Simply put, China has three core strategic interests.
Paramount among them is the maintenance of domestic security. Historically, when China involves itself in global trade, as it did in the 19th and early 20th century, the coastal region prospers, while the interior of China -- which begins about 100 miles from the coast and runs about 1,000 miles to the west -- languishes. Roughly 80 percent of all Chinese citizens currently have household incomes lower than the average household income in Bolivia. Most of China's poor are located west of the richer coastal region; this disparity of wealth time and again has exposed tensions between the interests of the coast and those of the interior. After a failed rising in Shanghai in 1927, Mao Zedong exploited these tensions by undertaking the Long March into the interior, raising a peasant army and ultimately conquering the coastal region. He shut China off from the international trading system, leaving China more united and equal, but extremely poor.
The current government has sought a more wealth-friendly means of achieving stability: buying popular loyalty with mass employment. Plans for industrial expansion are implemented with little thought to markets or margins; instead, maximum employment is the driving goal. Private savings are harnessed to finance the industrial effort, leaving little domestic capital to purchase the output. China must export accordingly.
China's second strategic concern derives from the first. China's industrial base by design produces more than its domestic economy can consume, so China must export goods to the rest of the world while importing raw materials. The Chinese therefore must do everything possible to ensure international demand for their exports. This includes a range of activities, from investing money in the economies of consumer countries to establishing unfettered access to global sea-lanes.
The third strategic interest is in maintaining control over buffer states. The population of the historic Han Chinese heartland is clustered in the eastern third of the country, where ample precipitation distinguishes it from the much more dry and arid central and western thirds. China's physical security therefore depends on controlling the four non-Han Chinese buffer states that surround it: Manchuria, Inner Mongolia, Xinjiang and Tibet. Securing these regions means China can insulate itself from Russia to the north, any attack from the western steppes, and any attack from India or Southeast Asia.
Controlling the buffer states provides China geographical barriers -- jungles, mountains, steppes and the Siberian wasteland -- that are difficult to surmount and creates a defense in depth that puts any attacker at a grave disadvantage.
Today, China faces challenges on all three of these interests.
The economic downturn in Europe and the United States -- China's two main customers -- has exposed Chinese exports to increased competition and decreased appetite. Meanwhile, China has been unable to appropriately increase domestic demand and guarantee access to global sea-lanes independent of what the U.S. Navy is willing to allow.
Those same economic stresses also challenge China domestically. The wealthier coast depends on trade that is now faltering, and the impoverished interior requires subsidies that are difficult to provide when economic growth is slowing substantially.
In addition, two of China's buffer regions are in flux. Elements within Tibet and Xinjiang adamantly resist Han Chinese occupation. China understands that the loss of these regions could pose severe threats to China's security -- particularly if such losses would draw India north of the Himalayas or create a radical Islamic regime in Xinjiang.
The situation in Tibet is potentially the most troubling. Outright war between India and China -- anything beyond minor skirmishes -- is impossible so long as both are separated by the Himalayas. Neither side could logistically sustain large-scale multi-divisional warfare in that terrain. But China and India could threaten one another if they were to cross the Himalayas and establish a military presence on the either side of the mountain chain. For India, the threat would emerge if Chinese forces entered Pakistan in large numbers. For China, the threat would occur if large numbers of Indian troops entered Tibet.