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)

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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

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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