas, European countries are becoming increasingly apprehensive of the challenge China poses to global stability. Its ongoing abetment of Russian aggression against Ukraine – as manifested in the ongoing export of dual-use systems supporting Russia’s defence industrial production – and its intimidating behaviour against smaller countries in its own neighbourhood, as well as in Europe, are at the root of this emerging trend. This CSDS Policy Brief first describes the long shadow cast by China’s military rise, then it dissects the conflict that is brewing between China and its neighbours over competing territorial claims – with far-reaching implications for global supply chains – and, finally, analyses the emerging responses to the changing military balance of power in the Indo-Pacific and in Europe.
The long shadow cast by China’s military rise
China’s military rise encompasses two major components, namely the development of a fully survivable nuclear triad and the construction of technologically state-of-the-art conventional forces. The former likely represents an attempt to counterbalance the coercive value of the US nuclear arsenal, whereas the latter enables China to tilt the regional military balance – especially within the First Island Chain – decisively in its own favour.
China’s nuclear expansion represents a long-term strategic challenge to the United States. The US Department of Defense (DoD) estimated that the People’s Republic of China (PRC) possessed more than 500 nuclear operational nuclear warheads as of May 2023 – on track to exceed previous projections. While this number is still considerably smaller than the US arsenal, Washington’s concerns about China’s emergence as a second nuclear peer are growing rapidly. The PRC will probably have over 1,000 operational nuclear warheads by 2030, much of which will be deployed at higher readiness levels, and expand its arsenal of long-range intercontinental ballistic missiles, including multiple independently targetable re-entry vehicles and road-mobile missile systems. China will continue growing its force to 2035 with the number of 1,500 nuclear warheads available for delivery by land-based ballistic missiles, sea-based ballistic missiles and bombers. Since the US currently deploys about 1,550 strategic warheads under the New START limits, numerical parity will no longer be a distant prospect. Just as importantly, the ongoing diversification of China’s nuclear delivery systems signals a growing willingness to differentiate between the strategic and non-strategic use of nuclear weapons. This may result in a so-called imbalance of political resolve, in which China may be willing to accept much greater risk over Taiwan than the US. As a result, the US has become ‘concerned about the erosion of what it sees as a longstanding position of nuclear advantage relative to China’.
Simultaneously, US allies and partners in the Indo-Pacific face a large and rapid power shift vis-à-vis China as a short-term challenge. Since Xi Jinping became president and the military’s commander-in-chief a decade ago, China’s defence budget has ballooned to CN¥ 1.67 trillion (US$ 230 billion) in 2024 from CN¥ 720 billion in 2013. While China’s announced defence budget in fiscal 2024 is around of one quarter of US defence spending, it is also nearly 4.5 times that of Japan’s defence budget for the same year. Furthermore, China alone is outspending its neighbours: The Military Balance 2024 assesses that China represented 43% of all of Asia’s defence spending in 2023. Taking purchasing power parity into account, this share would even be considerably larger.
These steady defence budget increases have enabled the PLA to continuously improve its conventional military capabilities, especially in the maritime domain and anti-access and area denial (A2/AD) capabilities. China already operates the world’s largest navy in numerical terms with an overall battle force of over 370 ships and submarines, including more than 140 major surface combatants. This number is nearly 80 more than the US Navy’s 291 ships, mainly concentrated in a single region as opposed to being spread out globally. The PLA Navy (PLAN) is building new warships such as guided-missile cruisers, destroyers and corvettes at a rapid pace. In August 2023, the PLAN launched the new Type-054B frigate, which is likely to have a full displacement of approximately 6,000 tons. This new frigate is larger than the previous 4,000-ton Type-054A, being expected to accompany aircraft carriers, amphibious ships and destroyers in far sea voyages. Similarly, its already large submarine force continues to expand. The PLAN is thus assessed to reach near-parity with US Indo-Pacific Command on a tonnage basis in the mid-2030.
In addition to its expanding naval capabilities, China has fielded an impressive missile inventory. This includes for instance the DF-21 and DF-26 intermediate range ballistic missiles, the DF-17 hypersonic-glide vehicle armed medium-range ballistic missile and a wide suite of short-range ballistic missiles such as the DF-11, DF-15 and DF-16. China has also started fielding ground-launched cruise missiles like the DH-10 and DF-100 with ranges of approximately 1,500 kms and 2,000 kms. These weapons imply that a wide range of land and naval targets can be held at risk. As such, China is creating the conditions in which it can hope to neutralise the escalation advantage traditionally held by the US in both the nuclear and conventional domains. Such conditions increasingly permit the PLAN to pursue aggressive probing campaigns below the threshold of kinetic conflict against Taiwan and the Philippines. This results in a growing risk of a military contingency within the First Island Chain in which the cost of US intervention is raised massively.
The brewing conflict between China and its neighbours
China’s military expansion has become an urgent and short-term challenge to most of the US’ Indo-Pacific allies and partners, for several reasons. First and foremost, the challenge to the status quo has taken place in China’s near vicinity. While the PLAN’s ability to perform missions beyond the First Island Chain might still be considered relatively modest, its prowess closer to home – where it is augmented by China’s Coast Guard (CCG) – is already formidable. Japan’s defence White Paper – published in July 2023 – criticised China’s military activities surrounding Japan, particularly in the East China Sea as creating a situation of ‘great concern’ to the country. Beijing also maintains a daily coast guard presence around the Senkaku Islands (known as the Diaoyu Islands in China). In November 2023, during his inspection of the CCG’s command office for the East China Sea area, Xi Jinping stressed the need for improving law enforcement capabilities in support of China’s maritime claims. The CCG has subsequently drafted a plan to keep its ships presence in the vicinity of the islets every day in 2024 and to conduct inspections of Japanese fishing boats in the sea area, if necessary, to boost Beijing’s sovereignty claim.
Secondly, the coastal states in the South China Sea are alarmed at China’s aggressive naval actions as well as so-called “grey-zone” operations by CCG and the maritime militia in the waters disputed with China. Following incorporation to the military-administrated People’s Armed Police (PAP) in 2018, the CCG has actively spearheaded the expansion of China’s maritime control in the South China Sea. In November 2023, for instance, Filipino President Ferdinand Marcos Jr. stated that the regional situation ‘has become more dire’ than it was before due to China’s ‘coercive tactics and dangerous manoeuvres’ in the South China Sea. This situation prompted Manila to partner with Washington and other nations around the world, so as to come to some kind of resolution and to maintain the peace. At a summit meeting in the same month, Marcos and his Japanese counterpart Fumio Kishida shared ‘serious concerns’ on the situation both in the South China Sea and East China Sea, referring to China’s assertive maritime actions.
Finally, China’s repeated calls for a reunification with Taiwan – no longer always accompanied by the predicate “peaceful” – highlight the growing risk of a shock to the global supply chains. Recent “Joint Sword-2024A” PLA drills following the inauguration of Taiwanese President Lai Ching-te included the staging of mock air and naval attacks against high-value targets. This prompted the US State Department to issue a statement expressing ‘deep concern’. Whilst the rest of the world’s dependence on the chipmaker TMSC is well known, Taiwan’s position as a supply chain hub in fact spans across many high-tech industries. As a result, the repercussions of any such military challenge to the status quo cannot help but stretch far beyond the region in scope. Not only would Japan, South Korea and other regional partners be severely affected, but this would also be the case for their respective trading partners worldwide. In that sense, any military contingency pertaining to Taiwan would result in a global economic shock that is even more severe than Russia’s invasion of Ukraine in 2022.
The responses to China’s military rise in the region and beyond
China’s growing assertiveness in East and South China Seas is fuelling concern and anxiety about Beijing’s strategic intent. For example, nearly 80% of the Japanese public has a sense of crisis about China potentially taking military action against Taiwan. The consequences thereof are twofold. On the one hand, various Indo-Pacific countries are increasingly apprehensive about the threat posed by China. As a result, they are increasing their levels of defence expenditure and strengthening their alliances accordingly. On the other hand, the broader implications of China’s military rise are becoming increasingly apparent to many European countries. This is not only due to the risk of overstretch of US military commitments, but also due to China’s growing presence worldwide and the global consequences of any major contingency in the Indo-Pacific.
Within the Indo-Pacific region, many nations are busy adapting their strategic posture in function of the deteriorating security environment they find themselves in due to China’s military rise. A total of 61% of Japanese citizens support the Japanese government’s decision to acquire counterstrike capabilities to enhance deterrence, for instance. Likewise, some 70% of South Korea’s public indicated concern about a deteriorating security situation. Furthermore, a 2022 Lowy Institute poll found 64% of Australians saying that a military conflict between the US and China over Taiwan would pose a critical threat.
As China continues its military and grey-zone expansion, Australia, Japan, the Philippines, South Korea and Taiwan have all responded by increasing defence spending to counter rising threat levels within the region. In November 2023, Japan set to increase its defence budget to 2% of GDP by 2027 to build ‘fundamentally reinforced defence capabilities’. Tokyo plans to invest in long-range precision strike assets, comprehensive air and missile defences, and cross-domain capabilities encompassing space, cyberspace and the electromagnetic spectrum, for instance. In addition to defence reinvestment, new minilateral coalitions are being formed, such as the growing coordination between Canberra, Manila and Seoul and trilateral exercises between Japan, the Philippines and the US. Finally, the growing stress on the balance of conventional military power has prompted Japan and South to call for the strengthening of US extended nuclear deterrence. As Seoul and Tokyo need to deal with nuclear, conventional and grey-zone threats simultaneously, the regional deterrence posture needs to span across all domains. According to its Ministry of Defence, ‘Japan intends to create a seamless posture and secure its peace and security by effectively utilizing the deterrence capabilities of the U.S. military together with Japan’s own national defence architecture’.
China’s military rise is also making itself felt far beyond the Indo-Pacific region. Many European nations have been growing aware of China’s growing assertiveness in the cyber domain and its proclivity to instrumentalise economic ties to further an autocratic political agenda. For several reasons, this emerging European awareness is now acquiring a military dimension too. Firstly, European nations have come to realise that China’s military rise now poses a direct threat to their strategic partners in the Indo-Pacific – with all the consequences this entails for global trade and the freedom of navigation. Any military contingency in the Indo-Pacific would cause dramatic economic ripple effects throughout global supply chains and provoke a global economic crisis.
Secondly, the European NATO allies have started to recognise that any such contingency would impose major limitations on the availability of US forces to reinforce the European theatre vis-à-vis continuing Russian aggression. China’s military rise in the Indo-Pacific dramatically shrinks the reservoir of military power the US can make available for underpinning European security. Thirdly, the geographic reach of China’s power projection capabilities is extending itself to the wider European neighbourhood. Already in 2017, the PLA conducted its first joint naval exercise with Russia in the Baltic Sea, for instance. Finally, China is now seen to be actively abetting Moscow’s revisionist quest by resupplying the ongoing Russian war effort. This cannot help but change the way Chinese power is being perceived in Europe and elsewhere.
Similar to the Indo-Pacific allies of the US, the European allies are rapidly reinvesting in their own defence establishments as well as their resilience against economic disruption and political interference. Such European defence reinvestment helps to re-equilibrate the NATO alliance internally and enables the US to allocate a growing share of scarce military resources to meeting possible contingencies in the Indo-Pacific. In addition, several European nations have started contributing in a modest but symbolic way to the effort of ensuring the freedom of navigation in the East and South China Seas. By committing themselves to an economic de-risking agenda, furthermore, European nations are seeking to shield themselves against the weaponisation of economic ties by China and the undermining of the European scientific, technological and industrial base. Finally, the growth in China’s nuclear arsenal and the emergence of nuclear tripolarity is increasingly understood to challenge US extended deterrence commitments worldwide, given that all US alliances are ultimately underpinned by the same US strategic nuclear arsenal. Whilst the Chinese nuclear threat is still dwarfed by that from the Russian Federation, NATO’s nuclear posture adaptation will need to take the emerging cross-theatre interdependencies into account.
Conclusion
To maintain peace and security in the Indo-Pacific region, a growing number of countries from within the region as well as outside consider it necessary to promote a credible regional and globally integrated deterrence architecture. This requires political effort and defence investment from all like-minded countries as well as the US. In April 2024, Japan, the Philippines and the US held the first Summit between the three countries. At this unprecedented occasion, President Joseph Biden reaffirmed the ironclad US commitments to both the alliance with Japan and the Philippines. They also reaffirmed the importance of peace and stability across the Taiwan Strait as an indispensable element of global security and prosperity. Similarly, NATO’s 2022 Strategic Concept stated that the allies will work together ‘to address the systemic challenges posed by the PRC to Euro-Atlantic security’. The attendance of Australia, Japan, the Republic of Korea and New Zealand at meetings of the NATO Heads of State and Government is evidence of the growing interest in tackling the cross-regional challenge that China’s military rise poses. This provides an effective blueprint for a widening network of allies and partners that share an interest in preserving international peace and global stability. As China’s military rise continues, successful deterrence is the critical prerequisite for diplomatic engagement in support of international law and the peaceful resolution of disputes.
This paper was completed with the support of the NATO Science for Peace and Security programme. It is part of a project looking at the future of the Indo-Pacific region and NATO, and the authors wish to thank the participants of a conference organised under the project on 15 November 2023 in Tokyo, Japan, which was hosted by the National Institute for Defense Studies (NIDS).
