The U.S. Navy is looking for a sufficiently impressive foe to help scare more money out of Congress. The Chinese Navy (or, more correctly, the Chinese Peoples Liberation Army Navy) is now the favorites candidate, for navy and defense industry analysts, to become the new Big Bad. Just how dangerous are these Chinese sailors and their ships? It turns out that, on closer inspection, not very.
This is the sort of thing that what went on during the Cold War. Russian military prowess was hyped by American the military, and their defense suppliers, to justify further increases in defense spending. When the Cold War ended, it was revealed how the Russian military, and defense manufacturers, plaid the same game. It also revealed that Russian military capabilities were far less than the hype indicated.
The basic weapon for this sort of thing is FUD (Fear, Uncertainty and Doubt). Works every time, although it is difficult to pitch the Chinese navy as a crack force. Most of their ships are elderly, poorly designed and rarely used. Their nuclear subs are worse than the first generation of Russian nukes back in the 1960s. The most modern Chinese ships are Russian made, Cold War era models. Chinese ships don't go to sea much, not just because it's expensive, but because Chinese ships tend to get involved in nasty incidents. Like the submarine that killed its crew when the boat submerged (and the diesel engines did not shut down when the batteries kicked in, thus using up all the oxygen.) Breakdowns are more common, as well as a lot of accidents you don't hear about (weapons and equipment malfunctions that kill and maim.)
Unlike the Russians, who started a ruinous arms race in the 1960s, the Chinese have been increasing their military budget in line with economic growth. Russia was spending over 20 percent of GDP on defense during the Cold War. China spends far more, and far less. While China increased its defense spending 14.9 percent this year, that's down from the 17.9 percent jump last year. China claims that its defense spending is only 1.4 percent of GDP (compared to 4 percent for the U.S. and 1-2 percent for most other Western nations.) But China keeps a lot of defense spending off the official defense budget (a technique long favored by communist nations), and actual spending is more like 3-4 percent of GDP. Thus while China spends far less of its GDP on defense, it is spending what it can afford, and is currently spending about as much as the Soviet Union did per year, during the 1980s (using the black market exchange rate for the ruble).
Meanwhile, as a percentage of GDP, U.S. military spending continues a decline that has been going on since the 1960s (when, because of the $686 billion cost of the Vietnam war, defense spending was 10.7 percent of GDP). That went down to 5.9 percent of GDP in the 1970s and, despite a much heralded defense buildup in the 1980s, still declined in the 1980s (to 5.8 percent.) With the end of the Cold War, spending dropped sharply again in the 1990s, to 4.1 percent. For the first decade of the 21st century, defense spending is expected to average 3.5-4 percent of GDP.
Last year, China passed Germany to become the third largest economy on the planet (after the U.S. and Japan). Currently, the U.S. has a GDP of $13.8 trillion, Japan $4.4 trillion and China, $3.5 trillion. The per-capita share of that GDP varies greatly, since the U.S. has 302 million population, China 1,300 million and Japan 127 million. Thus the average Japanese generates more than ten times the GDP as the average Chinese. But 30 years of constant, nearly ten percent a year, economic growth have turned China into an economic superpower, at least in terms of national GDP. The problem is that there are two Chinas. About twenty percent of the population are enjoying most of this growth. They mainly live along the coast, where a recent survey found, to no one's surprise, that 80 percent of the coastal waters were polluted by several decades of sharp economic and industrial growth. But the interior is poor, and angry. In other words, you've got about 300 million people doing quite well, and another billion that are not happy with the situation at all. This does not bode well for the Chinese military budget.
China has a lot of domestic problems to worry about, which is apparently one reason the government isn't willing to give a lot of money to the military. In fact, the generals have been told to shrink their manpower strength, and gradually increase the quality of equipment and training. Over the next three years, China will shrink its armed forces by another 700,000 troops. The Chinese armed forces has already shrunk by 1.7 million troops in the last twenty years, and now consists of 2.3 million active duty personnel. In three years, there will be only 1.6 million troops (not much larger than the 1.4 million American force). China also has 660,000 personnel in the national police, and 1.2 million organized reservists. Remember, China is still a communist police state. There are a lot of Chinese unhappy with the government (which is actually rather corrupt and inefficient by Western standards.)
Given the sorry state of Chinese weapons and equipment, it will take them decades to even have a chance of "catching up with the United States". And that's apparently the Chinese plan. And it's a very traditional plan. The Chinese like to think long term. Works for them. Meanwhile, China does not want to make the U.S. Navy angry. China is now dependent on imports, especially oil and other raw materials. Access to the sea is a matter of life or death for the Chinese economy, and the survival of the communist dictatorship. But the same could have been said for Japan in 1941. The difference is that China is not making bug trouble with any of its neighbors, and China and the United States both have nuclear weapons.