In the last 30 years, China's GDP has become ten times larger. During that period, the Chinese armed forces actually shrank, in terms of troops, and didn't increase its combat power in the same proportion. China has bought many new weapons in the last thirty years, in relatively small quantities. Yet China is still largely a force equipped with weapons and equipment several decades behind what the United States possesses. What China is doing is creating the ability to develop and manufacture a wide range of weapons and equipment in the future. Such a capability requires skills and industries that only advanced industrial economies possess. This includes the development and manufacturing of jet engines, nuclear submarines, microelectronics, space satellites and the like.
Officially, the U.S. expresses shock, surprise and uncertainty at what China is doing with its armed forces. But in fact, the Chinese are not building new weapons in large quantities, with the exception of short range ballistic missiles (aimed at Taiwan). However, China is building a capability to, within a few years, manufacture large quantities of new weapons based on newly developed technologies. Thus China is investing heavily in the ability to become a military superpower, but it has not yet used that capability, and may never do so. Long term, the Chinese strategy is far more likely to make China a formidable military power in the future, than if China simply tried to update all the weapons and equipment they currently have, and continue doing so. China is not trying to become a military superpower now, but is laying the groundwork to do so in the future, if it believes it needs to.
China's strategy also leads to disagreements over what China's defense budget actually is. According to the Chinese, it is about a tenth of what the U.S. spends each year. According to the U.S., China's defense spending is about a third of what America spends. China is no doubt spending far less, but investing, by their standards, a lot more into their military future.
May 25, 2006: The government has established a program that will seek out useful new military technologies, and quickly adapt them for military use. Money will be available for rapid investment in these future technologies. This program reflects the Chinese belief that rapidly evolving technology makes it difficult to predict which weapons and equipment will be crucial in the future. Therefore, this new Chinese program will cover potential developments over the next fifteen years.
May 22, 2006: China and India have agreed to develop military cooperation, concepts and technologies together. Most of this is, at the moment, just talk. But both countries have growing weapons industries, and the potential for joint projects is there.