http://www.wired.com/dangerroom/
One of the biggest problems
assessing China as a military power is figuring out exactly what Beijing’s aims are, say the authors of the Pentagon’s 2008
China report
(pdf!). “China needs to be more open about its defense investment and
how it intends to use those forces … They have yet to explain the
purpose and objectives of the [People’s Liberation Army's] improving
capabilities”

The report offers theories. It may very well be geography that drives China’s relatively high military spending:
China currently consumes approximately 7.58 million
barrels of oil per day and, since 2003, has been the world’s third
largest importer of oil and second largest consumer, after the United
States. China currently imports over 53 percent of its oil (around 4.04
million barrels per day in the first three quarters of 2007), with the
vast majority coming by ship and transiting through the Malacca or
Lombok/Makkasar Straits.
Those straits are important choke points. Control them, and you
strangle China. So no wonder China is investing heavily in blue-water
naval forces,
anti-ship missiles and long-range aviation. It must be able to keep those straits open.
However, as China’s current ability to project and
sustain power at a distance remains limited, the PLA, at least for the
near and mid-terms, will face an ambition-capability gap. Currently it
is neither capable of using military power to secure its foreign energy
investments nor of defending critical sea lanes against disruption.
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