INTRODUCTIONTHIRD LARGEST COUNTRY.

MOST POPULOUS.

BORDERS.

INTRODUCTIONTHIRD LARGEST COUNTRY.

MOST POPULOUS.

BORDERS.

3400 OFFSHORE ISLANDS.

AREA – 95,71,300 SQ KM.

ZHONGGUO.

SCOPEPART I–BACKGROUND INFORMATION.

PART II–ANALYSIS OF IMPORTANT CURRENT FACETS OF POWER.

PART III-THE PEOPLE’S ARMY.

PART IV-INDIA-CHINA RELATIONS.

PART V–PROGNOSIS.

LAND AND RESOURCES

BROAD DIVISIONS

MOUNTAINS -43 %.

MOUNTAINOUS PLATEAUX - 26 %.

BASINS - 19%.

FLATLANDS - 12%.

NATURAL RESOURCES

RESERVES OF ENERGY RESOURCES

(IN TONNES)

PETROLEUM - 20 BILLION.

COAL - 10 TRILLION.

IRON ORE - 50 BILLION.

HAN CHINESE - 93%

MINORITES - 7.0%

(56 ETHNIC GROUPS)

POPULATION - 1.27 BILLION (2001).

DENSITY - 133 PER SQ KM.

RURAL/URBAN RATIO - 66/34.

POPULATION

FOUR MODERNIZATIONS

AGRICULTURE.

INDUSTRY.

SCIENCE AND TECHNOLOGY.

DEFENCE.

DECENTRALIZATION OF PLANNING.

RELIANCE ON MARKET FORCES.

GROWTH RATES

1986-90 - 7%

1992 - 13%

1994 - 12%

FDI - $ 30MILLION IN 1994.

ECONOMY

GNP IN 1999 - $980 BILLION.

PER CAPITA - $ 780.

NATIONAL INCOME

AGRICULTURAL OUTPUT -17.6%.

INDUSTRIAL OUTPUT -49.3%.

GDP

1965-79 - 6.4%.

1980-88 - 10.3%.

1989 - 4%.

1990’s - 10%.

ECONOMY

MOST IMPORTANT SECTOR.

PER CAPITA INCREASES DWINDLING.

1952-79

GRAIN OUTPUT INCREASE -103%.

PER CAPITA INCREASE - 20%.

PER CAPITA ACREAGE

1949 - 0.45 ACRES.

2001 - 0.26 ACRES.

AGRICULTURE

MIXED FARMING.

MECHANIZATION.

FLOOD CONTROL AND IRRIGATION PROJECTS.

2000 STATE FARMS.

FISHERIES

CATCH IN 1997 - 36.3 MILLION. TONNES.

MARINE PRODUCTS - 7 MILLION. TONNES. ANNUALLY.

AGRICULTURE

COAL - ANNUAL OUTPUT – 1.01 BILLION TONNES. PETROLEUM

1994 - 146 MILLION TONNES. SELF SUFFICIENT FROM 1963. EXPORTER FROM 1973. LARGEST RESERVES - 10 BILLION BARRELS - TARIM BASIN. NET IMPORTER SINCE 1993.

IRON ORE PRODUCTION IN 1999 - 63 MILLION TONNES.

GRAPHITE PRODUCTION IN 1994 - 3,20,000 TONNES.

MINING

INDUSTRY’s SHARE OF GDP 1965 - 39%. 1999 - 49%.

300,000 INDUSTRIAL ENTERPRISES BY MID-1990’s. PRODUCTION OF IRON AND STEEL (1995)

PIG IRON - 105 MILLION TONNES. CRUDE STEEL - 95.4 MILION TONNES.

HEAVY INDUSTRIES. FERTILIZERS

PRODUCTION IN 1998 - 28 MILLION TONNES. PRODUCTION OF

COTTON YARN IN 1995 - 5 MILLION TONNES.

MANUFACTURING

OTHER PRODUCTS

CEMENT - 476 MILLION TONNES.

PAPER & PAPER

BOARDS - 28.1 MILLION TONNES.

BICYCLES - 44.7 MILLION UNITS.

MOTOR - 1.45 MILLION UNITS. VEHICLES

TV’s - 34.9 MILLION UNITS.

INDUSTRIAL UNITS BY 1994

PRIVATELY OWNED - 8 MILLION.

COLLECTIVES - 1.8 MILLION.

100,000 STATE OWNED FIRMS.

MANUFACTURING

ELECTRICITY OUTPUT IN 1999 -1.2 BILLION kWh.

HYDROELECTRIC POWER – 18%.

NUCLEAR ENERGY PLANT AT SHANGHAI.

ENERGY

MARKET FORCES DOMINATE. 1999

EXPORTS - $ 195 BILLION. IMPORTS - $ 166 BILLION.

FDI BY 1994 - $ 39 BILLION. EXPORT COMMODITIES

CRUDE & REFIND PETROLEUM. COTTON FABRIC. SILK. RICE. CLOTHING. PORK. FROZEN SHRIMPS. TEA.

COMMERCE AND TRADE

MACHINERY.

STEEL PRODUCTS.

OTHER METALS.

CARS.

SYNTHETICS.

AGRICULTURAL CHEMICALS.

RUBBER.

WHEAT.

SHIPS.

IMPORT COMMODITIES

JAPAN.

HONG KONG.

USA.

GERMANY.

TAIWAN.

SINGAPORE.

TRADING PARTNERS

RAILWAYS LENGTH -57,566KM. DIESEL AND STEAM TRACTION. LANZHOU - LHASA LINE UNDER CONSTRUCTION. TRANS – ASIA RAILWAY PROJECT

LENGTH - 5513KM. COST - $ 2.5 BILLION. LIKELY COMPLETION - 2006. WILL CONNECT SIX ASEAN COUNTRIES.

ROADS LENGTH - 1.5 MILLION KMS. VEHICLE PRODUCTION - 1.5 MILLION ANNUALLY. PLANS TO RAISE TO 3 MILLION. 3.5 MILLION CARS IN 1995 AND 5.6 MILLION LARGER VEHICLES. 1 VEHICLE PER 131 PEOPLE.

INLAND WATERWAY - 110,000KMS LONG. MERCHANT FLEET - 1800. AIR LINKS TO 90 CITIES.

TRANSPORT

RADIO - 417 MILLION BY 1997. TV

BETWEEN 1997 & 1981 - INCREASE FROM 6,30,000 TO

7 MILLION. IN 1997 - 400 MILLION TV’s WERE IN USE. AVERAGE - 2 SETS FOR EVERY THREE HOUSE HOLDS. SATELITE RECEIVERS.

NEWSPAPERS 200 DAILIES. CIRCULATION - 50 MILLION. PEOPLE’s DAILY.

ACTIVE PUBLISHING INDUSTRY. 16.9 MILLION INTERNET USERS. GOVERNMENT CONTROLS P & T SERVICES.

COMMUNICATIONS

SUPREME COMMAND WITH CMC. WORLD’s LARGEST – 2.5 MILLION (ABOUT 1.3 MILLION

CONSCRIPTS). BREAKDOWN OF PLA

NAVY - 2,20,000 (INCLUDING 27,000 IN NAVAL AIRFORCE

AND 5000 MARINES). AIR FORCE - 4,20,000. ARMY - REMAINDER.

SUPPORTED BY MILITIA (12 MILLION) & SECURITY FORCE (8,00,000).

MAJOR EQUIPMENT NAVY - 1700 VESSELS, INCLUDING 60

SUBMARINES. AIR FORCE - 3740 COMBAT AIRCRAFT.

NUCLEAR WEAPONS. NO BUSINESS VENTURES NOW.

DEFENCE

NATIONAL SECURITY OBJECTIVES

SOVEREIGNTY : RETURN OF TERRITORIES. BORDER DISPUTES. CONTROL OVER RESTIVE INDIGENOUS

POPULATIONS. INTERNATIONAL PRESSURES.

MODERNITY : INCREASE ECONOMIC STRENGTH. ENHANCE TECHNOLOGICAL CAPABILITIES. RAISE STANDAR OF LIVING.

STABILITY : TACKLING SOCIAL DISLOCATIONS. REGIME CONTINUITY. PEACEFUL EXTERNAL ENVIRONMENT.

EXTERNAL FACETSMAJOR POWER.ULTIMATE GOAL.MAIN EXTERNAL PROBLEM – TAIWAN.STRATEGIC AND MISSILE FORCE.SECURITY AGREEMENTS WITH RUSSIA.SINO – US RELATIONS :CONDITIONAL ENGAGEMENT.BALANCE OF THREAT.DEFENCE OF TAIWAN.COUNTER TERRORISM.WEAPONS PROLIFERATION.

CHINA’S VIEW OF USA.SINO – INDIAN RELATIONS.DISPUTE – SOUTH CHINA SEA.

TIBETAN PROBLEM LINGERS.

FALUN GONG MOVEMENT.

SEPARATISM IN XINJIANG.

SARS.

INTERNAL ISSUES

OPEN MARKET ECONOMY.

GROWTH IN 2001 – 7.3%.

TRANSFORMING INTO DOMINANT ECONOMIC FORCE.

CHALLENGING USA IN FUTURE.

FUND SUPPORT FROM GOVERNMENT.

CHALLENGES

BUDGET DEFICITS.

RESTRUCTURING STATE-OWNED INDUSTRIES.

SOCIAL COSTS.

SPREADING WEALTH.

ECONOMIC ISSUES

10TH PARTY CONGRESS.

NEW LEADERSHIP

HU JINTAO.

WEN JIABAO.

GEN CAO GANGCHUAN.

PARAMOUNT POLITICAL LEADER- JIANG ZEMIN.

POLITICAL ASPECTS

MORE OPEN TO CHANGES.

PRESS FREEDOM.

VALUE IN DE`TENTE.

NO LOOSENING OF CONTROL ON TIBET & XINJIANG.

ANALYSIS OF NEWLEADERSHIP

PLA LINKS WITH CCP.

AUTONOMY AND FUNDING.

MILITARY SENTIMENT.

DE-POLITICIZATION OF PLA.

ROLE OF MILITARY

POSITIVE CHANGES EXPECTED.

DIFFUSING ‘CHINA THREAT’ THEORY.

TAIWAN ISSUE.

PEACE AND STABILITY IN ASIA-PACIFIC.

MULTI-POLAR WORLD ORDER.

NEW LEADERSHIP

PART - III : THE PEOPLE’S LIBERATION ARMY

NATIONAL MILITARY OBJECTIVES

PROTECT THE PARTY AND SAFEGUARD STABILITY.

DEFEND SOVEREIGNTY AND DEFEAT AGGRESSION.

MODERNIZE THE MILITARY AND BUILD THE NATION.

CHINA’S SECURITY ENVORONMENT

INTERNAL UNREST.OPTIONS FOR TAIWAN.DEFENCE OF CENTRE OF GRAVITY – COAST.BAILATERAL PROBLEMS ON LAND BORDER.RUSSIA – LONG – TERM CONCERN.USA – ENDURING CONCERN.JAPAN VIEWED WITH SUPICION.NEED TO ENHANCE MARITIME AND AEROSPACE CAPABILITIES.CREDIBLE NUCLEAR DETERRENT.

MODERNIZATION OF THE PEOPLE’S LIBERATION ARMY

(PLA)

INCREASED MILITARY SPENDING.

ENHANCING CAPABILITIES OF NAVY AND AIR FORCE.

SECOND ARTILLERY.

RAPID RESPONSE FORCE.

MISSILES.

ENHANCING C3ISR.

INFORMATION WARFARE.

MODERNIZATION OF PLA

$ 20 BILLION IN 2002.

INCREASE - 17.6%.

ACTUAL BUDGET - NEARLY $ 65 BILLION.

DEFENCE BUDGET

70% OF FOREIGN ARMS SALES TO CHINA. 72 SU-27 AND 10 IL-76 AIRCRAFT. 100 S-30 MISSILES. 4 KILO CLASS SUBMARINES. 2 SOVERMENNY CLASS DESTROYERS. 300 SU-27s BY END 2003. CO-PRODUCTION OF 200 SU-27s BY 2012. AERIAL RE-FUELLING TANKERS.

SUPPLIES FROM RUSSIA

CONVERSION TO NEW EQUIPMENT.

POCKETS OF EXCELLENCE.

GROUND TROOPS

RESEARCH AND DEVELOPMENT.

AIRCRAFT CARRIER?

PLA NAVY

SUKHOI FIGHTERS.

AEW AIRCRAFT.

HEAVY TRANSPORT AIRCRAFT.

AERIAL REFUELLING.

R&D IN NEW WEAPONS AND EQUIPMENT.

PLA AIR FORCE

PHASING OUT FIXED MISSILES.

INCREASED SURVIVABILITY.

RAPID RESPONSE.

SECOND ARTILLERY

TEA

PART – IV : INDIA – CHINA RELATIONS

OFFICIAL POLICY OF INDIA

SEEKS FRIENDLY, COOPERATIVE, GOOD – NEIGHBOURLY AND MUTUALLAY BENEFICIAL RELATIONS.LONG – TERM STABLE RELATIONSHIP.COMMITTED TO PROCESS OF DIALOGUE.AREAS OF BILAERAL RELATIONS.TRADE.CULTURAL EXCHANGES. MILITARY EXCHANGES.SECURITY AND FOREIGN OFFICE DIALOGUE.SCIENCE AND TECHNOLOGY COOPERATION.

ECONOMIC AND COMMERCIAL FIELDS

RESUMPTION OF TRADE – 1978.

MOST FAVOURED NATION AGREEMENT – 1984.

JEG ESTABLISHED IN – 1988 .

BILATERAL TRADE HAS GROWN RAPIDLY.

PROGRESS AND SETBACKS

JOIN WORKING GROUP (JWG) ESTABLISHED.BILATERAL TRADE HAS GROWN.INDIA – US RELATIONS VIEWED WITH CONCERN BY CHINA.LITTLE PROGRESS ON BORDER ISSUE.TIBET – A THORNY PROBLEM.INDIA VIEWS CHINA’S RELATIONS WITH PAKISTAN WITH CONRERN.

POLICY CHANGES BY CHINA

SHIFTING STANCE ON KASHMIR.ADVICE TO PAKISTAN.STANCE DURING KARGIL WAR.NEUTRAL ROLE IN 2002.BILATERAL TALKS ON BORDER ISSUE.REDUCED MILITARY AID TO PAKISTAN.REDUCTION OF RHETORIC.POLITICAL AND ECONOMIC COOPERATION.

INDIA’S RESPONSEINITIAL SUSPICION BECAUSE OF :CHINESE ASSISTANCE TO PAKISTAN.WEAPONS TO BANGLADESH.MAKING INROADS INTO MYANMAR.CONTINUED OCCUPATION OF INDIAN TERRITORY.DANGER OF CHINA’S MEDDLING IN N E STATES.

MODIFICATION TO FOREIGN POLICY.SETBACK AFTER NUCLEAR TESTS.BORDER ISSUE HAS BEEN KEPT ASIDE.CAUTIOUS PARTNERSHIP BASED ON STABILITY AND ECONOMIC GROWTH.

STRATEGIC REASONSINDIA HOPES TO WEAKEN SINO-PAK RELATIONS.CHINA’S SUSPICIONS OF PAK COMPLICITY IN XINJIANG.SIMILAR VIEW ON TERRORISM.STABLE RELATIONS WITH INDIA SECURE CHINA’S SOUTH WESTERN FLANK.FOR INDIA BETTER RELATIONS WITH CHINA CAN REDUCE DEFENCE BURDEN.

HEDGING BY CHINA

UNWILLING TO BREAK ALLIANCE WITH PAKISTAN.RELATIONS WITH PAKISTAN – COUNTERWEIGHTS TO USA.HEDGE AGAINST RELATIONS WITH INDIA TURNING SOUR.RELATIONS WITH OTHER COUNTERIES OF SOUTH ASIA.CAUTIOUS APPROACH FOR THE PRESENT.

AREAS OF IMPROVEMENT

REGULAR DIALOGUE INCLUDING ON STRATEGIC ISSUES.POLITICAL WILL TO SOLVE BORDER DISPUTE.MANAGEMENT OF INDIA – CHINA – PAKISTAN TRIANGLE.ACCOMODATION AND DEMONSTRANTION OF GOODWILL.SECURITY COUNCIL SEAT FOR INDIA.GREATER COOPERATION IN OTHER SPHERES.

CONSIDERABLE PROGRESS. SUSTAINED GROWTH. WILL ENHANCE MILITARY POWER. STRUCTURAL PROBLEMS

FOOD. ENERGY.

REGIONAL DISPARITY. GLOBAL MANUFACTURING AND PROCESSING BASE. TRADE WITH INDIA. ECONOMIC MODERNIZATION HAS PAID RICH DIVIDENDS.

ECONOMIC ISSUES

CONCERNS – JAPAN & USA.

INTEGRATIVE STRATEGY.

FORCE MODERNIZATION.

POTENTIAL CONFLICT WITH TAIWAN.

RELIANCE ON MISSILES.

NEED TO OVERCOME OBSTACLES.

SECURITY ISSUES

FRACTURED SOCIETY.

RURAL – URBAN DIVIDE.

ONE – CHILD POLICY.

ETHNIC UNREST.

INTERNAL ISSUES

STABLE & CO-OPERATIVE RELATIONS DESIREABLE. AREAS OF CONCERN REMAIN. CHINA’S VIEW OF INDA. RISING POWER. INTERNAL PROBLEMS. ONLY REGIONAL STATUS. POTENTIONAL IT GIANT.

INDIA – CHINA RELATIONS

CONCLUSION

IMPRESSIVE GROWTH BUT UNEVEN.

CREDIBILITY OF CHINESE STATISTICS. HIGH SAVING RATE. DOMESTIC ECONOMY WEAK. UNEMPLOYMENT. CORRUPTION. LEGAL SYSTEM.

CONCLUSION

PROJECTION AS “RESPONSIBLE WORLD POWER”.

CO-OPERATION, PEACE AND STABILITY.

MILITARY MODERNIZATION.

INCREASED ASSERTIVENESS IN FUTURE.

COUNTRY IN TRANSITION.

CONCLUSION

TRANSITION

FOCUS ON TAIWAN AND

ASIA-PACIFIC.

FACING NO IMMEDIATE

MILITARY THREAT.

MODERNIZATION OF PLA

& IMPROVING ECONOMY

WILL CONTINUE.

CONCLUSION