Taiwan is maintaining defense spending at 2.7 percent of GDP, which comes to about $10 billion a year. The Taiwanese military is reducing personnel strength 25 percent over the next few years, and eliminating conscription. This one would give Taiwan an armed forces, and defense spending, that is about 12-15 percent the size of China's. Taiwanese defense efforts are mostly about defending the island nation from Chinese invasion. China, however, has many other tasks (nuclear weapons, ballistic missiles, defending borders with Russia and several countries in the south.) The Chinese Navy, in particular, has a growing number of priority chores in protecting vital Chinese shipping lanes (for raw materials from Africa, the Middle East and Australia) and exports to everywhere.
Taiwan has arrested its highest ranking Chinese agent ever, a 41 year old Taiwanese Major General, Lo Hsien Che. Although married, he was seduced by a Chinese operative in 2002, while serving in Thailand. In 2004 he began providing classified information, for which he was ultimately paid over a million dollars. Until recently, Lo managed to avoid detection by Taiwanese counter-intelligence, but was eventually found out. Lo's current job was head of military telecommunications and information.
The United States, and the West in general, is also much beset by Chinese espionage efforts. But there's a difference in that the main Chinese effort here is economic, while against Taiwan, the emphasis is on military and government. For China, the main goal is keeping the economy going and prospering. Conquering Taiwan is a "nice to have" goal, sustaining economic growth is "must have." The United States, and other Western nations, are increasingly fighting back. Arrests and prosecutions of Chinese spies are way up, and on the Internet front, the war is becoming more intense.
Unwilling to try and coerce North Korea into behaving and getting its economy in order, China is now trying another approach. China has obtained the right to explore for new mineral deposits in North Korea, and then build mines and handle the exports. China has pushed back in the past when North Korea tried to cheat on economic deals, so Chinese economic investments like this would be pretty safe. China has also obtained North Korean agreement to the stationing of Chinese troops at these new facilities, further limiting North Korean ability to play their usual stupid games. In addition to the threat of military force, China remains North Korea's main source of food and fuel (freebies as well as paid for.)
Partly in response to growing pressure from trading partners, and partly to protect the rapidly increasing value of Chinese copyrights and patents, China has expanded its crackdown on factories that produce fakes, and people who sell them inside China. Until recently, most of these illegal copies (of clothing, gadgets, software and so on) were exported. But growing affluence inside China has created a large domestic market. The government is also cracking down on online pornography, which has become a major online industry. The government sees porn as one of those "gateway drugs" for revolution and poor discipline. The government is also going after illegal news sites, which are considered another form of pornography.
The government campaign against corruption seems hopeless, but the national leadership feels otherwise. While China is 78th on the list of least corrupt nations, archrival India is at 87. More importantly, China is attacking corruption more vigorously and successfully than India. More so than India, the Chinese leadership recognize that corruption is a threat to Communist Party rule in China, and the jobs of all those senior officials. So it's a matter of clean up, or risk another revolution. India is a democracy, where voters can keep electing politicians who promise to deal with corruption, and never do. This is just another reason why the Chinese leadership sees no big advantage in democracy.
China has installed over 40,000 high-definition surveillance cameras in Xinjiang province, nearly half of them in the provincial capital. This province is heavily populated by Moslem Turkic people and has been the scene of growing violence. The local Uighurs have been increasingly violent against the many Han Chinese moving in. The cameras are in tamper-resistant enclosures, and send their images to surveillance centers for storage and analysis. There was widespread rioting against Han Chinese in Xinjiang two years ago. The Uighurs are still angry, but the government believes any future uprisings will be less of a problem because of the camera network.
January 27, 2011: A Chinese warship approached the Senkaku Islands, which are claimed by China and Japan. In this case, a Japanese Coast Guard vessel warned the Chinese ship not to enter waters claimed by Japan, and the Chinese ship complied. Chinese warships and commercial vessels are constantly operating around the Senkakus, apparently as part of a long-range campaign to wear the Japanese down.