China has been successful at disarming Taiwan. A Taiwanese attempt to buy $12 billion of American weapons has been delayed for over a decade. China exercised influence in Taiwan (where opinion on fighting, and spending, to resist Chinese control is split) and the United States (where many will not fight to resist a Chinese attempt to take Taiwan) to halt the shipment of these weapons. China simultaneously makes nice to Taiwan. For example, a recently signed agreement makes it easier to travel between Taiwan and China, and increased cooperation in criminal cases (currently crooks can often get away with fleeing from one country to the other and finding sanctuary. It's also now easier to investigate crimes that span both countries.) It's also now easier for both nations to invest in each other's economies. China sees this economic cooperation as the weapon that will eventually enable China to conquer Taiwan without firing a shot. The military threats serve mainly to encourage the Taiwanese to make these economic agreements.
India is upset at how China has come to the support (diplomatically and as an arms supplier) Myanmar and Sri Lanka. Myanmar, a country run by a widely reviled military dictatorship, can always get the weapons it wants from China. This enables Myanmar to resist pressure from India to clear Indian rebels out of the jungles along their long mutual border. To show its appreciation, Myanmar has allowed China to set up intelligence gathering facilities off its coast. This enables China to keep a close eye (and ear) on Indian naval activity nearby. India does not like this. India sees Sri Lanka showing its appreciation in a similar fashion. China is also making a major effort in Pakistan. There, billions of dollars in aid and investment, and 10,000 Chinese businessmen, engineers and workers, are being applied to economic and military projects. For this, China obtains the ability to monitor India from there as well. In effect, China has surrounded India with pro-Chinese allies.
The world shipbuilding industry is dominated by China (23 percent of merchant ship construction), South Korea (33 percent) and Japan (28). These three nations build 84 percent of the new merchant ships. China is expected to eventually surpass South Korea and Japan. The current worldwide recession has been particularly hard on shipbuilding, which work in Chinese yards falling nearly by half in the last year. But now orders are picking up again. As with the United States a century ago, this domination of the commercial shipbuilding industry gives China the experience to build better warships, and do it fast. Japan and South Korea have already demonstrated this, with both nations building warships that rival American vessels in quality and capability.
Five times in the last two months, China has deployed commercial, or navy support vessels, to harass American intelligence ships. This is a clever strategy, because that puts it on the United States to escalate next. Meanwhile, it's become more difficult for U.S. intel ships, operating in international waters, to monitor Chinese submarines. The Russians used similar tactics during the Cold War. But in the end, the U.S. still got what they needed about enemy subs. The Chinese will have to up their game to keep their submarine capabilities secret.
China has less influence on North Korea than it thought. Even though most of North Korea's foreign trade is with China (and 80 percent of imported goods are from China), the North Korean leadership has long resisted Chinese advice to implement economic reforms similar to those applied in China. There is a "pro-China" faction there, but it cannot exercise much control. China has a large network of merchants and commercial travelers inside North Korea. These are regularly debriefed by Chinese intelligence analysts when they come home. North Korea dares not go after these Chinese businessmen as "foreign spies," because the economic connections with China (both business activity and handouts) are essential. China could drive North Korea over the precipice quickly by simply closing the border. China knows it, North Korea knows. So China knows what is going in inside North Korea, and it's nothing good. The U.S. and South Korea are finding out the same thing, by putting more photo satellites and electronic monitoring over North Korea. Apparently there's been some tapping into the Chinese network as well. Everyone wants to know exactly when the patient will die, and millions of refugees will head for their borders. Everyone wants to be ready, for events they cannot otherwise control. The Chinese are dismayed at their inability to manipulate the North Korean leadership, which they see as stubborn and self-destructive.
China issued the official report on the massive earthquake that took place in the southwest a year ago. The quake killed 87,000 and injured 375,000. The government admitted to some shortcomings, including corruption that led to a lot of "quake proof" buildings collapsing. The report points out that half the Chinese population lives in quake prone areas.
May 2, 2009: China expressed its displeasure over a new Australian military plan, that will spend $70 billion over the next two decades to sharply improve their armed forces, in order to increase defenses against China. This includes doubling the submarine force from 6-12 and buying at least a hundred of the new U.S. F-35 fighters. Australia is a major source of raw materials for China, and a big market for Chinese goods. So war is unlikely. But China has long preferred its neighbors weak and submissive. China wants to return to the Good Old Days.
April 23, 2009: In celebration of the 60th anniversary of communist government in China, a naval review was held in the eastern port city of Qingdao. Twenty-one warships from fourteen foreign nations (including a U.S. destroyer) attended to show their respects, China paraded 56 ships and aircraft, including two of its most modern nuclear subs (a SSN and SSBN). This was the first time China had publically displayed these two classes of nuclear subs, although satellite photos, and unofficial pix from people passing by, have been available. China has held naval reviews three times before, but never as large and international as this.