The Economist just did a multipage article about the growth of China and specifically it's military. Until recently the Chinese never really had a cause to project their power beyond their immediate region. They have acquired a few subs from the Russians and are masters are re-engineering much of their military hardware. My guess is they will steal their way into the 21st Century via industrial espionage.
http://www.economist.com/node/179029...ry_id=17902953
http://www.economist.com/node/179086...ry_id=17908622