DOD's China Report

The Defense Department today released its annual report on China's military, noting the country is sustaining investments in advanced cruise missiles, short- and medium-range conventional ballistic missiles, anti-ship ballistic missiles, counterspace weapons and military cyberspace capabilities that "appear designed to enable anti-access/area-denial (A2/AD) missions, or what PLA strategists refer to as 'counter intervention operations.'"

China's military has continued to demonstrate, the report adds, “improved capabilities” in advanced fighter aircraft, as demonstrated by initial fight tests of the J-20 stealth fighter; limited power projection, with the launch of China’s first aircraft carrier for sea trials; integrated air defenses; undersea warfare; nuclear deterrence and strategic strike; improved command and control; and more sophisticated training and exercises across China’s air, naval and land forces.

In an assessment issued this morning, Byron Callan of Capital Alpha Partners notes that the Pentagon's report discusses Chinese military modernization programs, but not in the context of annual procurement rates. The report, he adds, stresses China's focus on Taiwan but lacks information on South China Sea, the Korean peninsula and other contingencies related to China's military modernization.

And Callan cautioned the Pentagon might be caught off guard by China's potential to steal sensitive secrets in cyberspace and use the information to develop advanced weapons. “We strongly believe that a potential 'surprise' for the U.S. defense in 2013-15 is that China successfully exploits it extensive cyber-espionage efforts and unveils new weapons systems that are on par with U.S. systems,” Callan writes.