DEPUTY ASSISTANT SECRETARY OF DEFENSE FOR EAST ASIA ABRAHAM M. DENMARK: Good afternoon.
My name is Abe Denmark. I'm the deputy assistant secretary of defense for East Asia in OSD.
And today, the Department of Defense submitted the 2016 Report to Congress on Military and Security Developments Involving the People's Republic of China. This annual report mandated by Congress highlights China's defense strategy and military developments.
The report is intended to be factual, descriptive and analytical--lets the facts speak for themselves. The report describes how China continues to invest in military programs and weapons designed to improve power projection, anti-access area denial, and operations in emerging domains such as cyberspace, space, and the electromagnetic spectrum.
China continues to focus on preparing for potential conflict in the Taiwan Strait, but additional missions such as contingencies in the East and South China Seas and on the Korean peninsula are increasingly important to the PLA.
China's leaders seem committed to sustaining defense spending growth for the foreseeable future, even as China's economic growth decelerates. In March, China announced that its military budget will grow at 7.6 percent, to $144 billion in 2015. From 2006 through 2015, China's officially disclosed military budget grew at an average of 9.8 percent per year in inflation-adjusted terms.
China's published military budget omits several major categories of expenditure such as R&D and the procurement of foreign weapons and equipment. So the true expenditure DOD estimates in terms of total military-related spending for 2015 exceeded $180 billion in 2015.
As a result of these investments, the PLA continues to make strides. For instance, at China's military parade last year, China unveiled the DF-26 missile, a system that is capable of precision ground strikes in the Asia-Pacific. Beyond these ongoing long-term trends, China's military modernization program entered a new phase in 2015. I'd like to highlight three key security developments.
The first trend is China's maritime activities. In 2015, China used assertive tactics to assert its claims in the South China Sea, reclaiming vast acreage on existing outposts and constructing military facilities.
China's leadership demonstrated a willingness to tolerate higher levels of tension in pursuit of its maritime sovereignty claims.
China's strategy is to secure its objectives without jeopardizing the regional peace that has enabled its military and economic development, which in turn has maintained the Chinese Communist Party's grip on power.
The second trend is the PLA's growing global presence. China's leaders are leveraging the country's power to expand its international influence and its military footprint overseas. The most prominent example in 2015 are the PLA's expanding ambitions was the November announcement that China is establishing a military facility in Djibouti. This is a big step forward for the PLA, which has never had an overseas facility before.
The third trend I want to highlight is the sweeping reforms to make a more capable and politically loyal PLA. President Xi Jinping unveiled sweeping plans that are intended to enhance the PLA's ability to conduct joint operations by replacing the old military regions with new geographic commands and also seek to strengthen Chinese Communist Party's control over the PLA by establishing new bodies to oversee the military.
The United States will seek cooperation in areas of mutual benefit and manage competition with China from a position of strength, while seeking ways to reduce the risk of misunderstanding or miscalculation. As the United States builds a stronger foundation for a military-to-military relationship with China, we will continue to monitor China's evolving military strategy, doctrine and force development.
We will also continue to encourage China to be more transparent about its military modernization program. Our approach focuses on reducing risk, expanding common ground, and maintaining our military superiority.
To reduce risk, the DOD and the PLA expanded upon the historical understandings reached in 2014 when then-Secretary of Defense Chuck Hagel and China's Minister of National Defense General Chang Wanquan signed two confidence building measures. These include, first, the rules of behavior for safety of air and maritime encounters MOU; and second, the notification of major military activities MOU.
In 2015, we expanded upon the MOUs with annexes on air-to-air interactions and crisis communications. These confidence-building measures are enhanced efforts to reduce risk and misunderstanding. We've included these documents as appendices in this year's report.
DOD has also continued to make progress with the PLA in developing the capacity to cooperate in delivery of international public goods, including humanitarian assistance and disaster relief, counter-piracy, peacekeeping operations, search and rescue and military medicine.
In short, this report illustrates the complexity of the issues at stake. Despite China's opacity about its military, this report documents the kind of military that China is building. We hope that it contributes to the public's understanding of the PLA.
And with that, I'd be happy to take a few questions.
Q: Thank you. David Brunnstrom from Reuters.
I was wondering if you could bring us up to date on infrastructure development in the Spratlys. Your report mentions that the reclamation has been completed, but in terms of the building of air strips, have they been completed yet?
And just on the -- on the defense spending, as I understand it, the figure announced in March of this year was actually a -- represented a slowdown in growth for the first time in some time. Do you expect that trend to continue?
DEP. SEC. DENMARK: In terms of -- you asked about China's intentions in terms of further militarization in the Spratly Islands. In -- for that, I'd actually have to refer you to the Chinese government in terms of their overall objectives.
We've watched this very closely. We've seen them conduct construction and reclamation and we've been watching this issue very closely. We're aware of these issues and we see them as out of step with the desire of the rest of the region to peacefully manage disputes -- resolve these disputes. But in terms of where they go from here, what their next steps are, I'd have to refer you to the Chinese government.
Q: (inaudible) to bring us up to date from the period of the report to today...
DEP. SEC. DENMARK: I see.
Q: ... as to whether they've got to in terms of building -- finishing airstrips. The report mentions three airstrips and says that they're being completed, but are they now complete, for example?
DEP. SEC. DENMARK: Well, the -- the trends of what we've seen in terms of construction have continued through the end of -- through the lifetime of this report. I don't have anything specific for you right now. But the trends that we saw in 2015 have -- in terms of military construction have continued for a bit. But in terms of number of certain assets, I don't have anything specific for you.
Q: Tara Copp with Stars and Stripes. China has said that it's actually the U.S. freedom of navigation operations that are inspiring it to further bolster its defenses of these reclaimed islands. I was wondering -- your thoughts about that? And then in general with this report, do you anticipate that having some actual numbers out there about what China is developing and spending will be shaping future strategic dialogue, such as the upcoming Shangri-La dialogue?
DEP. SEC. DENMARK: First on FONOPs, these operations are nothing new. We have been conducting operations -- freedom of navigation operations around the world since the 1970's and we have been operating according to international law for a lot longer than that. These operations are intended to acknowledge and demonstrate that we don't abide by excessive maritime claims that are counter to international law.
They demonstrate our commitment to uphold international law, and as the president has said, as the secretary has said, that we are going to fly, sail and operate wherever international law allows. So there's nothing new in terms of these operations. So why China is developing these capabilities in the South China Sea I think may come from a wide variety of other factors, and to that, I'd have to refer you to their government.
But the fact that we've been doing these operations for decades suggests to me that those specific operations are not the cause.
Q: And then on Shangri-La?
DEP. SEC. DENMARK: These issues -- so this is -- I think the discussions that we have not specific to the upcoming dialogues, but discussions that we've been having across the region for several years, often center around issues related to the South China Sea.
And I think again, this is -- the reason we're talking about these things is not because of the United States continuing to operate the way we always have, but rather because of new things -- I would argue new things that China has done in terms of reclamation, in terms of construction and militarization in these disputed features and sort of behaviors, of some of their assets.
DEP. SEC. DENMARK: And that's what's driving concerns around the region and I think that's what's new and what's driving these discussions. So I can't predict what conversations may happen in upcoming dialogues, but I can say that in -- in past dialogues, the South China Sea certainly has been an issue of discussion.
Yeah. Yes.
Q: You referred to China using coercive tactics. Can you explain what that is, what are you referring to there?
DEP. SEC. DENMARK: Sure. It's -- we talk about it a bit in the report where we see China--China's forces, I should say, using tactics such as reclamation; at times some of their fishing vessels and coast guards acting in -- unprofessional, or sort of manners in the vicinity of the military forces or fishing vessels of other countries in a way that's designed to attempt to establish a degree of control around disputed features.
And we -- as we note in the report, it seems to us, to an outside observer that these activities are designed to stay below the threshold of conflict, but gradually demonstrate and assert claims that other countries dispute.
Q: A couple of questions not related to the South China Sea.
For years this report has been seen as a benchmark between China and Taiwan's relative military strength. You laid out that China has been, on average, spending at 9 percent or so, or more over the last decade.
Has Taiwan kept the pace? Because I've seen statistic indicating over the last decade it has been relatively flat, while China has exponentially increased.
What's your take there in, and is the U.S. going to if not pressure, encourage the new regime in China -- excuse me, in Taiwan to increase its defense spending?
DEP. SEC. DENMARK: Sure. We have been -- as you said, we have been monitoring the cross-strait military balance for a long time, as demonstrated by the long history of these reports. And we continue to monitor the situation.
And we have encouraged -- and we have encouraged Taiwan to continue to increase its defense spending and to invest in asymmetric and innovative capabilities and concepts.
And we focused on asymmetry, because of the obvious and unavoidable imbalance in the sheer size of the two sides. And because of that, we believe that Taiwan does need to increase its spending, but also needs to make investments in asymmetric capabilities that would account for that natural disparity in size.
Q: OK. Does it pay for those out of its own defense budget, versus foreign military financing from the United States or something like that?
DEP. SEC. DENMARK: Well, I'm not going to get into the financing of these things; that Taiwan does use -- does spend funds on its defense. And we do, in accordance with the Taiwan Relations Act make articles and services necessary for its own self-defense.
But we believe that they need to spend more on these capabilities in order to maintain the ability to defend themselves.
Q: Separate question. ON -- for the last three or four years, the Pentagon has anticipated in its reports that the Chinese would begin nuclear deterrence patrols with Jin class submarines.
It's almost by rote. "We anticipate by the end of the year this nuclear missions will start," and they haven't started yet. Can you give some insight into why they haven't started? And is it more likely this year, by the end of this year than past years that they will launch with these JL-2 nuclear missiles?
DEP. SEC. DENMARK: I really can't begin to speculate as to why this trend continues to sustain over the years.
I can't definitively say that they've conducted a deterrence patrol yet, nor can I really comment on what China may consider a deterrence patrol.
So, I think it's a good question to refer to them. But we have not seen -- we've not yet seen them conduct -- with this specific platform -- we've not seen them conduct what we would consider to be a deterrence patrol. But as to why I really can't speculate. I would refer you to them.
Q: (Inaudible) deterrence patrol?
DEP. SEC. DENMARK: I can't -- I'm not a submariner. I'm not a Navy specialist. I'm not going -- I can't really get into the specifics of it. But we haven't seen it doing yet as best as we can tell. But really in terms of why and what's going on. And underneath this issue I'd really have to refer you to them.
Q: How significant...
DEP. SEC. DENMARK: I got to...
Q: ... (inaudible). When a deterrence patrol is -- how significant will that be for the region, or the message in terms of Chinese capabilities?
DEP. SEC. DENMARK: I really can't get into hypotheticals like that.
Go ahead.
Q: I just want to drill down a little bit. In your opening remarks you talked about the budget and how it was $180 billion in 2015, which is a much higher number than they've disclosed. And then this year they disclosed a budget of about $135 billion.
I'm wondering you know how do you see that number in actuality? And you know Reuters and other outlets have described that as a decline in spending. But obviously that doesn't include the areas that you mentioned before. So is that really a decline? And where do you see the number this year?
DEP. SEC. DENMARK: It's a decline in growth in that the over time, as I mentioned, over time, the budget has raised to roughly an average of 9.6 percent per year. And this time I believe it was 7-something percent.
Q: Excluding those areas though.
DEP. SEC. DENMARK: In terms of their annual budget -- annual official announcements.
And I -- in terms of why it may be slowing down, I really couldn't speculate. I think it's a good question for them. But what we see this contributing to in aggregate, what we see this resulting in, in aggregate is an increasingly capable and modern fighting force across all domains of our combat capability.
So we see them -- we've seen them for a long time as documented in this series of reports making significant investments in military capabilities. And we see them now reaping the benefits of some of those investments with increasingly capable and modern systems.
Q: Did the number for 2016, including those areas that you said were excluded?
DEP. SEC. DENMARK: Yes. In terms of -- yes. Let me find what I -- in -- and it's in the report. I looked at it before I came up.
I believe our estimate was that it exceeded $180 billion in 2015.
Q: In 2016 though?
DEP. SEC. DENMARK: In 2016 we haven't made that estimate yet. And I think it's -- every report, as far as I recall, is about the year previous. So I don't have an update for you in terms of what we think they're spending in 2016.
Yes, ma'am?
Q: Can I just drill down a little bit on what David had asked before about the building?
First, it seemed to -- the report seemed to focus on the Spratlys. Can you provide the assessment on the Paracel area, including Woody Island? What you -- what do you -- what the U.S. has seen over the past year in the growth and changes there?
And both in acreage as well as your assessment of the increase in either the number or scope of facilities. If you can -- the report doesn't really get into sort of an assessment of the scope of the facility increase.
DEP. SEC. DENMARK: In terms of specifics in like acreage I'll have to get back to you on it. I don't have the number in front of me. But I can say that we have seen that -- China continues to conduct reclamation as well as construction in the Paracels.
But I don't really have anything more specific than that with me. But I can get more information to you later on.
Q: And then on -- as far as on the Spratlys, can you give any sort of estimate of scope of increase in the facilities that they've been building?
DEP. SEC. DENMARK: The -- the report doesn't comment on specific military systems. Although we're aware of reports of artillery and other sorts of systems. I'd actually encourage you to take a look at the report. There is...
(CROSSTALK)
Q: I saw the map. I was trying to figure out if you have any -- if there's any way you can verbally say they tripled, quadrupled, they went from tens to hundreds. Is there any way -- don't you have any sort of numerical type assessment of it, aside from looking at the pictures growing on the maps?
DEP. SEC. DENMARK: I don't have the specific numbers or specific systems for you right now.
Q: Lalit Jha from Press Trust of India.
On page 57, your report says that India's nuclear force is an additional driver behind China's nuclear force modernization. But don't you think they are more driven by the U.S. nuclear posture rather than India nuclear posture?
DEP. SEC. DENMARK: Well, I really couldn't speculate as to what's -- what weighs greater in the minds of Chinese military planners. That being said, I believe if you look at the report, it refers to -- that specific section refers to the United States, then Russia, and then India.
But I would refer, in terms of giving an authoritative answer about what drives Chinese thinking on these issues, I'd have to refer you to their government. This is our best understanding based on their authoritative statements and writings of -- writings of military scholars.
Q: And of late, the Chinese submarine activities in the Indian Ocean has increased. And there were also some reports about U.S. and India planning to jointly monitor those activities. So two questions.
To what extent that disturbs the status quo in the Indian Ocean, and the flow of economic trade? And is India and U.S. planning to do monitoring exercise in the Indian Ocean?
DEP. SEC. DENMARK: We do in the report detail how China's interests are getting more global as their economy expands and as their economy grows more sophisticated and modern. Their interests are growing more global, which we see as a primary driver for, for instance, in the announcement of establishing a facility in Djibouti.
And so naturally, it's understandable that they would be operating in new areas. But that's -- that assessment is -- does not include a value statement about the intentions behind these actions or the effects of these actions. But as you know, Secretary Carter recently visited India; had a very positive and productive visit with India. We're going to continue to enhance our bilateral engagement with India, not as -- not in the China context, but because India is an increasingly important player by themselves. And we are going to engage India because of its value.
Q: And finally, the last question, there was a news report in the Chinese media that the Chinese army has decided to upgrade its command and control structure in Tibet. Tibetan Command upgrading their structure there in Tibet.
To what extent it would have and increase the tension between India and China as you have referred in your report about territorial disputes that China has with other neighboring countries like India?
DEP. SEC. DENMARK: The territorial dispute that you reference between China and India is longstanding, as you know. And something that continues to fester over the years. And as the report details, we have noticed an increase in capability and force posture by the Chinese military in areas close to the border with India.
But it's difficult to say how much of this is driven by internal considerations to maintain internal stability, and how much of it is an external consideration. So I don't really have a good way to break those things out for you.
Q: Thank you.
Q: Tony Bertuca, Inside Defense.
You called the Djibouti facility a big step forward for the Chinese military. Can you elaborate on the significance of the facility and whether or not the U.S. government expects similar facilities like that to pop up around the globe in the coming years?
DEP. SEC. DENMARK: Sure.
There is -- the United States has been operating around the world for decades. And it's a -- our bases around the world are a critical component of our global capabilities, of our global posture and enable us to fulfill our global responsibilities.
What China is -- has announced in Djibouti is something that we see as different from a traditional U.S.-style base. It's more of a facility that would facilitate logistical support for operations far from the Chinese mainland.
I couldn't speculate as to what may come in terms of additional bases. I think it's possible considering, as I mentioned before, the increasingly global interests that China has. And this -- it's an issue, as you saw in the report, that we're noticing, that we're documenting; that we'll continue to monitor.
Q: Paul (inaudible) for the Wall Street Journal.
The report makes the point that the development of China's military could reduce the U.S.'s military technological superiority. And what would you say, given what you've seen, is the biggest vulnerability that the U.S. faces on that front? Where are the -- what is the -- is there a number one area or a series of areas where the, in your assessment, the U.S. faces a risk of losing that superiority in the near term?
DEP. SEC. DENMARK: I'm not going to focus on U.S. capabilities and potential vulnerabilities. The report that we're announcing is focused on China and China's military developments.
So what I'd say is that we've been watching China's military modernize over a long period of time, as documented by these reports. And as we've said before, we're going to continue to make the investments and posture decisions necessary to maintain our military capabilities so that we can continue to defend ourselves, defend our allies and defend our interests.
Yes, sir?
STAFF: Last question.
Q: Thank you. I had a question. Actually you took my first question. And then my other question was about perhaps doctrine, if you will.
In the report you mentioned the way that -- and in your opening remarks you mentioned an aggressive style, but is designed to stay below a threshold of conflict. In the report in mentions that I believe in certain activities in the South China Sea and the East China Sea.
You also said you're going to keep monitoring for changes in doctrine. What changes in doctrine do you -- are you concerned about or particularly watchful of in those areas in terms of how the Chinese air, navy and paramilitary forces are interacting with, say for example U.S. vessels on patrols, or partner and allied nations' vessels?
DEP. SEC. DENMARK: I don't think I can call out a specific area that we're focusing on more than another.
What I'd mention and refer you to, and it's actually included at the back of these reports, is confidence-building measures and annexes that we've signed recently that detail how our naval and air platforms interact with one another because one of our key objectives in our military-to-military relationship is to reduce risk.
And as our forces increasingly operate in close proximity to one another, we see it as very important that we establish rules of behavior to ensure that we are -- that misunderstandings and potential for miscalculation is minimized and that the risk of an unintentional incident is reduced as much as possible.
Q: So is that -- is that interaction, is that effort yielding more positive results or is it trending more positively or do you -- are you seeing increased concerns that -- that those kind of agreements to a rule -- any sort of rules of behavior are -- are becoming further away?
DEP. SEC. DENMARK: We have seen a positive trend in terms of professional interactions between our two forces and we do think these are important avenues to pursue with the PLA and it's areas that we're going to continue to pursue with them in our military-to-military relationship.
STAFF: Thanks, everybody.
DEP. SEC. DENMARK: Thank you.