In Part 1 we noted the changes in China's security situation, its national defence policy and priorities and examined its military service system. What are the other major issues?

The part in the Defence White Paper which is likely to draw some attention is China's claims on defence expenditure. Through charts and figures an attempt has been made to demonstrate that its spending on defence in terms of actual expenditure, or as a percentage of GDP, or of overall governmental expenditure, are all well below that of the other permanent members of the security council and is only marginally higher than Japan's. It puts its defence spending for 2004 at 211.701 billion Yuan ($ 25.81 billion approximately), compared to India's less than US $ 16 billion. It is not easy to reconcile these figures with China's much larger Army, very large defence acquisitions recently and its large nuclear weapons and missile modernisation programme.

It is of course a fact that China does not include many traditional expenses connected with defence in its budget. The pay of conscripts continue to be minimal, other ranks including officers pay too remain low though rising. The state separately takes care of post discharge compensations for conscripts as well as pension and other welfare benefits for volunteer soldiers. Expenditures on research and development, production of major weapons and equipment and other big ticket items are often covered under other budget heads. Nuclear weapons and missile capability come under technology ministries. Besides, many other expenditure such as on accommodation, medical facilities and such are separately billed to the state. Including these components the SIPRI and the IISS, London, puts China's defence spending at several times these levels and next only to the US.

The fact is that the percentage rise of defence budget has been well over double digits every year for the last several years. Much of that indeed is due to increased personnel costs and salaries, as claimed by Beijing. For, the salaries traditionally in the PLA have been low and now it has to compete with the civil private sector for high quality manpower. Some compensation package has also been built into the budget as incentive to the PLA for giving up its many private business ventures till only a few years ago. The reality of Chinese defence modernisation is sustained by this steady increase in annual spending. Indeed the rapid growth in China's GDP has ensured that money will not restrain China's defence modernisation when it decides to rapidly enhance the quality and quantity of its weaponry.

In addition to the 2.5 million strong PLA, there are other major forces which are available to the state and placed under the Ministry of Defence. These are the Civil Air Defence, the Peoples Armed Police, the Militia and the Reserve. Regulations for these have in recent years been streamlined making them more professional.

A separate chapter has been devoted to relations between the armed forces and the people. In a totalitarian system, there will always remain a strain between the people and the coercive forces of the state. In China the question of state legitimacy makes this an even more important. The Fourth Generation Leaders are particularly concerned and are keen to overcome the Tinanmen legacy. Just as the civil population is asked to provide special treatment to soldiers and families, soldiers are now tasked to concentrate on nation building and particularly play a leading role in managing disasters and natural calamities.

Finally, the report highlights the rapidly growing role of the PLA in international security including participation in UN peacekeeping operations. Since the 1990's the PLA has been actively engaged in peace operations around the world contributing some 3,362 military persons in 13 peacekeeping operations. From the growing numbers of PLA personnel who have taken part in these operations as well as proceeded abroad for training and other international missions, it can be confidently claimed that the PLA is no longer the isolated force that it was during the first four decades of the Republic.

The 2004 White Paper does not indeed provide many new insights in to the PLA, but it will indeed go some distance in informing the world of China's 'peaceful rise'. In recent years the PLA is a much more open entity with greater transparency in all its activities. That is why these reports no longer attract a great deal of international attention apart from specialist PLA watchers.

What should India note from this paper? There are many issues but let me highlight three. First is the very sustained and deliberate effort at modernisation with emphasis on improving doctrine, training and upgrading manpower. Second is its steady emergence as a factor in international security and peacekeeping. Finally, its leadership restructuring, including a much younger age profile for its officer corps, which has a decisive advantage over India.

Peace and security in Asia will increasingly depend on our ability to comprehensively understand and engage China including its PLA.