China’s military capabilities At USD 250 billion in 2018, China’s defence budget is currently the second-largest in the world. It is more than four times Russia’s budget, and almost half of the United States budget. In terms of conventional operational capabilities and experience of war, China is estimated to be far behind the United States. Major investments are being made to modernise ground force capabilities. Space and cyber capabilities are particular priorities. Moreover, China aims to become a major maritime power, which involves building up the country’s military sea power. For more than ten years, China has participated in the international efforts to combat piracy off the coast of Somalia. The armed forces have been reformed, with increased investment in protecting interests abroad. China’s first foreign military base was inaugurated in 2017 in Djibouti. One important element of the development of China’s armed forces and strengthening of its capabilities is the fusion of civilian and military activities. The Chinese State wants to create a cohesive structure, with research, public authorities and the business sector closely tied to the armed forces so that civilian resources can be used for military purposes. It is not possible to draw a clear line between military and civilian. This also applies to academic exchange with other countries, where the Chinese State places individuals at universities and higher education institutions for the purposes of using their knowledge for military ends. The Chinese National Intelligence Law, which establishes that Chinese companies and citizens must assist in intelligence activities, reinforces the civil-military fusion. Using this Law, China can get individual companies and people to act in a coordinated way with a view to strengthening military capabilities and promoting the country’s political and economic ambitions. China in Sweden’s neighbourhood The relationship between China and the US is more confrontational than it has been for a long time. Chinese representatives have stated that the country is prepared for military conflict with the US in the event of any threat to what China considers its core interests, for example Taiwan. Tensions between China and the US could have far-reaching global consequences, and could affect cooperation between Europe and the United States, as well as cooperation between Europe and China. China’s relationship with Russia is developing, although it is associated with uncertainty. The relationship is bound together by a common interest in changing the international system to the advantage of their respective countries, which has led to stronger diplomatic ties and increased trade. Russia currently accounts for 12 per cent of China’s oil imports. Russia is more dependent on China than vice versa. Russia has also fostered security policy and military cooperation with China. This was clearly demonstrated by China’s participation in Russia’s Vostok military exercise in 2018. China also took part in Russia’s Joint Sea military exercise in the Baltic Sea in 2017. China has had observer status in the Arctic Council since 2013, and has a presence in the Arctic via investments in Russia, Iceland and Greenland, 9