Part 1. Strategic Environment

The 2015 PRC Military Strategy expressed: They will further broaden strategic vision, update strategic thinking, and make strategic guidance more forward-looking. A holistic approach will be taken to balance war preparation and war prevention, rights protection and stability maintenance, coercion and war-fighting, and operations in wartime and employment of military forces in peacetime. They will lay stress on farsighted planning and management to create a favorable posture, comprehensively manage crisis, and resolutely deter and win wars. The PRC has clearly followed Xi Jinping's directives in deploying conflict staging points, accelerating South China Sea island reclamation, and carrying out determined military measures in the protection of its sovereignty. Such measures reveal the PRC's ambitions in becoming a leader directing regional affairs. For its main joint operational programs, the PRC is learning from armed forces buildup and development experiences of other advanced nations such as Europe and the US to modernize and transform its defense forces by restructuring its military organization, generating new training guidelines, deploying new weapons, and training new military professionals.

I. Strategies against Taiwan adopted by the PRC

Cross-Strait relations have eased as a result of increasing economic, cultural, and educational exchange. However, the PRC is still preparing various strategic moves against Taiwan. These strategic moves are also growing increasingly diverse in order to facilitate development of cross-Strait relations that are beneficial to the interests of the PRC and generate advantageous environments for future military invasions.

( I ) Carrot and Stick Unification Strategies

In addition to emphasizing the common and unchangeable political foundations of Taiwan and Mainland China, strategies adopted by the PRC against Taiwan also include drawing a bottom line for developing cross-Strait relationship. Xi Jinping's vision where both sides of the Strait are of the same family and finding the ability to work together and achieve the Chinese Dream are also being followed to broaden and deepen cross-Strait economic and trade cooperation as well as promote youth and ethnic minority cultural exchange programs. These measures are aimed at reducing the gulf between the PRC and Taiwanese citizens and alleviation of mutual hostility.

( II ) Denying External Intervention in the Taiwan Issue

National defense white paper reports generated by the PRC in recent years have pointed out that the current cross-Strait problem is a result of historical issues. The 2015 national defense white paper re-emphasized that "reunification is an inevitable trend in the course of national rejuvenation". The PRC aims to categorize Taiwan's sovereignty question as a domestic issue in order to construct the basis needed for legally carrying out military operations against Taiwan in the future. The National Security Law of the People's Republic of China as well as Anti-Secession Law has both placed Taiwan within the PRC's national security legal framework, highlighting that unification remains its ultimate objective in the Taiwan issue. The laws also provide a legal basis for pursuing non-peaceful measures against Taiwan, classifying it as a domestic issue in order to prevent external intervention of its military measures against Taiwan.

( III ) Three Wars for Weakening Public Awareness on the Necessity for National Defense

Since 2003, the PRC has conducted wars on the three fronts of media, psychology, and law. These three wars have been integrated within the PLA Political Work Regulation as well as key education and training subjects for its military academies and troops. Recently, the PLA has been committed to establishing a Psychological Warfare Experimental Unit as well as a specialized training and research institution for the training of specialized psychological warfare officers. Military spokespersons have also been provided for the MND of the PRC as well as various armed services in order to maximize the country's capacities in swaying public opinions. The PRC has also mobilized local governments in carrying out dedicated measures against Taiwan, using overtures for peace to dissolve internal unity within the ROC as well as employing military force for intimidation and forceful persuasion with the hopes of achieving major victories in minor battles or victory without a fight.

( IV ) Comprehensive Preparations for Military Actions against Taiwan

In addition to creating an informatized armed forces to win battles in the digital age, the PRC is also carrying out comprehensive and thorough reforms of its national defense and military. By referring to the annual Outline of Military Training and Evaluation, the PRC is training its troops to improve their abilities to carry out trans-theater reinforcement, military operations against Taiwan, retaliate against foreign military intervention, and respond to regional conflicts. Despite making repeated pleas for resolving the Taiwan Strait dispute in a peaceful manner, the PRC's ambition to take over the ROC has remain unabated despite improvements of cross-Strait relations as observed from the PLA's utilization of the period of strategic opportunities for its development and its continued strengthening of military preparations against Taiwan.

II. Current Status of the Military Preparedness of the PRC

Under the strategic directives of winning a campaign in remote area quickly and winning the first campaign decisively, the PRC is researching and procuring various weapon platforms and precision weapons, improving surveillance and reconnaissance capabilities, enhancing Second Artillery Force strike and coercion, advancing aerial assault capacities, and expanding maritime attack prowess. The aim is to achieve comprehensive, long-range, multi-dimensional, rapid and decisive, and multi-faceted operational objectives. The PRC is also strengthening its readiness in conducting military operations in response to incidents in Taiwan, the East China Sea, and the South China Sea. In the event that crisis or contingencies occur in the Taiwan Strait or surrounding regions in the Asia Pacific, the PRC will be capable of deterring the forces of other countries from intervening in the said regions.

( I ) Defense Budget of the PRC

With the exception of 2010, the PRC's defense budget has retained double-digit growth from 2006 to 2015 (a period of 10 years). The total defense budget of the PRC is now the second highest in the world (after the US) and the highest in Asia. Despite emphasizing the defensive nature of its defense policy, the PRC has recently made substantial investments for external procurement of weapons and technologies while conducting weapons research and development (R&D). National defense development of the PRC has thus gradually grown beyond its defensive requirements, classifying the PRC as a potential threat that has led to an armament race in the Asia Pacific region and affecting regional peace and stability.

　1. Budget Overview

The PRC allocated a defense budget of RMB 911.4 billion in 2015, which was a 10% increase from 2014. The PRC declared that the increased budget is mainly used to modernize its military equipment, improve the work environment and salary of entry-level personnel, and drive the restructuring of military systems and organizations (PRC defense budgets from 2006 to 2015 are listed in Table 2-1).　　　

　2. Hidden Budget

The PRC has repeatedly emphasized that its entire defense budget has been included in the central budget to be reviewed by the National People's Congress before implementation. Hence, issues of hidden expenses would not exist. However, defense R&D projects, arms sales income (the PRC is a major exporter of arms), weapons procurement expenses, external income of national defense industries, and expenses of the People's Armed Police Force (PAPF) have not been included in the defense budget. Investigations indicate that these incomes and expenses may be hidden within non-military budgets. Estimates made by the ROC show that actual defense budget of the PRC may be 2 to 3 times higher than the published figure. Inferential estimates made using the PRC's historical budgets and budget utilization show that the actual budget may be up to 4% of the country's GDP, far-exceeding the 2% of GDP provided in most western countries, making the PRC's defense budget proportions on par with those of the US and Russia.

( II ) New Equipment Deployment Overview

The PRC has expressed that its military preparations must be based upon winning informatized local wars, with particular focus on the development of its navy (PLAN), air force (PLAAF), and Second Artillery Force. The PLAN has deployed long-range anti-ship missiles and new missile boats in the Fujian and Guangdong regions. The PLAAF has been outfitted with long-range missiles and new generation fighters which have been rotated to the coastal areas of the Taiwan Strait to participate in defense operations. The Second Artillery Force has researched, developed, and manufactured a series of new missiles to help the PRC command superiority in the maritime zone and airspace within the first island chain in order to achieve the strategic objectives of "open seas protection".

( III ) Active Developments in East China Sea and South China Sea

Although the Taiwan Strait has remained a key center of gravity for strategic development of the PRC, the country also significantly increased strategic focus upon the East China Sea and South China Sea as well. The PRC is now reclaiming land around islands it occupies in the South China Sea and expanded Diaoyutai Island maritime patrols using public vessels to declare and demonstrate its sovereignty over the islands.

1. Increased patrols in waters around Diaoyutai Islands

Multiple confrontations between the PRC and Japanese maritime vessel have occurred in recent years. The PLA has thus dispatched various aircraft and vessels to intensify patrols in the peripheral maritime areas of the Diaoyutai Islands. PLA naval patrol schedules and routes through the Gonggu Shuidao (Miyako Strait) and Hengyan Shuidao have gradually become a routine as well.

2. Strengthening sovereignty and construction works of South China Sea islands and atolls

In the past 2 years, the PRC has gradually increased its commitment to military exercises and maritime sovereignty defenses in the South China Sea, and has continued to reclaim land on occupied islands. The PRC also deployed naval forces to forcefully evict Filipino and Vietnamese vessels from the area to demonstrate the PRC's effective ownership and management of the South China Sea. To respond to increasing tensions in the South China Sea, Vietnam has acquired new and advanced weapon equipment, while the Philippines also acquired transport vessels, helicopters, and transport aircraft. Military preparations implemented by the aforementioned claimants represent potential challenges and variables to the PRC's control and management of the South China Sea and the sovereignty of its islands in the region.

( IV ) Strengthening Area Denial Capabilities

The PRC regards foreign intervention as the greatest potential threat if it undertakes military actions against Taiwan. In order to effectively deny foreign military intervention, the PRC has carried out red vs. blue simulation models for its PLAN, PLAAF, and Second Artillery Force exercises in recent years to verify and validate relevant tactics, techniques, and procedures. Regional intelligence, surveillance and reconnaissance (ISR) systems have been developed in tandem with novel weapon systems equipped by the Second Artillery Force, PLAN, and PLAAF in order to increase its A2/AD capabilities in the western Pacific. PLAN vessels and PLAAF aircraft have broken through the first island chain on many occasions, and its long-range strategic bombers have been equipped with YJ100 cruise missiles, giving it a striking range covering Guam. The PRC hopes that it will be capable of establishing itself as the dominant military force within the first island chain and be capable of deterring foreign military from intervening in Taiwan Strait issues.

( V ) Handling Various Security Threats

The PLA, PAPF, militia, reserve forces are referring to the National Defense Mobilization System and Prescribed General Response Plans for Military Disposition of Contingencies to conduct various military and non-military operations such as joint law enforcement, mobilization command and control, air defense in urban areas, disaster relief, counter-terrorism and stabilization, and joint search and rescue. To respond to various kinds of security threats and to conduct various types of military operations, the PRC is also involved in global peacekeeping missions, military exchange, and multi-national joint counter-terrorism exercises in order to acquire experiences of various countries in handling conventional and unconventional security threats.

( VI ) Participation in Multi-national Military Exercises

The PLA has conducted a number of joint operational exercises such as Joint Navy Exercise, Shaheen, and Khaan Quest with more than 40 countries (organizations) in recent years, including Russia, India, ASEAN member states and the Shanghai Cooperation Organization (SCO). The PLA was also invited, for the first time, to attend the US-led RIMPAC multinational joint naval exercise in 2014. The PRC hopes that participation in these military exchanges and direction of joint exercises with regional organizations will help to improve its joint operations capabilities and expand its regional influence.