In the last 20 years China had gone from a coastal force to a navy capable of "exerting its influence. It is clearly looking at a wider area of operations in the Far East, but it also does not like the US placing their carrier battle groups in the area. In due course this could lead to Cold War levels of stand off," a senior Royal Navy officer was quoted, as saying.
Kerry Brown, the China expert at the Royal Institute of International Affairs, warned of "hawkish" elements in the two million strong People's Liberation Army (PLA) who were "very focused" on Taiwan.
"The main source of friction is Taiwan and you cannot rule out a nationalistic military faction coming to power to taking a punt to have a quick go," he said.
Chinese defence expenditure is estimated by the Pentagon to be 50 billion dollars, but analysts believe large chunks of the budget are "squirreled away" and it could be as high as 200 billion dollars, making it the second largest in the world after America.
The PLA is reportedly developing a strategy called the "sea denial campaign" which would prevent America intervening in any conflict with Taiwan, Brown claimed.
Much to America's disgust, China's missile accuracy has been improved from 5km down to 1km. China's own space programme - that some experts believe equals Cape Canaveral in size - is also expanding close to the navy base on Hainan Island.