As tensions mount between China and the United States in the western Pacific, countering China’s growing anti-access/area denial (A2/AD) capabilities has been a major focus of the Pentagon’s current Third Offset Strategy, which is designed to leverage US advantages in new and emerging critical technology areas. The brief explores the implications of a push for cutting-edge military technology capabilties for both the US defense industry and the global arms industry and concludes that the United States might have to go it alone, at least in the short term.

Key drivers of change in defense technology in Southeast Asia are regional insecurities and, more recently, the rise of China. Most countries in the region harbor some animosities toward each other that, while not manifesting themselves in a full-blown arms race, at least contribute to an “arms competition” within the community. This results in “tit-for-tat” arms acquisitions inconsistent with mere modernization. China’s recent actions in the South China Sea add to the regional insecurities that seem to rationalize the qualitative arms buildup for the countries involved. While the number of advanced systems remains small, these upgrades have the potential to make conflict much more devastating should it occur.

While many countries in the Asia-Pacific region have extensive local arms industries, in terms of technology innovation these regional producers continue to run a poor third to the United States and Western Europe. Latecomer China may gain the advantage regionally, but it remains to be seen whether its accelerated spending, especially in R&D, will enable it to pull ahead of regional or global competitors.

Israel and Singapore are both countries with small populations and no strategic depth, and both see technology as a crucial force multiplier when it comes to national security. Israel, however, has been much more successful than Singapore in developing a range of indigenous military-technological innovations. The reasons are both geostrategic and cultural. Israel faces a much more looming and imminent threat which demands more military-technological innovation. Moreover, Israel’s informal and anti-hierarchical society is much more supportive than Singapore’s when it comes to risk-taking and experimentation.

The most critical long-term trend affecting the East Asian security environment is the emergence of a more politically and militarily assertive China, driven by its economic growth and its sense of entitlement as a leading power in the region. To a certain extent, this emergence will conflict with a similarly rising India, but mostly it will clash with U.S. security interests in maintaining the (U.S.–predominant) status quo in the region. The region may stay reasonably stable for the next decade, but if trends continue, instability could grow in the western Pacific, particularly the South China Sea.

The position of an arms producing country or region in the global arms industry is dictated by the relative level of its indigenous capabilities for independent defense-related research and development (R&D) and manufacturing. Tier 1 countries such as the United States are considered to have a techonological edge, based on their ability to innovate, over Tier 2 modifiers and adapters such as China and India. Progress in the Chinese aerospace industry demonstrates its rapid trajectory from copier/reproducer of technologies to adaptor/modifier, and, in some cases, developer and designer. Do these trends mean that China is on the verge of becoming a Tier 1 arms producer?