The following is the Pentagon’s annual report to Congress, Military and Security Developments Involving the People’s Republic of China 2016. The report was released on Aug. 16, 2018.

From the report:

WHAT IS CHINA’S STRATEGY?

Since 2002, Chinese leaders – including President Xi Jinping – have characterized the 21st century’s initial two decades as a “period of strategic opportunity.” They assess that international conditions during this time will facilitate domestic development and the expansion of China’s “comprehensive national power.” The Chinese Communist Party (CCP) has distilled these objectives into President Xi’s “China Dream of national rejuvenation” to establish a powerful and prosperous China.

GROWING REGIONAL AND GLOBAL PRESENCE

China’s leaders increasingly seek to leverage China’s growing economic, diplomatic, and military clout to establish regional preeminence and expand the country’s international influence. “One Belt, One Road,” now renamed the “Belt and Road Initiative” (BRI), is intended to develop strong economic ties with other countries, shape their interests to align with China’s, and deter confrontation or criticism of China’s approach to sensitive issues. Countries participating in BRI could develop economic dependence on Chinese capital, which China could leverage to achieve its interests. For example, in July 2017, Sri Lanka and a Chinese state-owned enterprise (SOE) signed a 99-year lease for Hambantota Port, following similar deals in Piraeus, Greece, and Darwin, Australia.

A COMPREHENSIVE APPROACH TO MANAGING REGIONAL DISPUTES

China seeks to secure its objectives without jeopardizing the regional stability that remains critical to the economic development that has helped the CCP maintain its monopoly on power. However, China is also willing to employ coercive measures – both military and non-military – to advance its interests and mitigate opposition from other countries. For example, in 2017, China used economic and diplomatic pressure, unsuccessfully, in an attempt to urge South Korea to reconsider the deployment of the Terminal High-Altitude Area Defense (THAAD) system. In its regional territorial and maritime disputes, China continued construction of outposts in the Spratly Islands, but also continued outreach to South China Sea claimants to further its goal of effectively controlling disputed areas. China also maintained a consistent coast guard presence in the Senkakus. In June 2017, India halted China’s efforts to extend a road in territory disputed with Bhutan near the India border, resulting in a protracted standoff lasting

more than 70 days. In August, India and China agreed to withdraw their military forces from the vicinity of the standoff; however, both countries maintain a heightened military presence in the surrounding region.