The American Enterprise Institute, Foreign Policy Initiative, and Heritage Foundation have teamed up to study China -- and how the Pentagon should respond. The result is a white paper, titled, "China's Military Build-up: Implications for U.S. Defense Spending." Here's the conclusion:
U.S. policy toward China in the past has been to ―engage but hedge. Engagement, especially economic engagement, was expected to produce a slow but inevitable transformation of China—moving it from an autocratic one-party state to a regime that respects the rule of law, free markets, and civil and political rights….
The problem is that China has not reformed as expected. Indeed, in many ways, it is less liberal today than a decade ago. And if there has been an arms race, it has largely been a one-sided affair. Complicating matters further is the fact that the leadership in Beijing appears to have read the initial Obama administration‘s talk of a ―G-2‖ world and the rhetoric of decline coming from the U.S. as a signal that it could be more assertive diplomatically, politically, and militarily. Nor is deterring ambitious, autocratic rising powers (as history has shown in the case of Wilhelmine Germany and Imperial Japan) an easy task. It is especially difficult in the case of the PRC because the country‘s strategic literature is full of discussions about the use of deception, surprise, and asymmetric tactics and weapons. Mere calculations of force-on-force balances may not be persuasive in a time of crisis to a military leadership so educated.
As matters stand now, even close allies, like Australia and Japan, have had second thoughts about America‘s ability to maintain its military‘s dominant position in the Asia-Pacific region. To truly deter China and maintain a balance of power that favors U.S. interests in the region, the American military will need to do more, not less, than it is currently doing. Among the things required will be: the deployment of more submarines and surface combatants, more 5th generation aircraft like the F-22 Raptor and F-35 Lightning, hardened air and naval bases, enhanced anti-submarine and anti-mining capabilities, additional missile and cruise-missile defense systems, redundant communication and reconnaissance platforms, including space-based and terrestrially-based systems, longer-range precision-strike platforms, and enhanced information warfare and cyber defense capabilities. None of which is cheap and none of which can be done with a declining defense budget. However, allowing the military balance of power to shift in China‘s favor in a region of the world vital to U.S. interests is a recipe for instability, diminished economic and political sway, and potential conflict—all of which comes with costs likely to be greater than the expenditures required to keep the peace.
Whole report here.