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China Defence and Security Report Q2 2011

China Defence and Security Report Q2 2011

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Additional Information

Price	$530.00
Publisher	Business Monitor International
Date of Report	Apr 8, 2011

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Quick Overview

The Chinese economy cooled down through 2010, particularly from declining growth in exports and less fixed-asset investment. Our long-held view of a slowdown has clearly started. However, there are a few factors which have certainly stopped the slowdown from being a major dip. Despite rising food price inflation, private consumption will be a major source of growth in 2011 and beyond and the service sector will therefore benefit disproportionately from this. We now see real GDP growth coming in at 8.3%, rather than 7.5% previously.
We still believe that the rebalancing that has yet to occur thus far will need to take place, which will put a ceiling on economic growth in spite of the government's ambitious infrastructure plans but that ceiling looks higher. A risk to stability is the potential increasing of inflation pressures if the economy overheats which, in the absence of a sharp slowdown in the economy, could require significant tightening measures going forward. It may be that we see 2011’s real GDP exceeding our forecast but this could come at the expense of longer-term growth.
China continues to compete for geo-political leadership in its own region. Japan and Russia are weakening in the face of a stronger, tougher and certainly growing China. The US maintains a peacekeeping role between the three power-houses. However, Taiwan and North Korea are the countries with whom China has tense relations, as they have been for many years. What is interesting is that the effect of globalisation on integrating economies means that the North East Asian countries really cannot afford to pick on each other and certainly none are brave enough to start new, fresh arguments. Japan's swift consent to China's demands in the recent clash over a detained Chinese fishing captain confirmed Beijing’s position of strength in bilateral relations.
What this does not mean is an end to old battles and China and the Koreas’ age-long mistrust of Japan (World War II legacy) and potential reigniting of tension between China and South Korea over the future of the Korean Peninsula, will come to the surface again.

Table of Contents

Executive Summary ........................................................................................................................................ 7
SWOT Analysis ................................................................................................................................................ 8
China Defence Industry SWOT ............................................................................................................................................................................. 8
China Security SWOT ........................................................................................................................................................................................... 9
China Political SWOT ........................................................................................................................................................................................ 10
China Economic SWOT ...................................................................................................................................................................................... 11
China Business Environment SWOT ................................................................................................................................................................... 12
Global Political Outlook ................................................................................................................................ 13
The United States ................................................................................................................................................................................................ 13
China .................................................................................................................................................................................................................. 15
Japan And The Koreas ........................................................................................................................................................................................ 16
Russia ................................................................................................................................................................................................................. 17
Europe ................................................................................................................................................................................................................ 18
India ................................................................................................................................................................................................................... 19
Brazil .................................................................................................................................................................................................................. 19
Turkey ................................................................................................................................................................................................................. 20
Iran ..................................................................................................................................................................................................................... 20
Egypt, Saudi Arabia And Pakistan ...................................................................................................................................................................... 21
Terrorism ............................................................................................................................................................................................................ 22
Africa .................................................................................................................................................................................................................. 23
Space .................................................................................................................................................................................................................. 24
Competition ........................................................................................................................................................................................................ 24
Wild Card In Global Politics .............................................................................................................................................................................. 26
Conclusion .......................................................................................................................................................................................................... 29
North East Asia Security Overview .............................................................................................................. 30
North East Asia: The Strategic Outlook For The 2010s ...................................................................................................................................... 30
The Geopolitical Importance Of North East Asia ............................................................................................................................................... 30
Flashpoints And Faultlines In North East Asia ................................................................................................................................................... 31
The Evolution Of North East Asia ....................................................................................................................................................................... 38
Security Risk Ratings ................................................................................................................................... 41
BMI’s Security Ratings ....................................................................................................................................................................................... 41
Table: Asia Pacific Regional Security Ratings .................................................................................................................................................... 41
Table: Asia Pacific State Vulnerability To Terrorism Index ............................................................................................................................... 42
China’s Security Risk Rating .............................................................................................................................................................................. 42
City Terrorism Rating ......................................................................................................................................................................................... 43
Table: BMI’s Asia City Terrorism Index ............................................................................................................................................................. 44
Political Overview .......................................................................................................................................... 45
Domestic Politics ................................................................................................................................................................................................ 45
Long-Term Political Outlook .............................................................................................................................................................................. 47
Political Risk Analysis ........................................................................................................................................................................................ 51
Security Overview ......................................................................................................................................... 55
Internal Security Situation ....................................................................................................................................................................................... 55
External Security Situation ...................................................................................................................................................................................... 55
Shanghai Cooperation Organisation .................................................................................................................................................................. 56
China-US Relations ............................................................................................................................................................................................ 56
China-Japan Relations ....................................................................................................................................................................................... 57
China-Taiwan Relations ..................................................................................................................................................................................... 58
China-Tibet Relations ......................................................................................................................................................................................... 59
China-Korea Relations ....................................................................................................................................................................................... 59
China-Russia Relations ....................................................................................................................................................................................... 59
China-India Relations ......................................................................................................................................................................................... 60
EU Arms Embargo .............................................................................................................................................................................................. 61
Armed Forces And Government Spending ................................................................................................. 62
Joint Operations And Exercises .......................................................................................................................................................................... 64
International Deployments .................................................................................................................................................................................. 64
Table: China’s Deployments ............................................................................................................................................................................... 64
Peace Mission 2005 ............................................................................................................................................................................................ 64
Weapons Of Mass Destruction ............................................................................................................................................................................ 65
Market Overview ............................................................................................................................................ 67
Recent Changes .................................................................................................................................................................................................. 68
Arms Trade Overview ......................................................................................................................................................................................... 69
Industry Trends And Developments .................................................................................................................................................................... 71
Procurement Trends And Developments ............................................................................................................................................................. 72
Competitive Landscape ....................................................................................................................................................................................... 72
Table: Key Players In China’s Defence Sector ................................................................................................................................................... 73
Industry Forecast Scenario ........................................................................................................................... 75
Armed Forces ..................................................................................................................................................................................................... 75
Table: China’s Military Personnel, 2000-2008 (‘000 personnel, unless otherwise stated) .................................................................................. 75
Table: China’s Manpower Available For Military Service, 2008-2015 (aged 16-49, unless otherwise stated)) .................................................. 75
Defence Expenditure ........................................................................................................................................................................................... 76
Table: Defence Expenditure, 2008-2015 ............................................................................................................................................................. 76
Table: Defence Expenditure Scenario – Changing % Of GDP, 2010-2015 (US$mn) .......................................................................................... 77
Defence Trade ..................................................................................................................................................................................................... 77
Table: China’s Defence Exports; 2008-2015 (US$mn) ....................................................................................................................................... 78
Table: China’s Defence Imports, 2008-2015 (US$mn) ....................................................................................................................................... 78
Table: China’s Defence Trade Balance, 2008-2015 (US$mn) ............................................................................................................................. 79
Key Risks To BMI’s Forecast Scenario ............................................................................................................................................................... 79
Macroeconomic Outlook ..................................................................................................................................................................................... 79
Table: China – Economic Activity, 2008-2015 ................................................................................................................................................... 82
Company Profiles .......................................................................................................................................... 84
Chengdu Aircraft Company ................................................................................................................................................................................ 84
China Aviation Industry Corporation ................................................................................................................................................................. 85
China National Nuclear Corporation ................................................................................................................................................................. 87
China Shipbuilding Industry Corporation .......................................................................................................................................................... 88
China South Industries Group Corporation ........................................................................................................................................................ 90
BMI Methodology .......................................................................................................................................... 91
How We Generate Our Industry Forecasts ......................................................................................................................................................... 91
Defence Industry ................................................................................................................................................................................................. 91
City Terrorism Rating ......................................................................................................................................................................................... 92
Table: City Terrorism Rating Methodology ........................................................................................................................................................ 94
Sources ............................................................................................................................................................................................................... 95