After years of political, social and economic chaos under Mao Zedong, Deng Xiaoping set a new course for China, determined to build the economy first and the military later. He sought a low-key foreign policy where China would not take the lead in world affairs and the nation would “bide time, hide capabilities”. Almost 30 years later, China has emerged as an economic power and is slowly becoming more assertive militarily. However, broad questions remain about the Chinese military’s capabilities, doctrine and intentions as it evolves into a more technically advanced force.

China’s military has received a technological upgrade paid for by double-digit budget increases over the past 20 years. This has enabled the People’s Liberation Army to increase its access to technology, both by importing high-tech equipment and weapons platforms and by recruiting more technically adept soldiers. This represents a significant shift from a largely illiterate peasant army that practised a “people’s war” doctrine, where generals were confident the PLA had more soldiers than the enemy had bullets.

Reports of the PLA hacking into US and German government computer networks are part of this modernising trend, just as China surprised military analysts when it carried out a successful anti-satellite test in January, demonstrating a technical capacity that was previously underestimated. Most important, these activities reveal that Chinese military planners and their civilian leaders recognise that to overcome technically superior militaries, they must resort to “asymmetric” strategies that exploit the adversary’s weaknesses.

However, the hacker attacks on a Pentagon computer system – reported in the Financial Times – and several German government networks should be kept in perspective. Based on reports that the compromised Pentagon data were unclassified, the Chinese have not demonstrated the capacity to disrupt critical military computer systems by hacking. The fact that the attackers were reputedly traced by investigators is an indication that Chinese technology has its limits as well. While the Chinese foreign ministry denied the Pentagon attack (though not the German ones), it is likely that the intrusions are part of a broader strategy to acquire information that furthers China’s technical development. The Chinese military, like the commercial sector, has a poor record of innovation and is highly dependent on imported technology acquired by legal and illicit means. Until the Chinese improve their indigenous research and development capacity, there is little threat that they will surpass the west in technology.

China’s military modernisation strategy is based on the premise that it is dealing with a technically superior adversary. While building its capacity to confront the enemy head on, it also must exploit vulnerabilities. China’s current strategy was shaped by the allied victory in the 1990 Gulf war, where US technology overwhelmed an Iraqi military equipped with Soviet-designed platforms very similar to Chinese ones. However, the present Iraq crisis has demonstrated some of the limits of US military technology and perhaps exposed some vulnerabilities in US dependence on the internet, satellites and information-centred warfare, compared with China’s dependence on large numbers of troops.

China has sought to reassure regional neighbours and the west that its military modernisation does not pose a threat and that it is seeking to be a responsible world power. China has recently sought to assuage concerns by touting its efforts to be more transparent. Arguably, there has been progress. China has published defence “white papers” and has committed to make annual reports to the United Nations on its military budget and international arms sales. However, the accuracy and reliability of China’s self-reporting do not diminish the suspicion of many critics, who point out that China’s revelations contain little substance. China’s efforts appear part of a comprehensive propaganda effort that attempts to shape global perceptions that its rise is peaceful, as well as assure Chinese citizens that growing investments in the military are justified, despite widespread rural poverty and underfunded social services.

The Chinese acknowledgement that greater transparency is necessary to improve its international relations also reflects growing confidence in its own capabilities and enhances its deterrent potential. The US and regional allies will be more deliberate when considering direct military confrontation over the most likely conflict, Taiwan, when faced with greater evidence that a conflict would be costly to both sides.

A more technologically capable PLA does not necessarily mean a military conflict is inevitable. What China wants most is to ensure it can build its economy in peace and prevent internal unrest. Taiwan is the focus of its military build-up, but Chinese leaders link Taiwan to their domestic security situation, arguing that the Chinese people could rise up and overthrow the Beijing leadership if Taiwan declared independence. There are indications that China is genuinely interested in avoiding a military conflict as well as increasing transparency.

These incidents perhaps indicate that China has moved beyond “hiding its capabilities”, to reflect President Hu Jintao’s vision of establishing a “harmonious world”. These sentiments give US and European allies an opportunity to capitalise on China’s professed interest in increasing transparency and military-to-military exchanges.

The writer is director of China studies and Starr senior fellow at The Nixon Center in Washington, DC