This report provides background on China's economic rise, describes its current economic structure, identifies the challenges China faces to maintain economic growth, and discusses the challenges, opportunities, and implications for the United States.

This report focuses on the implications that certain elements of China's military modernization may have for future required U.S. Navy capabilities. The issue for Congress addressed in this report is: How should China's military modernization be factored into decisions about U.S. Navy programs? Congress's decisions on this issue could significantly affect future U.S. Navy capabilities, U.S. Navy funding requirements, and the U.S. defense industrial base, including the shipbuilding industry.