Why China Is Flashing Its Military Muscle

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1:45Bloomberg Audio Studios. Podcasts. Radio. News. China test-fired a long-range ballistic missile into the Pacific Ocean on Monday, rattling its neighbors and putting a display of military capability on the global stage that hasn't been seen from Beijing in years. The missile, it flew over the exclusive economic zones of the Federated States of Micronesia, Nauru and Kiribati and landed about a thousand kilometers northeast of the Solomon Islands. Australia has been clear that this proposed test is in the context of a rapid military buildup by China. Japan, Australia and New Zealand, who were all notified shortly before the launch, swiftly condemned the test, calling it concerning and destabilizing for the region.

2:42China essentially was conducting the first full-range test of a Chinese submarine-launched ballistic missile. Rebecca Chung-Wilkins covers Asia government and politics for Bloomberg. It's not the first time that it's launched from a submarine, but it's the first full-range test. And it's the first time we've seen it launched into the Pacific at this distance and also publicly. This past year has been a big one for China's military. A recent Bloomberg investigation showed that the country has ramped up its missile production. Last year's missile buildup was the biggest expansion since President Xi Jinping took office in 2013.

3:28Back in September, while reviewing a military parade, President Xi gave a clear directive. He said China's soldiers must accelerate the building of a world-class military.

3:45And Rebecca says this week's missile launch was a highly public flex, one that signals Beijing believes it's on track to build one of the world's most powerful militaries. Xi's big ambition here is about having a so-called modern military. and the target he has always set himself is the 100th anniversary of the PLA and that falls in 2027. It's not just the capabilities which are concerning but the fact that Beijing appears to be projecting its power. So one big issue for neighbouring countries and of course for the US is that this might be a new sort of normal.

4:31This is The Big Take Asia from Bloomberg News. I'm Wan Ha. Every week, we take you inside some of the world's biggest and most powerful economies and the markets, tycoons and businesses that drive this ever-shifting region. Today on the show, what a surprise missile test says about China's willingness to flex its military muscle and what a Bloomberg investigation reveals about Beijing's secretive defense sector and the country's growing arsenal.

5:02Now, Rebecca, China just conducted a missile test that drew criticism from Japan, New Zealand, Australia and the United States. What was it testing and why did it set off so many alarm bells? So China essentially was conducting the first full range test of a Chinese submarine launched ballistic missile. So this is essentially a ballistic missile launched from a submarine and it landed in the Pacific, so about northeast of the Solomon Islands. And it's one of the more advanced so-called SLBMs that it's tested. I think most experts would know and probably assume and understand that China has this capability.

5:44But we haven't seen China do this before publicly. And so there is this interpretation that it's not just the capabilities which are concerning, but the fact that this is some kind of strategic signal. And one part of that is essentially showing that they can apparently perhaps match the U.S., which regularly tests these kinds of SLBMs. And what did Beijing demonstrate about its capabilities with this test that we hadn't seen before? So essentially, these types of ballistic missiles are one key part of China's fuller nuclear deterrent capability and fuller ability to hit back against any nuclear attack.

6:28So this is sometimes referred to as its second strike capability. And that's essentially a country's ability to retaliate if they were to be hit by a nuclear strike. And there are three key elements of that, right? So the sort of so-called nuclear triad. You want to be able to respond from land, from sea and from the air. And so this specific leg of that triad is the sea-based capability. And it is a cornerstone of nuclear deterrence and so-called sort of like mutually assured destruction, right? It's a cornerstone as Beijing sees it and as other countries around the world see it from deterring other countries from attacking you with nuclear power.

7:07It is also worth mentioning that testing your SLBMs at full range is something you would do as a normal part of operations to make sure that everything worked, both for your own peace of mind and to establish deterrence. It's something the US does all the time. Now, we know this missile had a dummy warhead. What sort of a payload is it designed to carry and how far can this missile travel? So experts say this is likely a test of either a JL-2 or this newer JL-3 missile. Both of them are capable of carrying nuclear warheads. Chinese media has experts citing that it's probably a JL-3. And that has an estimated range of about 9 ,000 kilometers.

7:54The big issue, of course, is that it could reach the continental U.S. Now, how rare is it for China to launch a missile test like this out into the open sea? So we have seen certain instances in the past. And the one that really comes to mind is back in 2024, China launched an intercontinental ballistic missile. So when we think back to that nuclear deterrence triad, this would be in that land category. And that was concerning back at the time. It was the first time they tested that kind of missile in that format for about four decades. Let's talk a little bit about the timing here. This comes before the start of the NATO summit.

8:30The U.S. is in the middle of the annual RIMPAC naval drills it hosts with more than two dozen other countries around Hawaii. And that, of course, excludes China. And it's on the heels of a new alliance between Fiji and Australia. What kind of message is Beijing trying to send with this timing, you think? So this is a really interesting question because there's so much ambiguity. And it is, to be frank, being really hotly contested by nuclear experts and political scientists at the moment. What does the timing mean? So on the one hand, this is a public event and clearly intended and expected to be visible.

9:10But there is another line of argument here, which is that China's military is essentially this huge lumbering bureaucratic machine. And that a test like this would have been months in the works, possibly longer. So I think rather than sort of debating necessarily the significance of this day or this particular date right at this moment, particularly as you think of the NATO summit, the RIMPAC exercises, I think we can make a stronger argument that this is part of China's wider push for military readiness, as well as this power projection at this moment where all corners of the globe are essentially arming up.

9:49Now, a spokesperson for China's foreign ministry has sought to downplay Monday's test, saying that Beijing warned relevant parties in advance and complied with international law. She added that the test wasn't directed at any country in particular, and urged people following these developments to, quote, not over-interpret this. Which countries in the region might see this, though, as a provocation? Japan has expressed its concerns over China's increasingly active military activities. Essentially, it doesn't want ballistic missile launch training in its airspace or territory. And Australia and New Zealand have both also expressed that essentially this is an unwelcome development.

10:31New Zealand specifically has picked up on this concern that this may be a recurring pattern. And I do think it's important to note that while countries have expressed their concerns, China itself does maintain it has a no first use policy when it comes to nuclear. And essentially, it argues that nuclear deterrence from its point of view is actually adding to international stability. I want to shift to the U.S. for a bit. A State Department spokesperson condemned the launch, saying, quote, at a time when the United States is working harder than ever to prevent nuclear proliferation, China is doing the opposite.

11:09Rebecca, it's not entirely clear that China even notified the U.S. of this test. If that is indeed the case, from a diplomatic standpoint, how problematic is it if the U.S. wasn't even informed? The U.S. has clearly expressed its displeasure. And if indeed this is a JL-3 missile, this is obviously also a very clear demonstration of a missile that U.S. experts say could target the continental U.S. It's also worth considering that China may also be testing this sort of so-called constructive relationship of strategic stability. That's the new phrasing that it's using to describe the relationship between China and the US after President Trump and President Xi had that sit down, which for all intents and purposes did seem like a sort of reset of relations and at least putting relations on a more stable, if not positive footing.

12:04I'm not necessarily sure that it's fair to say Beijing is doing this specifically to provoke the U.S. or with knowledge that it is going to be a deliberate and a clear provocation. I think Beijing has shown that it is keen to stabilize Thais and to keep Thais stable. But the U.S. is also going to be facing pressure from its allies in the region who are feeling this threat and are feeling under threat. After the break, what a Bloomberg investigation reveals about China's secretive missile program and how it fits into President Xi's military ambitions.

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16:06I'm back with Rebecca Chung-Wilkins, who covers Asia government and politics for Bloomberg. China is seemingly both expanding its missile program and being more open about that program. Rebecca, how does this fit into China's broader defense strategy? So I think there's two elements here. The first is thinking about the sub-launch missiles. And the key element is nuclear deterrence. More broadly, I think there is, of course, this issue of Taiwan front and centre. Taiwan continues to be a real focal point for Beijing. Beijing sees it essentially as a renegade province of China that it is inevitably going to, as it would say, reunify with.

16:53And bolstering that missile capacity is critical to any attempt if China were to try and forcefully take Taiwan. I want to talk a little bit about what we know about the missile program. Let's start with the publicly available information. Just how big is China's missile arsenal? China doesn't make the size of its arsenal public. And as you would expect, details about lots of its missile supply chain are pretty scarce. So the Pentagon estimates that China has at least 3 ,000 ballistic missiles and 300 ground-launched cruise missiles as of 2024. And that is a pretty big jump from their estimates from 2015.

17:39So about nearly 150 % more ballistic missiles than they estimated they had back in 2015. That's essentially when the U.S. started systematically disclosing their own estimates on Beijing's missile arsenal. But it is worth stressing they are only estimates. If that's true, it's quite an expansion. Yes, we've seen a major expansion. And there are other signs, too, that, you know, kind of indicate this big ramp up. Well, Bloomberg recently did an analysis of Chinese corporate filings that pointed to ramped up missile production, right? I wonder if you can talk us through what that project found. Yes.

18:18So essentially we examined nearly 400 listed firms to basically try and get a look under the hood of China's missile program. And through that analysis, we found companies that were directly tied to the missile supply chain. So firms that produce things like, for example, infrared sensors or stealth coatings. We found that China's missile production appears to be booming. and it's really all down to this sort of network of little known companies. So we found the number of firms that disclosed producing key missile components rose to about 80 last year. And if you compare that to Xi's first year in office, that's more than double.

18:59And then again, when you look and drill down within that group, we also saw that last year had the highest percentage of companies reporting record revenues of any during Xi's tenure. So again, our analysis indicates that that's a result of a surge in new orders that was intended to expand China's missile program. Now, at the same time, China is also undergoing a massive cleanup of its military, the People's Liberation Army. Tell us about Beijing's campaign. Why is President Xi shaking up the military leadership now? Essentially, we are seeing the biggest purge of top officers from the Chinese military in about half a century.

19:42But this anti-corruption campaign actually kicked off as soon as Xi came into power. And, you know, in many ways was a form of also ousting political rivals and cementing his own authority politically. But we then saw this military purge kick off really in full force in 2023. And we had these investigations into the rocket force and into this issue of military procurement. And there were very, very high profile departures. So former defence ministers expelled from the party, as well as a host of other officials and senior leaders and other folks lower down the rungs. And it reached the Central Military Commission, which is essentially the body that oversees the PLA.

20:26It's chaired by President Xi. And the real concern at the heart of it was military preparedness, was this anxiety or this concern that if corruption is rampant with the military, that perhaps is concealing its real capabilities. So analysts are pretty conflicted about what is the intention and why the cleanup is really happening right now. On the one hand, you have some people that argue that this is coming from a place of confidence, that she feels secure enough to reshuffle and have this enormous amount of disruption at the highest levels of his military. But on the other hand, you also have people that argue essentially the opposite, that the fact that he is having to reshuffle at the highest echelons of the military shows that there are vulnerabilities and weaknesses that he cannot ignore, particularly if any kind of military action is on the table.

21:32The unspoken anxiety that some experts point to is essentially this concern that if there is rampant corruption in the military, it may not perhaps be as ready or as prepared to take Taiwan by force. What do you think in the end this says on a broader level about Xi and China's ambitions? I think Xi's big ambition here is about having a so-called modern military. And the target he has always set himself is the 100th anniversary of the PLA. And that falls in 2027. Now, that has led to some speculation about 2027 and Beijing's plans for Taiwan in that year. Some argue that this deadline is perhaps the reason why there is this theory that Beijing may have intentions to invade or take Taiwan by force in that year.

22:30That question aside, this focus of having a modern military that essentially can take on and is a leader globally and, of course, unspoken, that can rival the U.S. has been a priority. and this deadline and this date has been a real focus of presidency since he came to power. And when you think about the two superpowers of China and the US coming up against each other and China's rivalry with the US, this is ultimately about having a military that in simple terms could defeat the US.

23:19This is The Big Take Asia from Bloomberg News. I'm Wan Ha. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you like the episode, make sure to follow and review The Big Take wherever you listen to podcasts. It really helps people find the show. Thanks for listening. See you next time.

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