National Security: Impact of China's Military Modernization in the Pacific Region, Report to Congressional Committees [open pdf - 862KB]
"With the end of the Cold War, the Asia-Pacific region faces an uncertain security environment. China, once viewed as a counterweight to Soviet aggression, is now viewed as a country that aspires to fill the role of the leading regional power. China is pursuing long-range military modernization that emphasizes the upgrading of its air and naval power and a realignment of its force structure. These actions and China's lack of openness on military matters have raised questions about its intentions. GAO undertook a study of China's military modernization due to numerous, and often conflicting, reports of a military buildup in China. GAO's objectives during this study were to assess the nature and purpose of China's military modernization, and compare China's military modernization efforts with those of other Asian nations. GAO's work is intended to assist the Congress in decisions it faces concerning China and the region. […] China has begun to modernize its military by acquiring some new weapon systems, restructuring its forces, and improving its training. Since 1989, the official Chinese defense budget increased annually at a double digit pace, but our analysis revealed that when adjusted for inflation there has been almost no real growth in the official defense budget. Major categories of defense spending, such as weapons acquisitions and research and development, however, are not part of the official budget."
Government Accountability Office (GAO): http://www.gao.gov/