A series of leaked internal documents reveal that China's military reforms are aimed at allowing Beijing to "manage a crisis, contain a conflict, win a war" and overtake the United States in military strength, according to the Express.

The leaked documents were published by the Central Military Commission in February for the purpose of spreading President Xi Jinping’s “thought on strengthening the armed forces”. If the reforms go ahead, they will lead to heightened tensions with China’s neighbouring countries, including Japan, in the East and South China Seas and the US. -Express

“As we open up and expand our national interests beyond borders, we desperately need a comprehensive protection of our own security around the globe,” read the leaked documents, which adds that a strong military is the best way to "escape the obsession that war is unavoidable between an emerging power and a ruling hegemony".

It's worth noting that in March Beijing rolled out their largest defense budget in three years.

According to the leaked documents, China's rapid military expansion will allow them to “more effectively create a situation, manage a crisis, contain a conflict, win a war, defend the expansion of our country’s strategic interests in an all-round fashion and realize the goals set by the party and Chairman Xi”.

The Japan Times reports that the authors of the documents argue that "strong military might is important for a country to grow from being big to being strong," and that the US, Russia and Japan are examples of this, and would avoid the "Thucydides Trap" - a deadly competition between superpowers first identified by anicient Greek historian Thucydides who explained: "It was the rise of Athens and the fear that this instilled in Sparta that made war inevitable."

China believes that Military reforms, therefore, are a significant "turning point" for any given emerging country to "overtake a slower vehicle on a curve," says the document - referring to the United States is in decline.

Citing the examples of the collapse of the Soviet Union and political unrest in some East European countries, one chapter said that it is important to control the military in a bid to ensure the Chinese Communist Party’s long-term ruling status. History proves that as long as the party keeps a tight grip on the military, it can withstand rigorous challenges both at home and abroad, it said. It also criticized the “antagonistic blocs of the Western world” for plotting to instigate separatists in Tibet, Xinjiang and Hong Kong to pursue independence as well as Falun Gong practitioners to stage protests and individuals to carry out terrorist attacks. -Japan Times

China has built up a significant presence in the disputed South China Sea - installing air bases, radar systems and other defense capabilities. Meanwhile, Beijing is supposedly testing advanced features on its military craft - outfitting aircrafts, destroyers, tanks and submarines with stealth technology.

As we reported in February, Beijing's rapid military modernization is "remarkable" according to Dr. John Chipman, Director of UK based Internaional Institute for Strategic Studies, in their annual report.

“China’s emerging weapons developments and broader defence-technological progress mean that it has become a global defence innovator” says Chipman.

In particular, he points out that China's Chengdu J-20 low-observable combat aircraft is set to challenge America's "monopoly on operational stealthy combat aircraft." As we reported yesterday, the J-20 is rumored to have already been deployed to the South China Sea along with several of China's Su-35s, to take part in a joint combat patrol over the region, according to the Chinese Ministry of Defense whose release did not mention the J-20.

The IISS report also notes that China's expanding array of advanced guided-weapons projects, such as the PL-15 extended range air-to-air missile which could enter service this year. "This weapon appears to be equipped with an active electronically scanned array radar, indicating that China has joined the few nations able to integrate this capability on an air-to-air missile," reports Chipman.

In March, Chipman said “China’s emerging weapons developments and broader defense-technological progress mean that it has become a global defense innovator."

“[While] a great power war is not inevitable, states are systematically preparing for the possibility of conflict,” he said, adding that China’s “land and naval forces are modernizing and progress in defense aerospace remains remarkable.”

According to Bank of America's Mike Hartnett, the "trade war" of 2018 should be recognized for what it really is: the first stage of a new arms race between the US & China to reach national superiority in technology over the longer-term via Quantum Computing, Artificial Intelligence, Hypersonic Warplanes, Electronic Vehicles, Robotics, and Cyber-Security.

This is hardly a secret, as the China strategy is laid out in its “Made in China 2025” blueprint: It aims to transform “China’s industrial base” into a “smart manufacturing” powerhouse via increase competitiveness and eroding of tech leadership of industrial trading rivals, e.g. Germany, USA, South Korea; this is precisely what Peter Navarro has been raging against and hoping to intercept China's ascent early on when it's still feasible.

The China First strategy will be met head-on by an America First strategy. Hence the “arms race” in tech spending which in both countries is intimately linked with defense spending. Note military spending by the US and China is forecast by the IMF to rise substantially in coming decades, but the stunner is that by 2050, China is set to overtake the US, spending $4tn on its military while the US is $1 trillion less, or $3tn.

This means that some time around 2038, roughly two decades from now, China will surpass the US in military spending, and become the world's dominant superpower not only in population and economic growth - China is set to overtake the US economy by no later than 2032 - but in military strength and global influence as well.

And, as Thucydides Trap clearly lays out, that kind of unprecedented superpower transition - one in which the world's reserve currency moves from state A to state B - always takes place in the context of a war.

Which explains BofA's long-term strategic recommendation: "We believe investors should thus own global defense, tech & cybersecurity stocks, particularly companies seen as “national security champions” over the next 10-years."

And in April, an unclassified 50-page transcript on Advance Policy Questions warned that Beijing has the capability and capacity to control the South China Sea “in all scenarios short of war with the United States.”

In written testimony to the US Senate Armed Services Committee, Adm. Davidson said China is seeking “a long-term strategy to reduce the U.S. access and influence in the region,” which he claims the U.S. must maintain its critical military assets in the area. He views China as “no longer a rising power,” but rather a “great power and peer competitor to the United States in the region.” Adm. Davidson agreed with President Trump’s recent assessment on China, calling the country a “rival.”

In response to questions about how the U.S. Navy in the South China Sea should handle the increased military presence in the region. Adm. Davidson advocated for a sustained U.S. military approach, with the increased investment in new high-tech weaponry.

“US operations in the South China Sea—to include freedom of navigation operations—must remain regular and routine. In my view, any decrease in air or maritime presence would likely reinvigorate PRC expansion.”

And in regards to the type of weapons, Adm. Davidson outlined some critical technologies for immediate investment:

“A more effective Joint Force requires sustained investment in the following critical areas: undersea warfare, critical munitions stockpiles, standoff weapons (Air-Air, Air-Surface, Surface-Surface, Anti-Ship), intermediate range cruise missiles, low cost / high capacity cruise missile defense, hypersonic weapons, air and surface lift capacity, cyber capabilities, air-air refueling capacity, and resilient communication and navigation systems.”

Adm. Davidson’s testimony to the US Senate Armed Services Committee, provided us with the much-needed knowledge that American exceptionalism is quickly deteriorating in the South China Sea after more than seventy years of control. The transcript reveals how America’s military will continue to drain the taxpayers, as it will need an increasing amount of investments and military assets in the Eastern Hemisphere to protect whatever control it has left. The clash of exceptionalism between Beijing and Washington is well underway, will war come next?