A storm is brewing across the Pacific and almost no one seems to be paying at tention - except the Pentagon.

With all eyes pealed on Iraq and terrorism, only a precious few outside of dedicated China hands have noticed the swelling military might of the People's Republic of China.

In fact, when the Pentagon issued its "Annual Report on the Military Power of the People's Republic of China" (defenselink.mil) in late May, it made a nary a splash in any media market.

The report's a big deal because China looms as America's biggest foreign-policy challenge in this century. Iraq will pass and al Qaeda will be defeated - but China will soon stand before us like a teenage Goliath, anxious to flex its political, economic and, perhaps, even military muscle.

As the Pentagon notes:

• In 2004, the PRC's military budget will grow by 11.6 percent - excluding weapons research and purchases. Add those in, and China's defense budget becomes the world's third largest (after the U.S. and Russia and ahead of Japan) at $50 billion to $70 billion a year.
• China's imports of high-tech weaponry rose 7 percent over last year. From its largest supplier, Russia, China has bought nearly $20 billion in arms, including world-class Su-27 and Su-30 fighters, stealthy KILO-class diesel submarines and prodigious Sovremennyy-class destroyers equipped with supersonic, sea-skimming SS-N-22 anti-ship cruise missiles.
• To boost its access to top-of-the-line weaponry, Beijing is lobbying the European Union to lift its 1989 Tiananmen Square arms embargo. France and Germany are supportive of lifting the ban - and Britain is teetering.
• China's next military frontier is space, including manned space travel and the development of reconnaissance satellites and anti-satellite lasers capable of destroying intelligence and communications satellites.
• The People's Liberation Army is paying very close attention to the revolution in American military affairs (beginning with Operation Desert Storm) in order to improve its doctrine and assess U.S. vulnerabilities.
• The PRC has more than 500 increasingly accurate, short-range ballistic missiles, mostly aimed at democratic Taiwan. Five years ago, the Pentagon thought this number was growing by just 25 a year - but the new estimate is three times that.

This means that China will have a first-rate military in 10 to 15 years and be the most powerful armed force in Asia - with the exception of the United States.

The buildup far exceeds China's self-defense needs. No nation threatens China. So what's it all for?

Short term, Beijing's military focus is on unification with Taiwan. Long term, the goals include making Japan strategically subservient and replacing America as the preeminent power in Asia.

Though positive political developments in China could ease some fears, the buildup raises enormous potential for conflict across the entire region.

For starters, Tokyo will find it difficult to sit idly by, trusting Beijing's good intentions. Indeed, modifications to the "peace constitution," which limits Japan's military options, are already on the table. And analysts generally assume that the nation could establish a nuclear-weapons capability in very rapid order, should it become necessary.

Taiwan, meanwhile, is where the United States and the People's Republic are most likely to cross swords.

The PRC sees the island as historically part of China, and wants to absorb Taiwan as it did British Hong Kong and Portuguese Macau before it. If a political solution can't be found, Beijing may use military force. But by U.S. law, America is committed to ensuring a peaceful resolution to Taiwan's future.

The United States thus has a strong interest in making sure China doesn't miscalculate - Washington must continually make clear to the PRC that it will honor its obligations in full.

China should also be kept aware that the buildup is unnerving its Asian neighbors, including the United States - and that they will react firmly.

The European Union should continue its 1989 ban on the sale of arms to China. A failure to do so could lead to European arms being used against U.S. forces in the Pacific.

Japan, often unwilling to roil diplomatic waters, is also obliged to express its candid concerns. China's western neighbor, India, should do so as well.

Beijing sees America's preoccupation with Iraq and terrorism as an opportunity to garner unbridled strength unnoticed. This follows deceased Chinese leader Deng Xiaoping's admonishment to "hide our capabilities and bide our time" while China (re)ascends the path to power and greatness.

China and the world will be better off if that ascent is wholly peaceful. But the nations of the regions, and of the world, should naturally aim to discourage a nationalist or militarist course.

Beijing must get the message its military buildup is being watched and that any adventurism will be challenged.

Peter Brookes is a Heritage Foundation senior fellow.