After building its first overseas military base in the African nation of Djibouti, China is now planning to establish its military base in Pakistan and other countries with which it has a longstanding friendly relationship and similar strategic interests, Pentagon has said in its annual report to the Congress.
"China most likely will seek to establish additional military bases in countries with which it has a longstanding friendly relationship and similar strategic interests, such as Pakistan, and in which there is a precedent for hosting foreign militaries," the report said.
This development can serve as a major concern for India which has hostile relationship with Pakistan.
The Pentagon highlighted in its report that China's expanding international economic interests are increasing demands for the People's Liberation Army Navy (PLAN) to operate in more distant maritime environments to protect Chinese citizens, investments, and critical sea lines of communication.
The report predicted that China's overseas military basing may be constrained by the willingness of countries to support a PLA presence in one of their ports.
"China's leaders may judge that a mixture of military logistics models, including preferred access to overseas commercial ports and a limited number of exclusive PLAN logistic facilities-probably collocated with commercial ports-most closely aligns with China's future overseas military logistics needs. A greater overseas naval logistics and basing footprint would better position the PLA to expand its participation in non-combatant evacuation operations, search-and-rescue, humanitarian assistance/disaster relief (HA/DR), and SLOC security," the report read.
"A more robust overseas logistics and basing infrastructure would also be essential to enable China to project and sustain military power at greater distances from China," it added.
Pentagon said that China is expanding its access to foreign ports to pre-position the necessary logistics support to regularize and sustain deployments in the "far seas," waters as distant as the Indian Ocean, Mediterranean Sea, and Atlantic Ocean.
Pentagon said that China's initiative to establish additional military bases in countries along with regular naval vessel visits to foreign ports reflects and amplifies Beijing's growing influence of extending the reach of its armed forces.
According to the annual report from the U.S. defence department, China had spent USD 180 billion on the People's Liberation Army last year which is significantly higher than its official defence budget of about USD 140 billion.
However, officials admitted that figure could not account for all spending due to poor accounting transparency.
China claims that this facility is designed "to help the navy and army further participate in United Nations peacekeeping operations (PKO), carry out escort missions in the waters near Somalia and the Gulf of Aden, and provide humanitarian assistance."
The report said that China's initiative of building its first overseas base in the African nation, along with regular naval vessel visits to foreign ports, both reflects and amplifies Beijing's growing influence and the extending reach of its armed forces.
"China's leaders may judge that a mixture of military logistics models, including preferred access to overseas commercial ports and a limited number of exclusive PLAN logistic facilities-probably collocated with commercial ports-most closely aligns with China's future overseas military logistics needs," the report said.
According to the report, a greater overseas naval logistics and basing footprint would better position the PLA to expand its participation in non-combatant evacuation operations, search-and-rescue, humanitarian assistance/disaster relief, and SLOC security.
The report further said that a more robust overseas logistics and basing infrastructure would also be essential to enable Beijing to project and sustain military power at greater distances from China.
Pentagon in its 106 page report also talked about China-India Border dispute in its report. However, it did not provided any solution to the existing problems between the two neighbours.
"Tensions persist along disputed portions of the Sino-Indian border, where both countries patrol with armed forces. In September 2016, an Indian patrol observed that more than 40 Chinese troops had set up a temporary shelter within Indian Territory in Arunachal Pradesh, which China also claims. The two sides conducted flag-officer level meetings where they agreed to maintain peace, and then withdrew to mutually acceptable positions," the report noted.
"In November 2016, China and India held the sixth iteration of the HAND-IN-HAND series of counterterrorism exercises and conducted joint military exercises in October in Ladakh near the China- India border. The two countries increased military exchanges since last year despite continued border tensions," the report added.
Asserting that China was the world's fourth largest arms supplier with more than USD 20 billion in sales, the Pentagon said that the Asian-Pacific countries, primarily Pakistan accounted for USD 9 billion in Chinese arms exports from 2011 to 2015.
Sub-Saharan Africa was China's second largest regional arms market.
The report noted that China's ability to remain among the world's top five global arms suppliers hinges largely on continued strong sales to Pakistan and demand for its armed UAVs.
According to the report, China is one of only a few global suppliers of such equipment and faces little competition for sales to the Middle East and North Africa.
This is expected to result in the Middle East and North Africa surpassing Sub-Saharan Africa as China's second largest arms export market.
Last year, Beijing had signed an agreement with Pakistan for the sale of eight submarines of which first four will be built in China, with the remaining four in Pakistan.
Other major Asia-Pacific customers of Chinese military equipment include Bangladesh and Myanmar.
China has also sold armed UAVs to several states in the Middle East and North Africa, including Iraq, Saudi Arabia, Egypt, and the United Arab Emirates.
China faces little competition for sale of such systems, as most countries that produce them are restricted in selling the technology as signatories of the Missile Technology Control Regime (MTCR) and/or the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (WA), as well as subjecting exports of this technology to greater scrutiny than China.
China's arms sales are conducted via state-run export organisations that seek primarily to generate profits and offset defense-related research and development costs.
The report mentioned that arms transfers are also a component of China foreign policy, used in conjunction with other types of military, economic aid and development assistance to support broader foreign policy goals.
These include securing access to natural resources and export markets, promoting political influence among host country elites, and building support in international forums.
From the perspective of China's arms customers, most of which are developing countries, Chinese arms are less expensive than those offered by the top international arms suppliers and are also of lower quality and reliability, but they still have advanced capabilities.
The report pointed that Chinese arms also come with fewer political strings attached, which is attractive to those customers who may not have access to weapons from Western countries for political reasons.
The report noted that the PLAA remains the largest standing ground force in the world, which in 2016 included 18 group armies and numerous specialised elements.
The year 2016 was the force's first as a separate service within the PLA following major reforms began last year.
These reforms elevated the other services to a status equal to the ground forces while establishing five new theatre commands for war fighting.
"Throughout the year, it adapted to its new organisational status and structure, particularly through the continued development of five new theatre army headquarters that are subordinate to and support the joint theatre commands," the report said.
In March 2016, China announced a seven percent inflation-adjusted increase in its annual military budget to USD 144.3 billion, continuing more than two decades of annual defence spending increases and sustaining its position as the second largest military spender in the world after the United States.
Analysis of data from 2007 through 2016 indicates China's official military budget grew at an average of 8.5 percent per year in inflation-adjusted terms over that period.
China has the ability to support defence spending growth for the foreseeable future.
It is expected that China's defence budget is likely to increase by an annual average of 7 percent, growing to USD 260 billion by 2020 for a force that, although expanding, is expected over the near-term to remain primarily regional.