After decades of heavy investment, China is close to possessing one of the most powerful militaries in the world— one that can "secure China's status as a great power," according to the latest edition of the US Defense Department's annual report on China, released this week.
In coming years China could reform the world's largest army into a smaller, swifter and harder-hitting rival to the America's own army, while also deploying high-tech new warplanes and warships from new air and naval bases on manmade—and potentially illegal—Pacific islands.
Meanwhile, Beijing's top scientists are putting the finishing touches on rockets and other weaponry capable of knocking America's satellites and ballistic missiles from space. And Chinese operatives are expanding a shadowy, oceangoing militia that disguises itself as a fishing fleet—and could represent the vanguard of any future Chinese invasion.
Here are some of the highlights from the Pentagon's China report.
Officially, China's military budget grew at a rate of 8.5 percent annually, on average, from 2007 through 2016, taking into account inflation. By 2016, Beijing was spending $144 billion a year on its armed forces—around a third what the United States spends on its own military.
But China's official budget conveniently leaves out potentially tens of billions of dollars annually that the Chinese Communist Party quietly invests in troops, weapons and training.
The Chinese military's coffers are likely to keep swelling, according to the Pentagon. "Chinese leaders seem committed to increases in defense spending for the foreseeable future, even as China's economic growth slows."
Smaller is better
Taking a cue from the US military, the People's Liberation Army—a catch-all term for the entire Chinese military, including the army, navy and air force—is cutting its payroll in order to spend more money on advanced technology.
That trend is most evident in the People's Liberation Army Army, or PLAA. With 1.6 million active-duty troops—three times as many as the US Army employs—the PLAA "remains the largest standing ground force in the world," according to the Pentagon.
In 2016, the PLA began the yearlong process of letting go as many as 300,000 people. "The cuts are expected to focus on non-combat personnel, such as those in arts and culture, administrative duties or academic work," the US Defense Department explains.
The cuts might be good for China's military strategy, but they have proved devastating to the pink-slipped soldiers. According to the American report, "following demobilization announcements in October , more than a thousand PLA veterans conducted a protest in front of [PLA] headquarters in Beijing."
Army of hackers
Beijing is worried that it's being out-hacked by the Americans. "China believes its cyber capabilities and personnel lag behind the United States," the Pentagon asserts in its report. In late 2015, the PLA established the Strategic Support Force, which includes a cyberwarfare component and could eventually rival US Cyber Command.
According to the report, during wartime the PLA could order its hackers to attack an enemy's command-and-control and logistics networks, steal design data on foreign weaponry and "serve as a force-multiplier when coupled with kinetic attacks." In other words, shutting down radar networks or other defense, leaving an enemy vulnerable to attacks by ships, planes or ground forces.
Unsinkable air bases
The Chinese navy possesses one small aircraft carrier for training and experimentation and is building at least one more flattop to begin building a carrier-centric fleet similar to the US Navy's own fleet.
But island airfields, not ships, are the foundation of China's naval strategy. Since 2015, Beijing has been dredging remote Pacific reefs and building air and naval bases on the reclaimed land—most notably in the Spratly island chain. Soon these outposts could support fighter squadrons patrolling the disputed airspace and waters of the South China Seas.
"Major construction features at the largest outposts include new airfields—all with runways at least 8,800 feet in length—large port facilities, and water and fuel storage," the Pentagon reports.
"As of late 2016, China was constructing 24 fighter-sized hangars, fixed-weapons positions, barracks, administration buildings and communication facilities at each of the three outposts," the US report continues. "Once all these facilities are complete, China will have the capacity to house up to three regiments of fighters"—around 72 planes—"in the Spratly Islands."
A hallmark of America's military power is its ability to strike, with non-nuclear munitions, targets anywhere in the world—and on short notice. The US Navy's roughly 50 cruise-missile-armed submarines can lie off an enemy coast until the order comes to surface, fire and then quickly disappear.
Beijing is eager to duplicate this capability with a new submarine class, the Type 093B, which might possess what the US military describes as a "clandestine land-attack option." A variant of the existing Shang-class submarine, the Type 093B carries as many as 16 cruise missiles. China has built three of the subs, so far, and could deploy them for the first time in 2017.
Little blue men
Despite possessing a frontline fleet of some 300 modern naval vessels, if China were to launch a war at sea, the first ships to sail into combat could be fishing boats. Beijing has raised an incognito naval militia, disguised as a fishing fleet, that it sends into contested waters to harass foreign ships and assert legal claims to new islands and fisheries.
American experts call these maritime militiamen "little blue men," a reference to the masked and armed "little green men" that Russia sent into Ukraine to back pro-Russia rebels. The secretive Chinese flotilla "plays a major role in coercive activities to achieve China's political goals without fighting, part of broader [Chinese] military doctrine that states that confrontational operations short of war can be an effective means of accomplishing political objectives," the American report states.
Before, the little blue men sailed in their own boats. But now China is building a state-owned fishing fleet for its maritime militia force in the South China Sea, according to the Pentagon. "Hainan Province, adjacent to the South China Sea, has ordered the building of 84 large militia fishing vessels."
The United States is still the world's leading drone power. But US law bars American companies from selling military-grade flying robots to countries with poor human rights records. China, by contrast, has no such qualms. Its drone business is booming.
"China sold armed UAVs to several states in the Middle East and North Africa, including Iraq, Saudi Arabia, Egypt and the United Arab Emirates" in 2016, the US China report explains. "China faces little competition for sale of such systems."
Beijing is working hard to negate America's military advantage in Earth's orbit. "Despite its public stance against the militarization of space ... China also continues to develop a variety of counterspace capabilities designed to degrade and deny the use of space-based assets by adversaries during a crisis or conflict," the Pentagon warns.
Potential "counterspace" weapons that China is working on include ground-based lasers and jammers; nimble "inspection" satellites that can sneak up on and tamper with other spacecraft; and rockets with the power and accuracy to fly into low orbit and smash satellites and enemy rockets.
The 1967 Outer Space Treaty bars weapons from long-term orbit, but world powers get around this ban by developing spacecraft with peaceful uses that can, with the flip of a switch, go to war -- treaty be damned. Beijing "probably is testing dual-use technologies in space that could be applied to counterspace missions," the American report claims.