China Defence & Security Report Q4 2011

Chinese military spending is expected to increase by 12.7% for 2011,
after growth of only 7.5% in 2010. Total expenditure in the official
budget for 2011 is around CNY601bn (up from CNY532bn in 2010). One
reason for the rising spend is to provide for salaries and welfare
services for staff. Another reason is the increasing cost of military
equipment, especially high-tech weapons. A Chinese foreign ministry
spokesperson said that his country’s move to modernise its military is
solely to protect national sovereignty and not to target any other

China’s military modernisation continues apace. According to a US
Department of Defense’s report in August 2011, in 2000, only about 2% of
its platforms were modern. In 2011, 25% of its platforms are modern.
Until now, China has lacked the ability to produce high-performance
engines, especially fighter jet engines. China’s aerospace industry is
determined to develop the means to produce these engines, at a cost of
CNY10bn (US$1.5bn) over the next five years: to avoid dependence on
foreign parts suppliers; (b) in case of foreign unwillingness to supply;
to avoid any poor after-sales service; and to be autonomous in aircraft
export sales.

On January 11 2011, the J-20 “Black Eagle” – a 5th-generation,
twin-engine radarevading, stealth fighter aircraft developed by Chengdu
Aircraft Industry Group – made its first known test flight. According
the US Department of Defense report, this aircraft ‘will eventually give
the People’s Liberation Army Air Force a platform capable of
long-range, penetrating strikes into complex air defence environments’.

China is also developing an aircraft carrier platform. In late July
2011, China announced the inaugural sea trial of its first aircraft
carrier, purchased some time ago from Ukraine. China is also planning to
build two new aircraft carriers. China is also developing an anti-ship
ballistic missile (ASBM) that could be used to target aircraft carriers.

Disagreement continues in the South China Sea. According to China, the
islands in the South China Sea have belonged to China since ancient
times. However, China’s ownership of the sea is hotly disputed by
Vietnam, Malaysia, the Philippines, Taiwan and Brunei, with each
claiming part of the Spratly and Paracel Islands.