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Members of the Chinese Navy honour guard wait for U.S. Secretary of Defense Robert Gates during his visit to Beijing this week.

Larry Downing-Pool/Getty Images/Larry Downing-Pool/Getty Images

When the Soviet Union began building the aircraft carrier Varyag more than a quarter of a century ago, the 300-metre ship was expected to one day sail provocatively into the Mediterranean Sea, a Cold War challenge to American naval dominance in that part of the globe.

When it finally sets to sea under its own power some time this year or next, the Varyag will have a very different master and mission. Today, the construction project that began in 1985 in what is now the Ukrainian port of Mykolaiv is being completed in the Chinese hub of Dalian.

A world and an era away from its original intended purpose, the Varyag will instead feed fears and suspicions between the United States and China, its latest military rival.

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The Varyag is far from the pinnacle of China's naval ambitions. In fact, it's not clear that the ship will ever be anything but a floating test runway for the pilots and planes that will eventually be transferred to a larger and indigenously developed aircraft carrier that China hints could be mission-ready by 2015. As many as six aircraft carriers are believed to be either planned or under construction by the People's Liberation Army Navy.

The status of the Varyag (a Cold War relic that once appeared fated to become a floating casino in Macao) is now of major concern in Washington, and among neighbours such as Japan, Taiwan and Vietnam. This fact speaks to a lingering truth about international relations: Even in a world of satellite weaponry and cyberwars, naval power remains as relevant in 2011 as it was in centuries past.

Despite all the advances in diplomacy, communications and military hardware, the way a superpower expresses its displeasure hasn't changed much since 1841, when an iron-sided British warship appropriately named the Nemesis sailed up the Yangtze River during the First Opium War, helping force the Chinese to cede Hong Kong Island to Queen Victoria's empire.

Gunboats still matter. Part of it is national pride, with aircraft carriers – the successor to the man-of-wars, ironclads and battleships of centuries past – bestowing an aura of power. But in a globalized era, where key resources and export markets are often halfway around the world, they are also vital to securing trade routes. And in disputes between nations, there remain few more effective methods of backing up an argument.

Take the recent flare-up of tensions of the Korean Peninsula. After North Korean artillery shelled a South Korean island late last year, the U.S. demanded that China rein in its ally. When Beijing didn't act, the U.S. dispatched one of its 11 aircraft carriers – the 98,000-tonne USS George Washington – to the Yellow Sea, carrying out joint exercises with the South Korean navy that were not only close to the disputed sea border with the North, but on the edge of waters that China considers within its exclusive economic zone.

America sends in the big guns

As that crisis simmers on – and with tensions between Beijing and Washington still on the rise – the U.S. is stepping up its gunboat diplomacy, simultaneously deploying three carrier battle groups (each of which also consists of a guided-missile cruiser, destroyers and smaller craft, plus a standard complement of 90 warplanes) in the western Pacific Ocean for the first time since shortly after the end of the Second World War.

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The U.S. has also in recent years transferred most of its nuclear-powered submarine fleet to the Pacific, a shift driven in large part by China's efforts to upgrade and expand its naval capability. "I have moved from being curious to being genuinely concerned," Admiral Mike Mullen, the chairman of the U.S. Joint Chiefs of Staff, said last year of China's military modernizations.

For now, the U.S. still rules the Pacific. But while China's own surface fleet may not be able to challenge that for several years, if not decades, it has already developed a weapon that could at least force the carrier fleet to give the country's coast a wider berth: advanced surface-to-sea missiles, dubbed "carrier-busters" because of their supposed ability to sink the giant ships. And after years of focusing on defending its coast and preparing for a potential war over Taiwan, China's navy now talks of "far-sea defence."

Chinese strategists see aircraft carriers as crucial to a deep-sea navy that would finally allow China to push beyond the ring of American bases in Japan, Taiwan and the Philippines. As the world's largest exporter, and a major importer of oil and other resources from Africa and the Middle East, it is no longer willing to trust the U.S. and other foreign navies to protect its ships.

"We have our interests and duties all over the world and need a naval force [to protect them] It's not a challenge to anyone, we would just like to join the carrier club," said Xu Guangyu, a retired PLA general. "It is a natural for the Chinese navy to go beyond the first island chain, to go to the far Pacific and other oceans. No one can stop China from doing this."

For China, it's all about the oil

Others see a simpler explanation for China's naval buildup in recent years.

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"It's about oil, oil, oil. Everything they're preparing, the stealth fighter, aircraft carriers, is to protect their oil resources," said Andrei Chang, chief editor of Kanwa Defense Review, a magazine that reports on China's military.

He pointed to the long route that tankers carrying oil from the Middle East and Africa have to take to reach Chinese ports, and the multitude of vulnerable points along the way, particularly the Strait of Malacca. Eighty per cent of China's oil imports flow through the narrow sea corridor between Malaysia and the Indonesian island of Sumatra, an artery that could quickly be closed by the U.S. Navy in the event of a conflict.

"The sea chain is very long for them. That's why they say they need a huge navy," Mr. Chang said.

Last year, a Chinese frigate and supply ship docked in Abu Dhabi, the first modern visit by warships from the Middle Kingdom to the oil-rich Middle East. Chinese vessels have taken part in anti-piracy patrols off the coast of Somalia, and a Chinese admiral proposed building a naval base in the Gulf of Aden to support those operations. China already has warships based in Myanmar and is building a deepwater port on the south coast of Sri Lanka that could be put to similar use.

By some counts, the PLA Navy already possesses more "principal combat ships" – submarines, destroyers, frigates, etc. – than the U.S. Navy, though the American craft are considered to be technologically far superior to the Chinese ships.

"The U.S. seems to take as granted its right to exert absolute control over the world's skies and oceans. However, the world we live in is not only vast but also changing fast. The U.S., however powerful it may be, cannot rule alone," the Communist Party-controlled Global Times newspaper wrote this week after a visit to Beijing by U.S. Defence Secretary Robert Gates.

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That trip – which came after China suspended military-to-military ties for a year to protest against U.S. arms sales to Taiwan – was marked by the test flight of China's first stealth fighter, the J-20. That the J-20 prototype is so far along came as a surprise to U.S. officials, who had previously speculated that such a test flight was years away.

If the simmering tensions in the region ever develop into anything more than that, it will probably be over the resource-rich waters of the South China Sea.

Every country in the region has its own map of the sea, which ranks high among the world's busiest shipping lanes. China, Taiwan, Vietnam, Malaysia, Indonesia and the Philippines all lay claim to the tiny island groups there, and more important, a share of the natural wealth (eight billion to 28 billion barrels of oil) believed to lie beneath the surrounding waters.

China's claim is by far the most expansive, encompassing islands hundreds of kilometres from its shores and thus nearly the entire South China Sea. The decades-old claim, and the disputes with its neighbours that it has fed, took on greater urgency last year when Chinese officials reportedly told their U.S. counterparts that the entire sea was now considered a "core national interest" – language previously reserved for red-line territorial issues such as Taiwan and Tibet, over which Beijing has expressed a willingness to go to war.

The statement provoked a hasty response from U.S. Secretary of State Hillary Clinton, who flew to Hanoi to deliver the message that the U.S. considered freedom of navigation in these waters to be a "national interest" of its own.

The hub of China's rapid naval buildup is Yalong Bay, a deepwater port on the south coast of Hainan, a tropical island in the South China Sea better known for drawing holidaymakers from colder parts of the country. A 900-kilometre stretch of coast has been converted into China's most advanced naval base, the primary launching point for its fleet of submarines, which has been growing at a pace of three a year since 1995. Hainan is also the hub of China's aircraft-carrier building activity.

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Though China's leaders speak of the need for "harmonious" oceans and of using their new naval capabilities for fighting piracy and providing humanitarian assistance, its neighbours are clearly anxious. Over the next five years, regional navies will invest about $60-billion – more than the combined spending of the North Atlantic Treaty Organization, excluding the U.S. – on upgrading their own surface forces and submarine fleets.

No country is more concerned about China's rapid naval buildup than the region's former dominant sea power, Japan. Relations between Beijing and Tokyo have yet to recover from a September showdown sparked by the collision of a Chinese fishing trawler and a Japanese coast guard boat. After China revealed the lengths it was willing to go to in the dispute, tightening exports of a key resource crucial to the Japanese high-tech industry, Japan was forced into a humiliating retreat that hasn't been forgotten.

Last month, Japan's Self-Defence Forces released a new white paper outlining a major shift in policy. The army will slash its spending on battle tanks and invest instead in new submarines and warships. The military's sharp edge will now point south and west, toward the waters between it and China.

"Rising China generally, and its naval modernization specifically, is posing an uncommon and unprecedented challenge for the region and beyond," said Yuki Asaba, associate professor of international relations at Yamaguchi Prefectural University in Japan. "Japan needs to make it clear that further provocations will not be tolerated."

The fishing-boat incident occurred near an uninhabited island chain in the East China Sea, known as the Senkaku in Japan and the Diaoyu in China, controlled by Japan but claimed by China. And it was far from an isolated event. The most dramatic statement of China's growing naval reach came last April, when a flotilla of two submarines and eight destroyers cruised between Japanese islands on their way to the deeper Pacific. When two Japanese destroyers were assigned to shadow them, a Chinese helicopter buzzed within 100 metres of them.

Gen. Xu, the ex-PLA officer, warned that Japan and others needed to get used to the new pecking order in the region. "When a country gets more powerful, it takes on more responsibility in the world. As China gets more powerful, its troops and ships will go out farther," he said.

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"The neighbours, especially those who bullied us in history, should calm down and adapt better to China's rise."

Mark MacKinnon is The Globe and Mail's China correspondent.

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