AUSTRALIAN COMMENTS ON DOD REPORT ON CHINA'S

S E C R E T SECTION 01 OF 02 CANBERRA 001430 SIPDIS NOFORN SIPDIS E.O. 12958: DECL: 09/15/2016 TAGS: PARM MOPS PREL CH PM AS SUBJECT: AUSTRALIAN COMMENTS ON DOD REPORT ON CHINA'S MILITARY POWER REF: STATE 82425 Classified By: Political Counselor James F. Cole, for reasons 1.4 (a),( b),(d) and (g). SUMMARY -------------- ¶1. (S/NF) An Australian Government interagency review of the U.S. Defense Department's 2006 Report on China's Military Power has yielded broad agreement with most of the report's key conclusions. Australia estimates that China's military spending for 2006 is approximately USD 70 billion, twice the budget publicly announced but at the lower end of the range suggested by the DOD report. It attributes the reason for China's military modernization to its determination to deter Taiwan from becoming independent, including by developing the capability to deter or delay the United States from coming to Taiwan's aid militarily. It also concludes that China's longer-term agenda is to develop "comprehensive national power," including a strong military, that is in keeping with its view of itself as a great power. The review underscores the potential for misconceptions that might lead to a crisis, citing such factors as China's antipathy towards tranparency, the possibility it could overestimate its military capability, and the confluence of China's rising nationalism, prediliction for strategic deception, and difficulties with Japan and Taiwan. Australia welcomes increasing U.S. engagement with China, including defense engagement, and intends to use its defense relationship with China to promote increased transparency in China's military development and to deepen cooperation in peacekeeping, counterterrorism and junior leadership exchanges. An outline of the review follows at para 3, below. End summary. ¶2. (C/NF) The Department of Foreign Affairs and Trade (DFAT) briefed us on September 14 on the results of a GOA interagency review of the U.S. Department of Defense's 2006 Report to Congress on China's Military Power. DFAT briefers included Peter Rogerro, Director, China Political and External Section; Adrian Lochran, Director, Defence Policy and Liaison Section; and Melissa Hitchman, Executive Officer for Defense Policy and Liaison. Agencies contributing to the review included DFAT, the Australian Department of Defence, the Office of National Assessments, and the Defence Intelligence Organisation. ¶3. (S/NF) Following is the text of the Australian Government's response to the demarche contained in reftel: Begin text: SECRET (RELEASABLE TO UNITED STATES) SIPDIS US DEPARTMENT OF DEFENSE 2006 REPORT TO CONGRESS ON CHINA'S MILITARY POWER AUSTRALIAN RESPONSE TO THE US DEMARCHE We welcome the opportunity to exchange views on China. Australia shares the US view that the emergence of a peaceful and prosperous China, with an open market economy, and constructively engaged in global and regional institutions, is beneficial to the Asia-Pacific region and the wider world. Increased transparency about China's capabilities and intentions, budgets and policies would help to address some of the concerns associated with China's military modemisation program. -- We believe China's military spending to be higher than the official figure of $35 billion and estimate it as being in the vicinity of $70 billion. We assess that the immediate rationale for China's military modemisation is to deter Taiwan from taking steps towards CANBERRA 00001430 002 OF 002 independence, particularly by developing the capability to deter or delay any US attempt to come to Taiwan's aid militarily. -- However, China's longer-term agenda is to build its 'comprehensive national power' - of which a strong military is a key element to a level that China feels commensurate with that of a great power. -- We agree that the trend of China's military modemisation is beyond the Scope of what would be required for a conflict over Taiwan. -- Arguably China already poses a credible threat to modem militaries operating in the region and will present an even more formidable challenge as its modemisation continues. We would welcome more detailed explanations by China about its capabilities, budgets and policies, especially regarding its future intentions. -- At the same time, we see some of China's military modemisation as understandable in the context of China's economic development and emergence as a major regional power. However, the pace of modem is at ion and the opacity of Beijing's intentions and programs is already altering the balance of power in Asia and could be a destabilising influence. -- Australia would be concerned at any development which could lead to instability in the region. There is the potential for possible misconceptions which could lead to a serious miscalculation or crisis. -- The nature of the PLA and the regime means that transparency will continue to be viewed as a potential vulnerability. This contributes to the likelihood of strategic misperceptions. -- The rapid improvements in PLA capabilities, coupled with a lack of operational experience and faith in asymmetric strategies, could lead to China overestimating its military capability. -- These factors, coupled with rising nationalism, heightened expectations of China's status, China's historical predilection for strategic deception, difficulties with Japan, and the Taiwan issue mean that miscalculations and minor events could quickly escalate. In our dealings with China, we continue to advocate the value of transparency with regard to its defence capabilities and strategic policies and regular and frank exchanges with the region and United States. As an alliance partner, we welcome the United States' increasing engagement with China, including defence engagement, as we believe the United States has influence to shape positively China's behaviour. We will continue to use our defence relationship with China to promote increased transparency in China's military development plans and evolving doctrine. -- We remain focused on deepening the Australia-China defence relationship in areas such as peacekeeping, counter-terrorism and junior leadership exchanges. -- While remaining cautious to avoid practical co-operation that might help the PLA to fill capability gaps. End text. MCCALLUM