The Pentagon recently released its annual report to the United States Congress on Chinese military developments. It is formally titled “Military and Security Developments Involving the People’s Republic of China 2012. 
The report varies in the quality of its analysis. Its assessment of Chinese military spending is fairly minimal: “Using 2011 prices and exchange rates, DoD [Department of Defense] estimates China’s total military‐related spending for 2011 ranges between $120 billion and $180 billion.” For context, past reports, from 2010 and 2011, estimated China’s military spending at $150 and $160 billion respectively.
In contrast, back in March, Beijing announced an 11.2% increase in its annual military budget to roughly US$106 billion. While spending comparisons have always been difficult, there is no doubt that the past few decades have seen steady expansion in China’s military spending.
However, China’s spending is still only about a fourth of what the US spends each year on the military. Furthermore, the direct US military budget is less than half of what the US spends on all its national security related spending.
This annual report always walks a tightrope between delineating what it sees as advances in Chinese military modernization while trying to avoid depicting China as a menacing state. For example, the executive summary says with regard to military intentions:
THE PEOPLE’S REPUBLIC OF CHINA (PRC) is pursuing a long‐term, comprehensive military modernization program designed to improve the capacity of China’s armed forces to fight and win “local wars under conditions of informatization,” or high‐intensity, information‐centric regional military operations of short duration. China’s leaders view modernization of the Chinese People’s Liberation Army (PLA) as an essential component of their strategy to take advantage of what they perceive to be a “window of strategic opportunity” to advance China’s national development during the first two decades of the 21st century. During this period, China’s leaders are placing a priority on fostering a positive external environment to provide the PRC with the strategic space to focus on economic growth and development.
As intentions go that is extremely benign. But two paragraphs later the report says this with regard to China’s military capabilities:
To support the PLA’s expanding set of roles and missions, China’s leaders in 2011 sustained investment in advanced cruise missiles, short and medium range conventional ballistic missiles, anti‐ship ballistic missiles, counterpace [sic] weapons, and military cyberspace capabilities which appear designed to enable anti‐access/area‐denial (A2/AD) missions, or what PLA strategists refer to as “counter intervention operations”.
The PLA also continued to demonstrate improved capabilities in advanced fighter aircraft, as evidenced by the inaugural flight testing 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.
The report also stated that China might have started work on its first domestically built aircraft carrier and is likely to produce a number of carriers during the next decade.
Not all those capabilities are seen as a threat. China’s investment in longer‐range cargo aircraft and logistics capabilities will allow it to perform missions beyond its territorial boundaries. Some of these missions, such as humanitarian relief and counter‐piracy operations, are seen as positives by US officials.
The report also says that Beijing has taken steps to ease relations with neighbors and “dampen suspicions” in other countries which like China claim large swathes of the South China Sea. China has taken steps to hold high‐level discussions with Japan other regional powers over territorial claims and other issues, the report says.
One thing that has stayed the same is China’s overall goal; namely, preserving Communist Party rule and preparing for possible hostilities in the Taiwan Strait, the report said.
As it has often done in the past, the report accuses China of carrying out aggressive cyber‐espionage to expand its military. David Helvey, acting deputy assistant secretary of Defense for Asia security, said when the report was released May 18, “We note that China’s investing in not only capabilities to better defend their networks, but also they’re looking at ways to use cyber for offensive operations.”
Such accusations ignore the fact that the United States began preparing for cyber‐war long before anyone else. As well‐known national security analyst Thomas P M Barnett wrote on Time Magazine’s Battleland blog,
Let’s be clear here: Our military has been aggressively seeking cyber warfare capabilities from Day One. We’ve never waited on anybody to “push the envelope”. We’ve always been there, pushing away… Washington likes to play the American public into believing this is all being pursued in response to a rising threat. But no one stands above the threat we represent — and no one ever will. Cyber warfare is the hot‐button budget item in the Pentagon right now, and the amounts of cash we will toss at this problem will dwarf any efforts mounted by anyone else.
As annual reports go, this was notable for both its brevity and its nuance. A rule of thumb with such annual assessments is that the longer it is, the more time has been spent focusing on the supposed threat the country in question poses. At only 43 pages, including appendices, focusing on detailing the capabilities of the world’s most populous nation, this report was remarkably light. The section on its nuclear forces, for example, took up just six paragraphs.
That may explain why General Robert Kehler, head of the US Strategic Command, which oversees US nuclear deterrence, told the Council on Foreign Relations in Washington on May 30, “I do not see the Chinese strategic deterrent as a direct threat to the United States. We are not enemies.”
Also, since the report was the first by the Pentagon since President Barack Obama last year launched a policy “pivot” to reinforce US influence across the Asia‐Pacific, its brevity could be taken as a sign of the Obama administration’s determination to emphasize diplomacy with China.
The report was released just over two weeks before a nine day‐long visit to Asia by US Defense Secretary Leon Panetta, which started on Thursday.
As he left the US, Panetta briefed allies on the US strategic shift toward Asia and sought to allay concerns that fiscal uncertainty could undermine Washington’s commitment to the effort. His trip is part of his visit to the Shangri‐La Dialogue, which brings together senior civilian and military chiefs from nearly 30 Asia‐Pacific states to foster security cooperation. The dialogue is sponsored by the International Institute for Strategic Studies think‐tank and is held in Singapore.
While there, Panetta plans to discuss the new US strategic military guidance, announced in January, which puts a greater emphasis on the Pacific region.