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China Modernizing Despite Economic Slowdown Moon 16
China Modernizing Despite Economic Slowdown Moon 16
Terri Moon 16 is a reporter for DoD news, 5-13-2016, "DoD Report: Chinas
Military Investments Continue," U.S. DEPARTMENT OF DEFENSE,
http://www.defense.gov/News-Article-View/Article/759522/dod-report-chinas-
military-investments-continue
Chinas investments in military and weaponry
WASHINGTON, May 13, 2016
operations continue on a path to increase its power projection , anti-access
and area denial and operations in cyberspace, space and electromagnetic
emerging domains, the deputy assistant secretary of defense for East Asia told Pentagon reporters
today. Abraham M. Denmark described the Defense Departments annual report on military and security
Highlighting Chinas defense
developments involving China, released to Congress today.
strategy and military developments, Denmark said the report provides
factual, descriptive and analytical information to Capitol Hill. It lets the facts
speak for themselves, he said. China continues to focus on preparing for potential conflict in the
Taiwan Strait, Denmark added, but additional missions such as contingencies in the East and South
China seas and on the Korea Peninsula are increasingly important to the [Peoples Liberation Army].
China Sustains Military Growth Chinas leaders seem committed to sustaining
defense spending growth for the foreseeable future, despite its economic
growth deceleration, he said. From 2006 to 2015, Chinas officially disclosed military budget grew
at an average of 9.8 percent per year in inflation-adjusted terms, Denmark said, noting that its published
military budget left out numerous major spending categories, such as research and development and
procuring foreign weapons and equipment. The true expenditure, DoD estimates, in terms of total
Such investments
military-related spending for 2015, exceeded $180 billion in 2015, he added.
are resulting in strides such as Chinas recently unveiled DF-26 missile, a
system capable of precision ground strikes in the Asia-Pacific region , he said.
Besides Chinas ongoing, long-term military trends, its military modernization program
entered a new phase in 2015 comprising three key security developments, Denmark said. The
first trend is Chinas maritime activities, in which it used assertive tactics to reclaim existing
outposts and began building military facilities on large swaths of land in the South China Sea in 2015, he
said. China's leadership demonstrated a willingness to tolerate higher levels of tension in pursuit of its
maritime sovereignty claims, he said. China's strategy is to secure its objectives without jeopardizing the
regional peace that has enabled its military and economic development, which in tum has maintained the
The second trend is China's growing global
Chinese Communist Party's grip on power.
military presence, he said. China's leaders are leveraging the country's power to expand its
international influence -- and its military footprint overseas, Denmark said. The biggest example of
expanding ambitions, he emphasized, was Chinas announcement in November that it would stand up a
military facility in Djibouti. This is a big step forward for the PLA, which has never had an overseas facility
The third security trend is Chinas large-scale reforms to make
before, he noted.
the its military more capable and politically loyal , Denmark said. President Xi Jinping
unveiled sweeping plans that are intended to enhance the PLA's ability to conduct joint operations, by
replacing the old military regions with new geographic commands, he pointed out. The plans also seek to
strengthen the Chinese Communist Party's control over the PLA by establishing new bodies to oversee the
military, Denmark added.
The perception is that China's SOEs have not invested much in the U nited
States, or that investments from China's SOEs are not welcome. Evidence does
not support these statements. Of the total of 896 investments from China in
the United States, 249 were by Chinese SOEs, about 27 percent of the total.
The SOE deals were generally larger than the deals of private Chinese investors,
accounting for 42 percent, or over $18 billion, of total investments from
China. Of the 249 SOE investments, 177 were greenfield investments, investments in new facilities and factories
rather than purchases of existing companies, worth $2.5 billion, while the other 72 were acquisitions, accounting for $15.5
billion." Acquisitions in the energy industry accounted for more than half the value of SOE investments. 1 lowever SOEs
invested across a wide variety of sectors, including aviation, information technology, health and biotech, basic materials,
and real estate. The Rhodium Group broadly defines "government-owned" to include any firm with more than 20 percent
government ownership. Even so, plenty of big name-brand Chinese SOEs have successfully invested in the United States.
State-ownedChina National Offshore Oil Corporation (CNOOC) is a prominent example.
Although it failed in its bid for Unocal in 2005 because of political opposition from members of the US
Congress, CNOOC now has investments worth over $3 billion in the U nited
States. CNOOC changed strategy and began investing in minority share
positions and entering into joint ventures with US firms . In another case, TPCO America,
a subsidiary of state-owned Tianjin Pipe Corporation made a greenfield investment in Texas of more than $1 billion. TPCO
is building a massive plant for processing steel into pipes, creating more than a 1,000 jobs in the process. State-owned
AV1C Automobile Industry Holding Company is a majority owner of US-based Nexteer and helped it become a powerful
Dozens of Chinese state-owned firms have invested in
supplier to US auto manufacturers.
the United States, and each has adopted a strategy backed by experience
and flexibility.
South China Sea. Chinas increasing military assertiveness has undercut Obamas pledge to refocus
U.S. military and foreign policy toward Asia, as has opposition by Trump and Democratic presidential
nominee Hillary Clinton to Obamas signature trade deal, the Trans-Pacific Partnership.