By Steven Mufson

Washington Post Foreign Service

Chinese Exercises Raise Fears in Asia, U.S.; Despite Military Upgrades, Economic Progress Is Beijing's Priority

BEIJING, July 23 -- China has fired four surface-to-surface guided missiles to kick off week-long military exercises just north of Taiwan, raising a question for Asian and American policymakers: Is China a military threat?

It's an issue that has become more acute with Chinese purchases of new hardware, its development of three or four divisions of rapid-reaction forces, new nuclear weapon tests, and a rhetorical assault on the United States and Taiwan, including a threat Friday that China would respond with force if Taiwan spurns the Chinese goal of reunification and declares independence. Many countries in the South China Sea area were also upset by recent Chinese moves to strengthen its presence in the disputed Spratly Islands.

Although China's military capability is modest compared to U.S. migh Chinese ships, subs and warplanes.

But specialists say the 3 million-man Chinese military is handicapped by outdated equipment that lags anywhere from 15 to 25 years behind American military technologoy. The Chinese military's budget increases, while substantial, have failed to keep up with inflation over the past two decades.

Moreover, specialists on Chinese strategy doubt that the giant of Asia would take action that might disrupt the nation's economic progress and social stability unless it were pushed hard. A major military initiative would undoubtedly disrupt trade relations, and more than 15 percent of China.

China believes it is entitled to aspire to military parity with the United States and other major powers, even though it recognizes that can't be achieved until the middle of the next century.

"If you're talking about a strategic threat to U.S. forces or interests in Japan or Korea, China is nowhere near that and won't be for 15 or even 25 years," said Michael Swaine, a China analyst at Rand Corp. But he said there is "real concern over local threats."

China could flex its military muscle as one element in a modern-day equivalent of gunboat diplomacy, the 19th-century strategy used by Western powers and Japan to wring concessions from Beijing.

That's where this week's military exercises fit in. The exercises are about 120 miles north of Taiwan, and only 40 miles from a sparsely populated island that Taiwan controls. Fishermen have been warned away from the area and commercial airlines have been forced to change their routes.

"The Chinese prefer shots across the bow that produce sensible adjustments in opponents' policies, to shots that strike and sink them," says Freeman. "The Chinese choice of an uninhabited island north of Taiwan as the place to demonstrate their military power is a classic instance of this."

Anxiety about the People's Liberation Army (PLA) has been heightened by improvements in its equipment, most of which dates from the 1960s.

Submarines. China has acquired four Russian-built Kilo class submarines, considered among the best of the world's diesel-powered subs.

Missiles. China recently developed a mobile intercontinental ballistic missile capable of hitting Europe or California. Worried about the missiles, Taiwan has been negotiating the purchase of Patriot missiles.

Planes. Last year China purchased 26 Su-27s, Russia's most advanced fighter jet. A dispute over payment terms has postponed delivery of a second batch. China wants to make an agreement to produce up to 300 of the planes in China, but Russia has been balking for both commercial and stagainst an invader inside China, not at its borders, still less beyond them.

In measuring the "China threat," politics loom as large as the military's manpower and equipment.

The People's Liberation Army was founded as an arm of the Communist Party. With the fading of paramount leader Deng Xiaoping from the political scene, the military might play a greater political role than ever before.

Now, for the first time, the country's political leaders have no military experience. President and party chief Jiang Zemin, Vice Premier Zhu Rongji and Premier Li Peng all built their careers in state industries and central planning.

Since becoming party general secretary in 1989, Jiang has worked to strengthen his ties to the military. Within 10 months after becoming party chief, Jiang had toured every one of the seven regional military commands. Many commanders he met then have been moved to senior positions in the central command.

Yet analysts say the military could assert a more independent role. The Clinton administration might have hastened that development by giving Taiwanese President Lee Teng-hui a visa to visit the United States. Just days before the decision, Foreign Minister Qian Qichen had been assured by Secretary of State Warren Christopher that no visa would be issued. When he brought that message back to Beijing, the Chinese military criticized him for being gullible. A visa was issued two days later, Chinese sources said. Jiang has made a "self-criticism" over the Taiwanese policy fiasco, Western sources here said. The self-criticism exercise, a tradition for the Communist Party but rare for senior leaders, indicates a severe setback and pressure on the president, who had launched an initiative for reunification with Taiwan in January.

While few Chinese leaders really expect to reunify mainland China with Taiwan any time soon, no one wants to go down in history as the person who "lost" Taiwan to independence. If the United States is in danger of miscalculating Chinese intentions, China runs the risk of misunderstanding U.S. intentions. Chinese leaders believe that the United States is pursuing a neo-Cold War policy of containment, a view that many Western specialists believe is unfounded but could also become self-fulfilling if China reacts by taking a more aggressive posture or selling weapons to countries like Iran.

The Chinese side's concern about American policy has increased with the reestablishment of U.S. relations with Vietnam, justified by some members of Congress as a counterweight to Chinese power. The visa for Taiwan's Lee also appeared to be part of a containment chess game.

"In China, more and more people are wondering: what are the Americans up to?" said Cui at the Institute of Contemporary International Relations. "Quite a number of Chinese people at various levels tend to believe that the Americans regard a powerful China as a hindrance to the United States in its bid to maintain world dominance and so are trying hard purposefully to keep China weak and even divided."

If China reacts with a military buildup, it would mean a shift in priorities. Ever since Deng launched reforms in the late 1970s, the military has come last on Deng's list of "four modernizations." Between 1985 and 1989, the number of Chinese in military uniform was slashed by a million, to a quarter of its previous size. The modernization program relies heavily on imported capital and technology.

"Modernization would be set back in many ways by the consequences of military confrontation with Taiwan, China's other neighbors or the United States," says Freeman.

Some American policy makers say that means the United States and Taiwan can brush aside Chinese threats as bluster. But that might be underestimating the seriousness of Chinese leaders, especially when it comes to Taiwan, and the danger of resurgent Chinese nationalism, especially at a time of political transition.

"Chinese nationalism dictates a strong response to perceived challenges to sovereignty and national dignity," says Freeman.