August 31, 2007: Taking into account all of the high tech weapons China is developing, or producing, you can make a case that their actual defense budget is about $100 billion a year. It's long been common practice in communist countries to hide defense spending in other areas of government activity. China has a very active space program, and part of it is obviously dedicated to military purposes (as in anti-satellite systems). China has several ICBM development projects underway, in addition to several shorter range ballistic missiles in development, or production. The Chinese navy and air force are also building lots of new ships and aircraft. It all adds up, to a much larger number that the current assumptions of about $45 billion a year.

American web information providers have been told that, if they wish to continue operating in China, they have to abide by Chinese web monitoring and censorship laws. Unwilling to cede the Chinese market to Chinese firms, the American companies (like Google, Microsoft and Yahoo) are going along with the Chinese demands. This includes installing software to monitor and censor blogs. Another new Internet police tactic is to have a warning (featuring two cuddly cartoon Internet cops) pop up every half hour, for users who are online, to warn against trying to reach forbidden websites. China's Internet police are noting increasing use of forbidden software, that enables Chinese web surfers to go where the government does not want them to be.

Unemployment, pollution and corruption continue to threaten government control. Unemployment is addressed, as it has been for three decades, by encouraging entrepreneurs to form new businesses. But that is done without much regulation, leading to so much pollution, that a sizable chunk of the population (over a third at the moment) is up in arms over. But the corruption is getting the most attention from the government, because this plague is very prevalent in the police and military, and the government needs these two institutions to remain in power. The anti-corruption campaign remains on track, with the finance minister resigning this week, along with several other lesser ministers. These actions are believed related to corruption charges.

While trying to deal with the dirty cops, billions of dollars is being invested in new tools to make police work easier. Hundreds of thousands of video cameras have been installed in urban areas, and millions of these inexpensive vidcams are planned. In addition, a new generation of ID cards are coming, with remotely readable electronic beacons (RFID) built in. Thus people can be tracked 24/7, if they live in one of the wired zones (that is, where the vidcams are.)

Taiwan and Japan are annoyed at continued intrusions by Chinese warships into their territorial waters. This has happened twice so far this year, and China ignores complaints about it.