Barack Obama said the US would move away from 'outdated cold war-era systems' Reuters

President Barack Obama has unveiled plans for America's military future, outlining a historic shift towards a smaller and leaner force that will focus on China and move away from large-scale ground warfare that has dominated the post-9/11 era.

Obama became the first president to announce a strategy change directly from inside the Pentagon – a theatrical gesture designed to underline the significance of the shift. Mindful of the dangers of displaying any weakness over national security in an election year, Obama said he was determined to maintain US military supremacy around the world, but he admitted that the review involved a move to "smaller conventional ground forces" and the removal of "outdated cold war-era systems".

The immediate incentive for the change in tack, set out in a Pentagon strategy paper, is the fiscal crisis and the Congress-led drive for spending cuts. Currently, the Pentagon is under orders to slash $487bn from the resources it had expected to receive over the next 10 years, and those cuts could rise to close to $1tn if Congress fails to reach agreement on alternative reductions by January next year.

Details of the impact of the cuts on military deployments and systems will gradually be rolled out in upcoming budget announcements. For now, Obama and his main advisers, the defence secretary Leon Panetta and general Martin Dempsey, chairman of the joint chiefs of staff, stuck to the highlights.

Among the casualties of the new-look military will be the two elements of the military that have formed the kernel of American global might over the past decade: the army and the marine corps. But with the Iraq war over and US commanders struggling to draw back from Afghanistan, that emphasis on the long-term massive ground mission is seen as fading as a priority, and both will face reductions in personel likely to involve tens of thousands of troops from the current Army numbers of 570,000.

There will also be a move away from the decades-old mantra of US military planners that America must be capable of fighting two wars at any one time. "The two-war paradigm has been an anchor in the way we think about the future. That paradigm is a residual of the cold war," Dempsey said.

That is likely to be siezed upon by Republicans as evidence that the Obama administration is damaging US capability around the world. Obama anticipated that criticism, saying: "Yes our military will be leaner, but the world must know the United States is going to maintain our military superiority with armed forces that are agile, flexible and ready for the full range of contingencies and threats."

For good measure, he added that the defence budget would continue to be larger than it was at the end of George Bush's term, and larger than the military spending of the next 10 countries put together.

"Make no mistake, we will have the capability to defeat more than one force at any time," Panetta concurred.

The dream of a modern military based on speed and stealth rather than overwhelming ground force has long been desired by military strategists. Donald Rumsfeld made a move towards it in the opening months of the Bush era, but was thrown off course by the 9/11 attacks and the angry US reaction to them in Afghanistan and then Iraq.

Now the Pentagon hopes to get back on that track, with new strategic goals and ambitions. Top of that list, the review has concluded, will be the emerging powers of the Asia-Pacific region amid mounting Pentagon concern about China's growing naval power and investment in high-tech weaponry.

"All trends are shifting to the Pacific. Our strategic challenges will largely emanate out of the Pacific region," Dempsey said.

In terms of the fighting force itself, the increasing reliance on technological warfare is certain to be extended, with the unmanned drone as its centrepiece. Critics on the left are likely to focus on that aspect as evidence of the Obama administration's disrespect for international law and civilian lives.

Panetta said: "As we reduce the overall defence budget, we will protect and in some cases increase our investments in special operations forces, new technologies like unmanned systems, space and in particular cyberspace capabilities and in the capacity to quickly mobilise."

Panetta and Dempsey both recognised that cuts in the strength of US troops would carry security risks. But they said the risks were preferable to doing nothing.

Panetta issued a clear and yet unspoken challenge to the Republican majority in the House of Representatives that has led resistance to the administration's budget plans. He said that if Congress continued along its path towards a further $500bn in defence cuts in January, the country's national security would be in jeopardy and there would be demoralisation within what he called a "hollowed" military force.