India should be concerned that the US Ex–Im Bank will be subsidising a major Chinese nuclear facility to the tune of $5 billion. USA my be merely thinking of the economics of the issues but studies show China’s GNP will overtake USA's by 2040 and India's GNP will also rise steadily.

The US Ex–Im Bank deal seems to be out of sync with American non-proliferation policy elsewhere in the world. Many of China's state-owned defence firms benefit from trade with America and have historically proliferated dangerous technology to rogue and unstable regimes around the world, like North Korea, Iran and Pakistan. Hence we in India need to take note that China’s maritime power is getting a great deal of attention and Indian defence planners need to realise that the Indian Navy and our maritime industry should get a larger share of the budget and attention.

In IDSA's latest Strategic Digest K Subrahmanyam has unfolded details of the exclusive interview he had with late PM Narasimha Rao, who had explained all that he achieved for India's nuclear quest. He had briefed the incoming PM Atal Behari Vajpayee fully on this, and his advice contributed to the SHAKTI nuclear tests in 1998. We hope Atalji has updated PM Manmohan Singh and in turn he briefs Mrs Sonia Gandhi, Natwar Singh and the NSA M K Narayanan and Pranab Mukherjee, as they all contribute to India’s strategic thinking. The Sonia Gandhi–Manmohan Singh relationship makes a piquant situation as far as Defence is concerned –– according to our Constitution Defence is the collective responsibility of the Cabinet with the PM as the de facto Commander. Narasimha Rao also confessed that he curtailed the defence budget in his time to augment nuclear spending. The Navy’s ATV nuclear submarine project may have also benefited as the PM is at its apex.

At the same time news from USA suggests that Mr. Donald Rumsfeld has an agenda for a massive review of defense spending and strategy. Because the process is conducted only once every four years, the review represents the Bush administration's best chance to refashion the military into a cheaper force capable of delivering on the ambitious security and foreign policy goals that President Bush put forth since the terrorist attacks of Sept. 11, 2001.

China on the other hand is steadily increasing its defence spending. In India the Air Force has pushed all guns to form a Strategic Aerospace Command which is another expensive venture and the Navy may get side tracked, now that the Army is also to get a new South Western Command at Jaipur –– the defence budget is limited and a Navy takes time to be built up! The only silver lining is that Indian warship building had improved. So we need to watch China and get our naval power going to be on equal footing.

As a maritime power, China's naval developments remain an issue of intense interest as its meteoric economic development paves the way for it's transformation into a major global power. In light of Beijing's quest to secure energy resources, its extensive maritime seaboard, and unresolved territorial disputes, Chinese naval interests deserve continued attention. Undoubtedly, the People's Liberation Army Navy's (PLAN) ability to adequately defend China's sea lines of communication (SLOCs) will be critical to protecting its overseas interests.

Hence Rep. Dana Rohrabacher (R. Calif.), one of the harshest China critics in Washington called the US Ex–Im deal, "yet more proof of the insanity of our China policy." The latest State Department Human Rights Report on China says, "citizens did not have the right to change their government, and many who openly expressed dissenting political views were harassed, detained, or imprisoned."

At a national maritime awards meeting in the Great Hall of the People in Beijing on 20 December 2004, Vice Premier Zeng Peiyan emphasized the importance of marine development, acknowledging the fact that China, with more than 9,000 miles of coastline and over 6,000 islands in its strategic picture, depends on the sea for food and trade and has often relied on naval power to defend vital national interests. Oil and gas will be the need of China. The country became the world's third largest commercial shipbuilder in 1995 and has set its sights on overtaking Japan and South Korea within the next decade. It also has the world's largest naval shipbuilding program. Beijing is party to six of East Asia's more than two dozen maritime territorial disputes:

1. Taiwan.

2. The Senkaku Islands/Diaoyutai with Japan.

3. Land features and the water areas of the South China Sea, with Taiwan, Vietnam, the Philippines, Brunei, and Malaysia.

4. The maritime border with Vietnam.

5. Fisheries areas and quotas, with North Korea, South Korea, Japan, Vietnam, and the Philippines.

6. The Maritime Border with Japan.

The Future of PLA Navy (PLAN)

Since the late 1990s, the quality and quantity of output from China's commercial and naval shipyards has risen sharply. China received the first of eight 636 Submarines from Russia. While India may just about sign the Scorpene submarine deal  –– it must not be forgotten that our submarines and MR aircraft are aging. By 2010, the PLAN will probably number approximately seventy modern surface combatants; two to three ballistic-missile submarines; and 20 to 30 modern attack submarines, perhaps six of them nuclear-powered. The Marine Corps, recently expanded from one to two brigades, may add a third unit although its assault mission will keep it tasked to the South and possibly the East Sea Fleets. The production and development of support vessels such as transport craft and landing ships was also being stepped up.

A new generation of conventional and nuclear attack as well as missile submarines is being developed to replace the PLA navy's outdated Ming-class conventionally powered (SS), first-generation Han class nuclear powered submarines (SSN) and Xia class nuclear powered ballistic missile submarines. The first hull of the new generation Type 093 SSN, which is equivalent to the US navy's first generation Los Angeles class SSN, is reported to have been launched with Russian help in the past year or so and is expected to enter service soon. More than six vessels of the indigenously developed Song-class SS have so far been built. The initial development of the Song encountered significant design and engineering problems, especially related to propulsion, but they appear to have been resolved and are now coming off the production lines at a rate of one annually.

The Type 052C Lanzhou-class guided missile destroyer has been developed by the Chinese shipbuilding industry and is equipped with stealth features and a long-range area air-defence missile system that has been compared to the early models of the US Aegis-class cruiser. The first ship of this class was delivered to the PLAN last summer and a second vessel was to be completed later this year. Their weapons systems are reported to be similar to the Soveremeny-class missile destroyers that  PLAN had acquired from Russia.

China has also set its sights on more ambitious targets for the defence industry's long-term growth. They include:

• Catching up with the technological standards of the world's leading arms producers. India too has that aim but FDI is restricted.

• Quadrupling the defence industry's aggregate economic output.

• Establishing a new R&D and production system that focuses on civilian–military integration. India needs to note this and the outdated Officials Secrets Act needs to be amended.

• Adapting management and operational mechanisms to the country's socialist market economy. 

• Making additional breakthroughs in institutional reform and further adjusting the size and structure of the defence industry.