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GNOSIS 3/2006
The economic boom of Peking and its projected army

Marco GIACONI

The economic development of a country has always, as a natural corollary, the growth of military potential: China, by now a rhetorical example of growth, is no exception. The phenomenon has several explanations: not least is the need to better manage its borders and exercise international pressure which is instrumental for its own interests. The military development is due also to the scientific and technological research evolution; also this, a corollary of the increased availability of money – a scientific evolution which finds its natural space of application in the military sector. The article explains with simplicity the inevitable process that justifies a strategy which does not hide any aggressive or belligerent policies, but confirms a rule which the experts of foreign politics know very well, and at the end of reading this article, each one of us will have greater awareness.


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What is the connection between the Chinese military and political system and its geo-economy? What is to be understood from its new presence in the World Trade Organization? What can we understand about its global strategy? Where do the Chinese Communist Party elite want to arrive in the medium-long term period? To understand all this, it is necessary to align all the information we have regarding the Chinese Armed Forces and that relative to the commercial and financial policies of the “Middle Empire”.
If, as Mao Tse-tung stated, power resides on the point of a rifle, the first thing to do is to see how the Chinese Armed Forces (The Popular Army of Liberation) are composed and with what doctrine they are utilized – this army being the junction point between the communist tradition as shaped in the “Long March” (1) and the present globalization directed by this One Party.
First and foremost, let us look at figures: in the present phase, according to the last available data by OSINT, the members of the armed forces totals a number of 2,3 million, financed with a budget of 24 billion US dollars (as of 2004), equivalent to 200 billion RMB.
The Air Force, as of today, is comprised of 470,000 airmen, 2556 fighter jet planes and approximately 400 attack planes (2) .
The Army is comprised of 1.9 million men, 14,000 tanks, 14,400 artillery guns and 453 helicopters and has, obviously, been planned to “hold” the maximum possible space on land and supply support and security areas to carry out high technology “strikes” in its own strategic continental quadrant: once again, the model of the Long March.
The Navy has 250,000 elements, 63 submarines (many of which are recent acquisitions from the Russian Federation), 18 cruisers and 35 frigates. Evidently, a sea force which is passing from a logic of defence of the regional waters to a navy project of ‘blue waters’ which works as the ‘long arm’ of the power projection in the quadrant of the Pacific and the South China Sea as far as Indian Ocean.
The intention seems to want to reproduce the post-Mao version of the NATO and USA doctrine – “forward…. from the Sea” (3) . This doctrine consists in, according to the original NATO formulation, the utilization of the Navy to do exactly that which also the Chinese want to do, to integrate and internationalize the question of Taiwan with the global control of their connecting oceans. Let us see what the NATO text establishes: in short, the naval forces located in a forward position, will procure the essential and critical operative connections between peacetime operations and the initial necessities of a major crisis or of a regional destabilization of particular importance (4) .
A growth in the Chinese Navy is foreseen within the next ten years, which will lead to an increase to 300 ships of various types.
On the organizational side, the PCC and the Central Military Commission (CMC) have been trying, since 2000, to optimize the relations between officers and troops, reducing the higher ranking officers by 15% and improving the efficiency of the chain of command of the various armed forces (5) .
With regard to the Maoist dilemma, better red than technicians, launched during the heated phase of the “Cultural Revolution”, the implicit answer of the Chinese Army, today, is: both is better.
Furthermore, a particular synergy is presented within the doctrinal framework between the “Fourth Modernization” or rather, that specifically military modernization, theorized by Den Hsiaoping in 1976 (coinciding with the funeral of Zhou Enlai, when the population silently protested against the radical mayor of Peking, Wu De, by sending countless cards of condolence to the old chief of the Chinese foreign policy), and the “Third Modernization”, that of the technical-scientific apparatus.
Consequently, it may be supposed that the Chinese Armed Forces could act as a flywheel of internal technological innovation for the scientific-technical “Third Modernization”, optimizing the costs of updating and ensuring the access and control of technologies which, otherwise would be too expensive and, above all, would create am excessively long foreign dependence. Another saying of Mao Tse-tung was – walk on your own legs.
Therefore, a sort of national-communist military Keynesism (6) , parallel and simultaneous to the management of public expenditure for scientific and technological innovation carried out by the USA since the times of the Revolution in Military AffairsIraq Freedom Operation (7) .
The real problem, therefore, for the present Chinese decision makers can be synthesized as follows: we are obliged to protect our advanced technologies in a globally open market, technologies which must last long enough to give a competition margin to our country: consequently, we shall protect them for the time that is needed by means of a strict collaboration between civil and military. The Chinese answer to the new Paper Tiger, globalization of free-trade.
In this framework, as it is easy to imagine, the major financial and doctrinal effort of the Chinese Armed Forces goes to the Navy and the Aviation, but, in particular, to the Second Artillery Force(8) . Peking hopes, with the new Five Year Plan, to stimulate the rural consumption in order to diminish the dependence of its economy on exportation and on the expenses concentrated in the urban areas (9) .
The problem is both political and geopolitical: after the 1989 protest which generated confusion and disorder in over 100 Chinese cities, Peking now had the necessity of reconverting into the country area the excessive investments in the urban areas to balance the Chinese society and permit a strategy, even military, of strong territorial and national compactness (also against the destabilization elements in the North and East, connected with jihadist terrorism) (10) and therefore, projecting its power towards the Pacific and the Indian Ocean area.
Furthermore, in this “city and country” operation, the export imbalances, which could, in the future, limit the stability of the Chinese society and the possibility of renewing its military and strategic system to become a global competitor, are eliminated at the roots.
From this point of view, the question of relations with Iran is a further demonstration of our geo-economic model.
In the middle of February, 2006, Sinopec, the Chinese multi-national oil company signed a contract with Iran for the extraction of oil from the Yadavaran oil fields to the total of 100 billion US dollars. To finance its development, China needs to double its oil consumption within the year 2020, with 60% deriving from importations (11) .
But the strict, and always reaffirmed connection between China and the dollar area does not allow the PCC Executive to favour only Iran closing the North American markets, which will further push the Chinese geopolitics towards the Pacific and in the direction of a regional hegemony in the Central Asiatic and Siberian area, to be managed in connection with the Russian Federation and the countries of the “Shangai Pact” (12) .
Therefore, China will make every effort to avoid sanctions against Iran, but will do everything to diminish the anxiety of the USA and Europe regarding the nuclear plans of Tehran.


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Russia, the real winner in the Iranian question up till now, will do their utmost to solve the contention without resorting to an official action by the UNO Security Council, pressuring Iran in bilateral terms and according to criteria of strategic balance of the conflicting interests. We will help you on the nuclear question if you do not distort the structure of the OPEC prices, so the Russians seem to say to the Republic of Ahmadinedjiad (13) .
The USA and the EU, in their turn, will try to push China and Russia towards a regime of “soft sanctions” with regard to Iran (14) .
At the geopolitical level, the victory of China and Russia is twofold: they control the strategic closure of USA and EU in the middle-eastern area, they credit themselves as “honest brokers” and allow Iran to restructure its economy (and its central role in the Middle East and in the Gulf) and finally, weaken both Saudi Arabia and the new future regional pivot of the USA power projection, Iraq.
The pact of an “agreement of twenty years cooperation” between the Russian Federation and China, of July 2001, confirms this strategic line: China integrates its hegemony using the nuclear and military Russian know-how to reinforce its temporary character of a great regional power in Asia, utilizes Russia to get access to the Siberian resources of natural gas and oil, the most strategically safe and the least “dangerous” for the “privileged” relations between Peking and Washington and, consequently combines the economic autonomy with the political and military updating.
In such a way China plans its medium-long term future of a great global power in a world framework from which the Paper Tigers which won the cold war, have disappeared.
It is in this power balance that China can deal with and condition the strategic players of economic and politico-military dimensions comparable to those of the Middle Empire (15) .
To do this, as we have already mentioned, China needs a strong investment in the advanced military or “dual use” technologies and to balance this investment in accordance with its financial relations with the USA and UE, in order not to unbalance its function of financier in the first instance of the United States Treasury.
By the middle of 2005, the Chinese expenditure for advanced technologies reached about one third of the corresponding US expenses, consequently, half of the UE expenditure level and above the Japanese level. In this framework, the geo-political reading of “friends” and “foes” is easy.
The Chinese budget for research and development is, today, oriented mainly towards the manufacturing of products for exportation and is particularly concentrated in the information technology, telecommunications and directly in defence sectors (16) .
The military technology improvements regard, firstly, its missile strategic force, with the introduction of a new generation SLBM (ballistic missiles launched from submarines) to produce both a new instrument of regional threat in the two Oceanic areas near the Chinese subcontinent, and to produce a cover of a nuclear “second impact” in the case of a possible land attack (17) .
As far as air power is concerned, China is buying aircrafts from Russia, is producing its own version of the SU-27 SK, adapted for air-to-air missiles at medium range, and is developing the FB-7, all time middle range bomber for attacks against enemy fleets.
However, in terms of cost reduction and of mass-effect of the threat and of the eventual Chinese reaction to regional crises which regard its territories and the sea, the key is that of the maximum integration between civil and military, as can be observed in the progressive adaptation of the Chinese merchant fleet to amphibious activities which could concern the “near foreign countries”. Naturally, it is yet another indication for Taiwan.
The question of the relation between the stable growth of the economy and military system is still, as has already been noted, a critical element of this geopolitical project.
The Chinese high technology companies have suffered scarce damage from the present weakness of the Chinese bank system, given that they can obtain capital from the international financing markets.
It is, therefore, quite possible that we could see a “Maoist” choice to continue and finance the technological and military development without waiting for the Chinese bank system to be restructured on a market philosophy; a technological-financial great leap forward.
Furthermore, the Chinese commercial surplus reached, at the end of 2005, 102 billion US$, a figure which could both accelerate commercial contrasts with the principle partners in Peking and increase the pressure on China to further adjust its rate of currency exchange, (18) .


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This was the undisclosed debate which took place during the Hu Jintao visit to the USA in April, 2006 (19) .
The impact of this probable revaluation of the Chinese currency could certainly moderate the accumulation of commercial surplus, generate a lower rate of growth of exportation and, above all, create major foreign importation competition.
Furthermore, the revaluation of the yuan could create a crisis in the low-technology Chinese industry with a maximum labour intensity while, for the industries of high technology and military importance, the result could be more ambiguous, given that the cost of raw materials and oil would decrease, but the relative costs would, however, increase.
Consequently, the revaluation of the Chinese currency would further favour the technological up-dating of the military industries.
If projections on the percentages of the military expenditures for the next ten years are made, it can be seen that, even without this favourable clause of the yuan revaluation, foreseeing a 10 % increase of the military expenditures in China, (as has already happened in the last two years) and comparing these Chinese expenditures with the American ones, stable at approximately 3% annually, then China could reach an equivalent expenditure of 75% of the USA defence budget within the year 2015 (20) .
But how long can the Chinese growth last and how long can these PIL growth rates persist? Definitely for a long time, according to experts.
It is, in fact, probable that the Chinese growth is not “drugged”, as some western analysts have hypothesized, but rather, that there is not a real and proper overheating of the Chinese economy and that the Chinese participation in the tempestuous growth of the international prices is remarkable, but not altogether decisive. (21) .
Therefore, it is quite probable that the military expenditure can increase, according to the best forecasts and will selectively finance the sectors of major technological potential of the Armed Forces of Peking.
According to the most reliable forecasts, the Chinese pro capite PIL should rise at a rate of 5.9% per year from now until 2050, at the present demographic growth. Therefore, there is ample space for a military programme that could change China from a regional power to a great world power. (22)
The most technologically advanced activities in the military sector are, by now, quite clear, in the ambit of the Chinese strategic doctrine: the application of the cyber technologies to the missile and satellite networks and the elaboration of an autonomous technology of which can destroy the command-control-communications system of the enemy. It is the Sun Tzu doctrine applied to electronics.
It is the sign of a doctrine and, above all, of a political project: Chinese theorists have elaborated their version of the as previously mentioned, in the framework of the First Gulf War experience.
The Chinese have learnt, from the Iraqi Freedom
operations, these lessons (23) :
a) the percentage of “intelligent” (or technological) weapons passed from 8% in Desert Storm to 98% in Iraqi freedom;
b) command and control functions are almost totally automatic:
c) The battlefield is multi-dimensional with the three space dimensions, plus the time, even more, the sky, space and electromagnetism;
d) The military high-tech clash is a confrontation between two integrated systems which are composed of armed forces previously integrated (24)
The Chinese theorists divide the clash in two categories: “tangible” and “intangible”.
The first aspect concerns the weapons systems, the organization and the infrastructure.
The intangible ones, with higher rate of evolution and superior “added value” both tactical and strategic, are the tactical and strategic theories. It is here that the particular logic of the asymmetric and unlimited war, which the contemporary Chinese doctrines are elaborating, intervenes (25) .
At the centre of this politico-military thought, there is, however, the concept of the network.
The primary objective of the Chinese strategists is, in fact, the achievement of the network superiority, which will guarantee victory in the wars of the 21st Century (26) .
But how is this series of economic, financial, strategic and military data projected in the future geopolitical project of the Chinese decision makers? What is their global strategy?
The primary evaluation of the Chinese strategists is that, when a country has a low- quality of political and geopolitical decision-making and, therefore, “pursues the hegemony and the growth of military expenditure, thereby slowing down the economic development and creating political and social instability (27) ” then the country tends towards failure.
Therefore, according to the Chinese analysts, the scenarios of global strategies are reduced to the following possibilities:
a) both powers could be destroyed by an event such as the nuclear war;
b) one country could force the other into a “fatal position”, without a way out, except rapid decline or defeat, and economic and military annihilation;
c) a situation of “unequal co-existence” could be generated in the multi-polar framework subsequent to the cold war, where one country is dominated by the other;
d) The two countries could co-exist in the “promotion of prosperity”.
In the present Chinese forecasted framework, China should reach the British strategic potential (28) within 2010, while Germany should remain the third economic global power for the next decade, after USA and Japan.
In the future phase of the “military revolution”, Chinese strategists foresee a long period of regional wars which will not take place in the same areas of crisis where the “little wars” started during the bi-polar USA-USSR confrontation. (29)
The zones of friction will be the East Asia shoreline, the Euro-Asiatic zone and, above all, in Eurasia, Central Asia and the Persian Gulf. A geopolitical project quite similar to that highlighted some time ago by Zbigniew Brzezinski. (30) .
The growth of the power centres in Asia will not be synchronized, according to Chinese strategists.
At the defensive level, Chinese analysts believe that if their country is attacked on the ground, the enemy (USA, Russia, or Japan) will have to endure a war of many years, managed with the classical Maoist criteria of the “People’s War” (renmin zhanzheng).


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In the future local wars, the Peking strategists, instead, identify the following essential traits:
a) the enemy will not be a superpower;
b) the war, however, will take place near the Chinese borders;
c) the confrontation will not be characterized by deep border penetration invasions;
d) China will seek the most rapid solution possible to bring about the defeat of the enemy on the ground.
It is in this context that the Chinese logic of the use of nuclear weapons and missile action is found.
The geopolitics of the “local wars” is reconnected to the theoretical management of the more ample scenarios in which the Chinese military decision makers outline this progression of actions in the field:
1) Equality of informatics potential with the enemy;
2) position of all the forces on the web (civil and military);
3) attack on the C31 system (Command, Communication, Control and Intelligence) of the enemy;
4) preventive actions;
5) use of virus informatics;
6) use of medium-long range submarine missiles (and here is the connection with the “local wars”);
7) use of anti-satellite weapons;
8) use of preventive strikes against the logistics of the enemy;
9) use of penetrating operations by special corps into the territory controlled by the enemy.
To reach this situation of military confrontation, valid for both the “local wars” and confrontations of the great powers, the present Chinese doctrine defines these trends:
a) China is in a long-term competition with the other major powers;
b) the military-technological gap, at the present time, is approximately 20 – 25 years (although some theorists of the Centre of Strategic Studies in Shangai believe that the actual difference is 6- 12 years);
c) through the “military revolution” - the Chinese version of the American RMA - China and the less economically advanced countries “can develop a great number of secret weapons which can effectively bring the enemy’s financial and military control system” to chaos (31) .
All the Chinese analysts foresee a political and military decline of the United States. Some criticize the US military doctrines for “being entrapped in the technological spiral” (32) .
The fall of the American Empire will have - always according to Chinese analysts - the following characteristics:
- loss of the USA global pre-eminence;
- progressive loss of the alliances as power factors of the USA with Europe and Japan, with increasing economical rivalry between the three poles;
- in the exacerbation of the conflict between the three poles, Japan and the European Union will work for the considerable improvement of their bilateral relations with China (33) .
Therefore, the debate within the Chinese political-military management is, at the moment, over the following points:
1) the time table of the decline of the United States
2) the rate of growth of the global strategic multi-polarity;
3) if and when the USA lose their allies;
4) the geopolitical role of the Third World nations (34) .
Within these variables is the relation between economic growth and military strategy in the China of the 21st Century.


(1) The “Long March” (Chang Zheng) was a gigantic military retreat taken by the Red Army to escape the “Fifth Encirclement” ordered by the National Forces of Chiang Kai-shek, in 1937. The Communist Forces took 370 days to pass from Xiangxi to Shanxi and to cover 6000 kilometres of high arid plains and mountains without roads; all the while continuing to fight to open the way. In 2003, two English travellers repeated the route in 384 days, naturally, without fighting. And in the direction of the Party of Zunyi in which the executive body of the Chinese Communist Party abandons the line of Zhou Enlai and supports the Mao Tse-tung programme, then excluded from the Party. Mao decided that that, against all appearances, must be a march of attack against the Japanese, who were entering China through Korea and Manchuria. Mao, therefore, proposed to march towards Shanxi to fight the Japanese. The problem was, as it is easy to understand looking at a map, the logistic and strategic continuity, or not, with the USSR forces. The “Long March” ended at Yan’an, where Mao’s troops and those of the Soviet of Henan joined, confronting the Japanese until 1945. This “primitive scene” of power of the PCC tells all about the relations between the State, the Party and the Armed Forces.
(2) V. Kenneth Allen, G. Krumel et al., China’s Air Force enters the 21st Century, Santa Monica, RAND Corp., 1995
(3) J. Dalton, Admiral Boorda, Carl E. Mundy, Forward…. From the Sea, Navy and Marine Corps Paper, 1995
(4) J. Dalton, Forward …. From the Sea, work cited, pg. 2.
(5) V. China’s National Defense in 2004, PLA Daily, 27th December, 2004
(6) For the definition of military Keynesism, or rather, the expansive use and to the debt of the public finance, the financing of technological innovation through the military-industrial system, see Noam Chomsky, Year 501, the Conquest Continues,, GamberettiEditors, Rome, 1993, Chapter 3.
(7)The RMA originates in the final phase of the Cold War, and therefore, is the mirror through which China, (never believing in the Cold War (the Maoist “Paper Tiger” was not only US imperialism, let us remember, but the same bi-polar world as then) look at the contemporary geopolitics and military doctrine. The RMA, thought up by the RAND Corp. to “combat contemporarily two local wars” or a “big war and a contemporary regional crisis” presumes that which the Chinese utilize as a foundation of the geopolitical analysis of their future role as a great world power: the end of the “medium powers”, those intermediate nation-states, their reduction to friction zones between new empires (not necessarily only of a state) or a transit zone, the new conformation of the forces in the field (advanced technologies, psychological warfare of a new kind, asymmetric war, mass political destabilization, as well as, the immediate overlapping between politics and war. It is not purely by chance, indeed, that the present Chinese strategic debate, the “point of no return” doctrine, is represented by the First Gulf War.
(8) The Lin Biao speech of 1965, Long Life to the Victory of the People’s War! (see Lin Biao, Speeches, Peking, Editing House in Foreign Languages, 1968) connects the Chinese geo-politics to the “emerging power” of the poor of Asia, Africa and Latin America, and the “city” of capitalism would be surrounded by the “rural areas” of the entire Third World, directed by China and, naturally, by the “thought of Mao Tse-tung”. Lin Biao died in 1971 in a strange air accident in the skies over Mongolia. Today, we can say that Chinese geo-politics wishes to transform the dependence of the “city of the world towards the “country” in a project of multi-polar balance in which the old hegemonies inherited from the cold war depend on the central geo-economic role of the post-Maoist China. Mao has won, once again.
(9) See Early Warning, “Chinese 60 billion USD programme, 6th February, 2006.
(10) See Bruce Tefft, Al Qa’eda entering China, Global Observer, 12 February 2006
(11) EIA-DOE, China, Outlook 2005, January, 2006.
(12) The Shangai Group, or rather, “Organization for the Collective Security and the Fight Against Islamic Terrorism”, created in 1996, in adherence are China, the Russian Federation, Kazakhistan, Kirghistan, Tagikistan and Uzbekistan, which is held to be out of the Pact.
(13) RADIO FREE EUROPE, Radio Liberty, Viktor Yassman, What’s Behind Moscow “Iranian Game?” January 19th, 2006.
(14) PINR Dispatch, 13 March, 2006, Iran’s Nuclear Plans complicate China’s Energy Security.
(15) G. Capitani, Central Asia, Divide et Impera, War & Peace, No. 100, June, 2003.
(16) See Hudson Institute, China’s New Great Leap Forward, Washington, D.C., 2005.
(17) DOD report to Congress, Military Power of the People’s Republic of China, Washington, D.C. 2005.
(18) David Barboza, China’s Trade Surplus tripled in 2005, The New York Times, 11 January, 2006.
(19) See Willi Lam, Hu’s Doctrine on American Diplomacy, Jamestown Foundation, China Brief, 26th April, 2006.
(20) DOD, Fiscal Year 2005, Washington D.C., 2006.
(21) Albert Keidel, Prospects for Continued High Economic Growth in China, Carnegie Endowment for International Peace, Seoul, Korea, 10-11 November, 2004.
(22) World Bank Stimate PPP, China, 2004.
(23) General Xiong Guangkai, On New Military Changes, Jiefang Ribao, 30th March, 2003
(24) China’s National Defense in 2004, Xinhua, 27th December, 2004
(25) Liang Biqin, Rethink the Issue on the New Military Revolution, Jengfangjun Bao, 27 August, 2002, for the doctrine of the War Without Limited, see Quiao Liang and Wang Xiangsui, Unrestricted Warfare, PLA Literature & Arts Publishing House, Bejing, February, 1999.
(26) Li Yannan and Li Zongjian, Network, Dominator of Future Battlefield, Jengfangjun Bao, 21st July, 1998.
(27) General Huang Shuofeng, Guoija Shengs Huai Lun, (On the Rise and Fall of the Nations), Changsha, Hunan chubashe, 1996, pg. 337. The Line of the “Promotion of Prosperity”. This refers to the terminology of Deng Xiaoping as shown in the article of 26th February, 1990, on the Renmin Ribao (Newspaper of the People).
(28) The Chinese analysts speak of potential strategy, which is the product of complex formulas which is not the case, here, to go into – utilizing the criteria of CNP, The Comprehensive National Power.
(29) Xia Liping, et al., Shijie zhanlue xingshi de zhuyao tedian yu qushi, (The World Strategic situation, characteristics and tendencies), in “Heping yu Fazhan” (Peace and Development), 47, No.1, February, 1994.
(30) Zbigniew Brzezinski, New American Strategies for Security and Peace, 28th October, 2003, Prospect, Washington, D.C. 2003.
(31) Sheng Zhongchang et al., Xin yunshi geming yu haizhan ji haijun jianshe (The Military Revolution in the Sea War), in China Military Science, 34, No.1. Spring, 1994
(32) Wang Naicheng, Beiyue dongkuo dui Mei-E-Ou guanxi….. 2003.
(33) From an e-mail sent to the author of this article from an analyst of the CIIS of Shanghai
(34) Ellis Joffe, The Military and China’s New Politics: Trends and Counter trends, RAND Corp, Santa Monica, 2005

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