Adm. Michael Mullen, chairman of the Joint Chiefs of Staff, recently raised eyebrows by noting that China is “developing capabilities” that “seem very focused on the United States Navy and our bases that are in that part of the world.”

There’s actually nothing new here. In fact, what Adm. Mullen said (and more) is described in the Pentagon’s latest report on the military power of China. It was also in last year’s report, and 2007’s report, and 2006’s, and 2005’s, and every report the Pentagon has issued since it began the practice back in 2000.

In case you haven’t read the latest edition, which came out this spring, here are some of the highlights:

Specific to Adm. Mullen’s observation, China has expanded its arsenal of “anti-access and area-denial weapons” and is building “increasingly credible, layered offensive combat power across its borders and into the Western Pacific.” In other words, China is deploying an array of assets aimed at dissuading the U.S. from intervening in what China considers its sphere of influence—and should conflict arise, preventing Washington from projecting its assets into the battle space before Beijing achieves its aims. As the Pentagon put it in 2000, in the event of conflict, Beijing’s goal would be “to achieve a military solution before outside powers could intervene militarily.”

The Pentagon concludes that China “has or is acquiring the ability to hold large surface ships, including aircraft carriers, at risk” with a range of weapons. These include submarines, anti-ship cruise missiles, computer-network attacks, high-tech Russian-built warplanes armed with anti-ship missiles, and even aircraft carriers. The Pentagon reports that China is initiating “a program to train 50 navy pilots to operate fixed-wing aircraft from an aircraft carrier.” Toward that end, China is renovating the former Soviet aircraft carrier Varyag.

The Pentagon’s worries are not limited to China’s air and naval forces, however. China is tooling its military for space and cyberspace operations as well.

China has already brandished its anti-satellite capabilities and is honing its capacity to attack an adversary’s space assets. The Pentagon notes that Chinese military writings emphasize the necessity of “destroying, damaging, and interfering with the enemy’s reconnaissance/observation and communications satellites.” The 2008 Pentagon report quotes Chinese military planners as openly envisioning a “space shock and awe strike…[to] shake the structure of the opponent’s operational system of organization and…create huge psychological impact on the opponent’s policymakers.”

Beijing is also grafting computer-network operations (CNO) into its military planning. These include network attack, network exploitation and network defense. According to the Pentagon, China “has established information warfare units to develop viruses to attack enemy computer systems and networks” and in 2005 “began to incorporate offensive CNO into its exercises, primarily in first strikes against enemy networks.”

The Pentagon estimates China’s total military-related spending for 2008 to be between $105 billion and $150 billion. China’s military budget doubled between 1989 and 1994, almost doubled again between 1994 and 1999, and will likely double for the 2005-2009 period.

Beijing is always quick to remind us that its military budget is just a fraction of America’s, which is true. Of course, the United States plays the role of global stabilizer and defender of last resort. China does not. Moreover, the growth in military spending by China is unmatched anywhere on earth. And as the Australian Department of Defense recently concluded, “The pace, scope and structure of China’s military modernization have the potential to give its neighbors cause for concern.”

This is especially true given the opaque nature of Chinese military plans. In trying to decipher China’s future path, a recent U.S. Joint Forces Command report recalls Deng Xiaoping’s advice that China “disguise its ambition and hide its claws.” The report labels the U.S.-China relationship “one of the great strategic question marks of the next 25 years.”

Questions marks can lead to misunderstandings, and misunderstandings can lead to conflict.

Indeed, U.S. military planners are probably far less worried about China launching an aggressive war than about a miscalculation or series of miscalculations on either side of the Pacific that could lead to some sort of showdown or test of wills. History reminds us that such miscalculations often lead to crises and sometimes spiral out of control:

• In 2003, the U.S. and Britain miscalculated the depth of Saddam Hussein’s duplicity, concluding that if he told his generals he had vast stocks of weapons of mass destruction, he surely had them. Likewise, the allies miscalculated the level of support they would receive from the Iraqi people. Saddam, too, miscalculated, especially the diplomatic strength of France and Russia, the endurance of the U.S. military, and the post-9/11 political changes that swept Washington.
• Thirteen years earlier, Saddam badly miscalculated how the world would react to his invasion of Kuwait. Washington then miscalculated Saddam’s prospects for survival.
• Moscow miscalculated Washington’s reaction to the deployment of missiles in Cuba, which almost triggered a global nuclear war.
• The U.S. miscalculated China’s commitment to North Korea during the Korean War, which extended the war and wasted thousands of lives.
• Britain miscalculated how far Germany would go—until 1939. America made the same mistake with Japan—until 1941. And it seems everyone miscalculated in August 1914.

However, there is good news on the U.S.-China front.

First, Washington and Beijing are taking steps to limit the misunderstandings. The two Pacific powers have set up a hotline known as the Defense Telephone Link (DTL) between the Department of Defense and China’s Ministry of National Defense. The Pentagon notes that Defense Secretary Robert Gates completed the first DTL call in April 2008.

Second, the Pentagon reports that in the past 10 years, China has settled 11 territorial disputes with six of its neighbors. China has improved its stormy relationship with India through trade and military-to-military contacts. The China-Taiwan relationship is calmer than it has been in more than a decade. Moreover, China refused to endorse Russia’s invasion of Georgia.

Third, with U.S.-China trade eclipsing $409 billion in 2008, it would seem the two nations share far too many interests to become enemies. America needs Chinese goods and capital, and China needs American consumers, technology and investment. Surely they would never go to war—by design or by accident.

Yet Adm. Mullen’s pointed observation that Beijing seems “very focused on the United States Navy and our bases that are in that part of the world” serves as reminder that China may be hedging its bets. Of course, Adm. Mullen’s comments and the Pentagon’s orientation of forces in the Pacific suggest that the U.S. is doing the same.

That’s not all bad. China has “a deep respect for U.S. military power,” as the Joint Forces Command concludes. We cannot overstate how important that is in averting crises and keeping the peace.

Peace through strength—what Ronald Reagan prescribed at the end of the Cold War and Winston Churchill at the beginning, what George Washington counseled centuries ago and the Romans millennia ago—still works.

In relation to China, this means maintaining bases in and warm relations with friends from Japan to India to Australia, deploying military forces that can ensure freedom of navigation in the heavens and on the seas, aggressively defending America’s patch of cyberspace, promoting transparency with the People’s Liberation Army through confidence-building exercises and military exchange, and making it clear by word and deed that the United States will be in the 21st century what it was in the 20th—a defender of peace and promoter of prosperity throughout the Pacific.