China is concerned about the resurgence of extreme nationalism within Russia, which could lead to territorial demands on China.

China is also constantly worried about NATO's eastward expansion. The existence of NATO forces in neighboring countries would undermine its border security.

Against this background of regional tensions, improved relations across the Taiwan Strait are not reason enough for the Chinese People's Liberation Army to relax its level of preparedness. All of the issues outlined above have been discussed frequently in numerous military and diplomatic documents over the past 10 years.

China's development and deployment of military equipment correspond to all the conflict scenarios it foresees. First, priority attention has been placed on the development of combat equipment related to the air force, navy and landing operations, all of which are directed at Taiwan.

Second, in response to possible intervention by U.S. forces, China has actively developed and deployed intercontinental ballistic missiles, intermediate-range ballistic missiles, anti-satellite weapons, space warfare capabilities, and ballistic-missile and attack submarines.

Third, to cope with front lines in Vietnam and India, China has developed mountain warfare armored vehicles and medium- and short-range ballistic missiles. An upgraded IRBM is now deployed in Yunnan province, which borders Vietnam.

Fourth, in the direction of Japan, the PLA has deployed DF-3A IRBMs in coastal Shandong province and reinforced the combat capabilities of its No. 19 Division based in that region.

Fifth, with an eye to Southeast Asia and India, a large submarine base has been established on Hainan Island and electronic surveillance stations set up on the Xisha Islands (also known as the Paracel Islands) in the South China Sea at China's southern tip.

Sixth, in response to the presence of U.S. and NATO forces in Afghanistan, China has sped up the deployment of HQ-9 long-range ground-to-air missiles in major metropolitan centers and strengthened its No. 6 Fighter Division in the Lanzhou Military Region of central China. In the direction of Russia, China is now actively developing and upgrading new main battle tanks and armored vehicles.

Given the need to cover all the scenarios described above, it is likely that China's military spending will continue to rise, with the 2009 military budget reflecting at least a 10-percent increase over this year.

Some equipment intended for combat operations against Taiwan will be replaced, and there will be some adjustments in the deployment of this equipment. The pressure to maintain a vigilant "military deterrence" against Taiwan is expected to continue.

It is worth noting, however, that with the warming of cross-strait relations and the balance of military power in the Taiwan Strait already tilted in China's favor, the PLA will likely focus its military buildup in other directions, particularly in the upgrading of long-range military projection capability.

Close attention should be paid to China's building of a new aircraft carrier fleet, its development and deployment of more ICBMs, SSBNs (ballistic missile submarines), new bombers and next-generation fighters. The Chinese military industry will also take this opportunity to put greater effort and expenditure into upgrading and expanding its research for the development of new weapons systems.

(Andrei Chang is editor in chief of Kanwa Defense Review Monthly, registered in Toronto.)