The People's Republic of China announced on March 4, 2007, that it would increase its military budget by 17.8 percent in 2007 to a total of $45 bil­lion-by far the largest acknowledged amount that China has ever spent on its military. However, CIA calculations suggest that China really devotes 4.3 percent of its gross domestic product (GDP) to its military, including off-budget sectors such as for­eign arms purchases, subsidies to military indus­tries, China's space program, the 660,000-man People's Armed Police, provincial militias, and reserve forces. Adjusting China's 2006 GDP of $2.5 trillion for purchasing power parity yields a GDP of about $10 trillion, which pegs military spending at $430 billion.

In other words, the size of Beijing's military bud­get puts China in the top stratum of global military powers with the United States. Despite the Beijing leadership's espousal of China's "peaceful rise," this unprecedented peacetime expansion of China's mil­itary capabilities can no longer be viewed as though some benign force animates it.

Military Buildup. The pace and scope of China's military expansion are startling.

Nuclear Forces. In the past decade, China's nuclear forces have brought the reliability, surviv­ability, response times, and accuracy of their ballis­tic missiles to state-of-the-art standards. China has about 40 intercontinental ballistic missiles (ICBMs) targeted at the United States. China's missile subma­rines are already loaded with solid-fuel Julang-1s, and each new Type-094 nuclear submarine after 2010 will deploy with 12 ballistic missiles that have a range of 8,000 km.

Anti-Satellite Weapons. On January 12, 2007, the Chinese successfully intercepted and destroyed a target satellite. China's anti-satellite (ASAT) technol­ogy is now state of the art. Unsurprisingly, Beijing rebuffs verification issues while purporting to seek an international pact to "prevent an arms race in outer space." More than any other Chinese military program, the ASAT program reflects not just a capa­bility, but also, given the lack of feasible alternative targets, an intention to strike U.S. space assets in time of war.

Naval Forces. China has made naval moderniza­tion its top arms priority. Since 1995, China has built a modern fleet of 29 advanced diesel-electric submarines, and 10 more are being built. China's surface fleet is also growing rapidly and is develop­ing a capability to project force throughout the Asia-Pacific. The People's Liberation Army (PLA) Navy is refitting a Ukrainian aircraft carrier and launched 19 new heavy transport ships and 10 amphibious landing ships between 2003 and 2005.

Air Forces. The PLA Air Force now boasts about 400 new Russian-designed fighter aircraft and 60 new Jian-10 fighters with expected production of at least another 190 Jian-10s-more than a match for Taiwan's fighters in the Taiwan Strait.

Ground Forces. China's army is still the world's largest with 1.64 million men and is modernizing apace. The PLA's Type 98 main battle tank arguably outclasses the weapons on the U.S. M-1A2 Abrams tank, and Chinese arms makers now display an impressive array of new armored vehicles, mobile heavy artillery, all-terrain vehicles, helicopters, and new small arms.

Cyberwarfare Forces. New PLA doctrine sees computer network operations as a force multiplier in any confrontation with the United States or other potential adversaries, such as Taiwan, Japan, South Korea, and even the United Kingdom. PLA cyber­war units apparently are the only PLA troops that regularly attack enemy targets, making at least four major attacks on U.S. government computer sys­tems in 2006 alone.

Geostrategic Implications. China's military expansion is extravagantly in excess of anything required by a responsible stakeholder in the existing international system and is even beyond that needed to "liberate" Taiwan. China shares land bor­ders with 14 nations, none of which is a threat to it, yet China still has contentious territorial claims against India and Japan and in the South China Sea. China's gathering geopolitical punch portends a 21st century that may well become the Chinese cen­tury in Asia-a new century of China's support for illiberal forces that will buttress the legitimacy of Beijing's regime at home.

What the Administration and Congress Should Do. Asia does not believe that Washing­ton-preoccupied with Iraq-is concerned about China's spreading influence, much less that it has a strategic vision for the Pacific Rim. Managing the emerging security challenge requires a new U.S. partnership with democratic Asia and a new atti­tude in Washington. The U.S. should:

• List China as the top U.S. foreign policy chal­lenge. The entire bureaucracy must prepare to implement a coherent China policy to address defense, global, and regional issues, using coun­terintelligence and export control strategies as needed.
• Commit resources to preserving the U.S. posi­tion as the world's preeminent military power. America cannot bluff its way out of this challenge. America's most urgent needs are increasing its submarine fleet, enhancing its anti-submarine warfare capabilities, and ensuring the survivabil­ity of its space platforms (e.g., satellites).
• Reinforce eroding alliances, eschew inclina­tions to take China's rhetorical side against Japan or against Taiwan, reinvigorate ties in Southeast Asia, build on new ties with India, and reengage the Atlantic Community in dia­logue on shared global interests and values of human dignity and freedom.

Conclusion. The Asian perception that the United States is a declining Pacific power may or may not prove prescient, but China is clearly emerg­ing as the preeminent power in the Asia-Pacific. Faced with this reality, an engaged America can strengthen the current robust trans-Pacific align­ment, knitting together the democracies of the Americas and the Western Pacific Rim, or a disen­gaged America can allow a Sino-centric continental axis to crystallize as the Association of Southeast Asian Nations, Taiwan, Korea, and eventually Japan, Australia, and South and Central Asia band­wagon with China.

The choices made in Washington on how to manage the emerging Chinese superpower will determine not only the direction of Asian democ­racy, but also the prospects for global political and economic freedoms in the 21st century.

John J. Tkacik, Jr., is Senior Research Fellow in China, Taiwan, and Mongolia Policy in the Asian Stud­ies Center at The Heritage Foundation.