The Defense Department, in a report to Congress on Chinese military power released on 12 July, concluded that China is honing forces to force the reunification of Taiwan. The report describes Beijing's coercive approach of achieving it's goals while keeping U.S. aircraft carriers at bay. China's submarine force will give it the potential to blockade Taiwan while using Russian-built "Sunburn" missiles deployed on Sovremmeny-class destroyers to deter any U.S. response. China is also on track to deploying 600 ballistic missiles opposite Taiwan by 2005, which would intimidate the Taipei government into surrender.
Meanwhile, Secretary of State Colin Powell and visiting Australian Foreign Minister Alexander Downer agreed on 11 July that China's military buildup is no cause for concern. Both men publicly concluded that with China's economy growing at a rate of about 7 percent a year, it was only natural that part of the new wealth is used to improve China's military. - Adam Geibel
A copy of the report is available on-line at http://www.defenselink.mil/news/Jul2002/d20020712china.pdf.
The previous report was submitted to Congress in June 2000, and is available at http://www.defenselink.mil/news/Jun2000/china06222000.htm.
The Pentagon report also asserted that China was spending $65 billion a year on defense, not the $20 billion the Chinese government admits to. Much of the money is being put into building short range missiles, and buying small quantities of high tech weapons from Russia. Any military attack on Taiwan would be very risky for China, as the chance of success is low (and will remain low for the next decade) and China's economy (and the nation's political stability) would be at risk from US backlash. Perhaps realizing this, China has made several friendly gestures to the United States recently and is trying to re-establish military cooperation.