Annual DoD Report Assesses Chinese Military is Modernizing Rapidly
Sean Patrick Calabria, AGS Associate Vice President & Director of Research 
On December 18, the U.S. Department of Defense (DoD) released its annual report on military and security developments involving the People’s Republic of China (PRC). The 2024 report notes that the PRC continues to modernize its military capabilities and structure as part of Beijing’s national strategy of “the great rejuvenation of the Chinese nation’ by 2049. The report charts the course of the PRC’s national, economic, and military strategy and offers insight on the People’s Liberation Army’s (PLA) strategy, current capabilities, and activities as well as its future modernization goals, and illustrates the importance of meeting the pacing challenge presented by the PRC’s increasingly capable military across numerous domains and measures of national power. Below are some of the key takeaways and insights from the 2024 report.
- Foreign Policy & Economic Strategy: PRC leaders claim their power to shape world events continues to grow, presenting “new strategic opportunities” to create an environment favorable for PRC interests and national rejuvenation. The PRC acknowledges that internal and external challenges complicated its economic recovery and growth in 2023. For 2024, the PRC plans to leverage perceived favorable factors in the PRC’s long-term growth trajectory while mitigating risks to economic stability. The PRC’s ongoing military modernization objectives are commensurate with and part of its broader national development aspirations to invest heavily in technological self-sufficiency and concentrate on advanced manufacturing.
- Military Modernization and Reform: The PLA has sought to modernize its capabilities and improve its proficiencies across all warfare domains to become a joint force capable of the full range of land, air, and maritime as well as nuclear, space, counterspace, electronic warfare, and cyberspace operations. Despite its progress, the force still has significant deficiencies including in commander proficiency, long-distance logistics, and urban warfare.
- Defense Industrial Base: The PRC’s long-term goal is to create an entirely self-reliant defense-industrial sector—fused with a strong civilian industrial and technology sector—to meet the PLA’s needs for modern military capabilities. The PRC has mobilized vast resources for defense modernization, including through its Military Civil Fusion (MCF) Development Strategy as well as espionage activities to acquire sensitive, dual-use, and military-grade equipment. The PRC has substantially reorganized its defense-industrial sector to improve weapon system research, development, acquisition, testing, evaluation, and production. In 2023, the PRC announced its official annual military budget would increase nominally by 7.2%, continuing more than 20 years of annual defense spending increases and sustaining its position as the second-largest military spender in the world. The PRC’s published military budget omits several major categories of expenditures and, thereby, omits spending on defense and security activities that could account for 40%–90% more than the announced budget. The PRC’s actual defense budget is probably approximately $330 billion–$450 billion.
- Naval & Shipbuilding Industry: The PRC, the top commercial ship-producing nation in the world by most industry measures, has sufficient capacity to produce any required numbers of naval classes: submarines, surface combatants, and auxiliary and amphibious ships. The PRC has developed unmanned underwater systems, publicly revealing along-range system in 2019. The PRC has been constructing major new shipyards, such as Hudong Shipyard on Changxing Island, in recent years to replace smaller and older yards in support of its commercial and naval shipbuilding programs, which seek to increase shipbuilding output. The PRC domestically produces naval gas turbine and diesel engines (under license from foreign companies or via domestic development) as well as almost all shipboard weapons and electronic systems for its military shipbuilding sector, making the industry nearly self-sufficient for all shipbuilding needs.
- Space Industry: The PRC’s space industry, managed by the PLA, is rapidly expanding its intelligence, surveillance, reconnaissance, navigation, and communication satellite constellations. The successful completion of the Tiangong Space Station in 2022and its planned expansion demonstrates the industry’s continued progress. The PRC’s domestic space market is dominated by state-run enterprises; however, increased investment has enabled private space companies to successfully launch orbital satellites in the past 4 years.
- Nuclear & Conventional Missile Programs: Over the next decade, the PRC probably will continue to rapidly modernize, diversify, and expand its nuclear forces. The PLA seeks a larger and more diverse nuclear force, comprised of systems ranging from low-yield precision strike missiles to ICBMs with multi-megaton yields to provide it options at every rung of the escalation ladder. DoD estimates the PRC has surpassed 600 operational nuclear warheads in its stockpile as of 2024 and will have over 1,000 operational nuclear warheads by2030. The large growth of the PLA silo force suggests Beijing is making progress in establishing its “early warning counterstrike” posture to increase the survivability and responsiveness of these launch sites. PLA’s expanding nuclear force will enable it to target more U.S. cities, military facilities, and leadership sites than ever before in a potential a nuclear conflict. The PRC’s hypersonic missile technologies have greatly advanced during the past 20years. The PRC may also be exploring development of conventionally-armed intercontinental range missile systems. If developed and fielded, such capabilities would enable the PRC to threaten conventional strikes against targets in the continental United States, Hawaii, and Alaska. Many of the PRC’s missile programs are comparable to other international top-tier producers.
- Dual-Use Technologies: The PRC seeks to be an innovation superpower largely non-reliant on foreign technology as well as a global center for high-tech industries and overtake the West in AI R&D by 2025 to become the world leader in AI by 2030. The goal of attaining self-sufficiency in key S&T sectors—a theme of PRC state plans going back decades—was recently reiterated in the 14th Five Year Plan (FYP). As part of this self-sufficiency drive, Beijing has mobilized its bureaucracies to rapidly develop the country’s capacity for domestic innovation. The PRC is particularly focused on dominating a range of emerging, dual-use technologies that promise to be disruptive and foundational for future economies. In its14th FYP, the PRC prioritized the advancement of next-generation AI, quantum information, brain science and biotechnology, semiconductors, and deep space, deep sea, and polar-related technologies. Beijing has a clear understanding of its remaining S&T deficiencies and wields industrial policies and the country’s massive tech transfer apparatus to close these gaps. The PRC sustains high levels of R&D funding and offers significant subsidies to domestic companies working on frontier technologies.
- Taiwan Contingency: Throughout 2023, Beijing continued to erode longstanding norms in and around Taiwan by employing a range of pressure tactics against Taiwan, including maintaining a naval presence around Taiwan, increasing crossings into Taiwan’s self-declared centerline and ADIZ, and conducting major military exercises near Taiwan. The PLA has a range of options to coerce Taipei based on its increasing capabilities in multiple domains. For example, the PRC could signal its readiness to use force or conduct punitive actions against Taiwan. The PLA could conduct a range of cyberspace, blockade, and kinetic campaigns designed to force Taiwan to capitulate to unification or compel Taiwan’s leadership to the negotiation table on the PRC’s terms. The PRC would seek to deter potential U.S. intervention in any Taiwan contingency campaign. Failing that, the PRC would attempt to delay and defeat intervention in a limited war of short duration. The PRC’s perception of domestic and international receptivity to military action, the expected impact on its economy of resulting sanctions, political trends in Taiwan, and its level of confidence in the PLA’s capability to conduct a successful invasion of Taiwan will determine which military option the PRC chooses during crises. Geopolitical events in 2023 continued to accelerate Taiwan’s development of asymmetric concepts and capabilities to counter the PRC’s improving capabilities. However, Taiwan seeks to balance asymmetric capabilities with conventional ones, the latter of which it relies on to defend against PRC gray-zone operations.
AGS will continue to monitor PRC related military affairs as well as security developments in the Indo-Pacific and provide relevant updates. You can read the full DoD report here.
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