Amid an intensifying rivalry with the United States, China is modernizing and significantly expanding its nuclear forces. These developments fuel concerns that China's traditional nuclear strategy premised on a limited nuclear arsenal for assured retaliation and a no-first-use policy is undergoing a major shift. Using Chinese-language materials, an examination of Chinese debates about China's security environment and the future direction of its nuclear strategy finds that a nuclear-conventional entangled security dilemma is emerging between the United States and China. The shift in the conventional balance of force in the region and the U.S. development of lower-yield nuclear weapons has led to greater fears in China of U.S. limited nuclear use in a conflict. Chinese strategists increasingly believe that U.S. nonnuclear strategic capabilities threaten China's nuclear forces. Although there is limited evidence of a shift in its nuclear strategy, China is changing its strategic posture to ensure its second-strike capability, including by relying on advanced conventional weapons (e.g., counterspace capabilities, cyber weapons, and electronic warfare) that can target U.S. missile defense. The dynamics of an entangled security dilemma may weaken arms race stability, and they underscore why it will be challenging for the United States to engage China in nuclear arms control.

How strenuously, and at what risk, should the United States resist China's efforts to dominate the South China Sea? An identification of three options along a continuum—from increased resistance to China's assertive policies on one end to a partial South China Sea retrenchment on the other, with current U.S. policy in the middle—captures the choices facing the United States. An analysis of China's claims and behavior in the South China Sea and of the threat that China poses to U.S. interests concludes that the United States' best option is to maintain its current level of resistance to China's efforts to dominate the South China Sea. China has been cautious in pursuing its goals, which makes the risks of current policy acceptable. Because U.S. security interests are quite limited, a significantly firmer policy, which would generate an increased risk of a high-intensity war with China, is unwarranted. If future China's actions indicate its determination has significantly increased, the United State should, reluctantly, end its military resistance to Chinese pursuit of peacetime control of the South China Sea and adopt a policy of partial South China Sea retrenchment.

Chinese views of nuclear escalation are key to assessing the potential for nuclear escalation in a crisis or armed conflict between the United States and China, but they have not been examined systematically. A review of original Chinese-language sources and interviews with members of China's strategic community suggest that China is skeptical that nuclear escalation could be controlled once nuclear weapons are used and, thus, leaders would be restrained from pursuing even limited use. These views are reflected in China's nuclear operational doctrine (which outlines plans for retaliatory strikes only and lacks any clear plans for limited nuclear use) and its force structure (which lacks tactical nuclear weapons). The long-standing decoupling of Chinese nuclear and conventional strategy, organizational biases within China's strategic community, and the availability of space, cyber, and conventional missile weapons as alternative sources of strategic leverage best explain Chinese views toward nuclear escalation. China's confidence that a U.S.-China conflict would not escalate to the use of nuclear weapons may hamper its ability to identify nuclear escalation risks in such a scenario. Meanwhile, U.S. scholars and policymakers emphasize the risk of inadvertent escalation in a conflict with China, but they are more confident than their Chinese counterparts that the use of nuclear weapons could remain limited. When combined, these contrasting views could create pressure for a U.S.-China conflict to escalate rapidly into an unlimited nuclear war.

Since 1949, China has adopted nine national military strategies, known as “strategic guidelines.” The strategies adopted in 1956, 1980, and 1993 represent major changes in China's military strategy, or efforts by the People's Liberation Army (PLA) to wage war in a new way. Shifts in the conduct of warfare in the international system offer one explanation for why China, a developing country for most of this period, pursued major change in its military strategy. Such shifts in the conduct of warfare should be especially powerful if a gap exists between a state's current strategy and the requirements of future warfare. The PLA has only been able to change strategy, however, when the Chinese Communist Party leadership is united and agrees on basic policies and the structure of authority. When the party is united, it delegates substantial responsibility for military affairs to the PLA leadership, which changes or adjusts military strategy in response to changes in China's security environment.

Whether China will abandon its long-standing nuclear strategy of assured retaliation for a first-use posture will be a critical factor in future U.S.-China strategic stability. In the past decade, advances in U.S. strategic capabilities, especially missile defenses and enhanced long-range conventional strike capacity, could undermine China's nuclear retaliatory capability, which is based on a relatively small force and second-strike posture. An exhaustive review of Chinese writings on military affairs indicates, however, that China is unlikely to abandon its current nuclear strategy of assured retaliation. Instead, China will modestly expand its arsenal, increase the sophistication of its forces, and allow limited ambiguity regarding its pledge not to use nuclear weapons first. This limited ambiguity allows China to use the threat of nuclear retaliation to deter a conventional attack on its nuclear arsenal, without significantly increasing the size of its nuclear forces and triggering a costly arms race. Nevertheless, China's effort to maintain its strategy of assured retaliation while avoiding an arms race could backfire. Those efforts increase the risk that nuclear weapons could be used in a crisis between the United States and China, even though China views this possibility as much less likely than the United States does.

After exploding its first nuclear device in 1964, China did not develop sufficient forces or doctrine to overcome its vulnerability to a first strike by the United States or the Soviet Union for more than three decades. Two factors explain this puzzling willingness to live with nuclear vulnerability: (1) the views and beliefs of senior leaders about the utility of nuclear weapons and the requirements of deterrence, and (2) internal organizational and political constraints on doctrinal innovation. Even as China's technical expertise grew and financial resources for modernization became available after the early 1980s, leadership beliefs have continued to shape China's approach to nuclear strategy, reflecting the idea of assured retaliation (i.e., using the fewest number of weapons to threaten an opponent with a credible second strike). The enduring effect of these leadership ideas has important implications for the trajectory of China's current efforts to modernize its nuclear force.

Although China has been involved in twenty-three territorial disputes with its neighbors since 1949, it has used force in only six of them. The strength of a state's territorial claim, defined as its bargaining power in a dispute, offers one explanation for why and when states escalate territorial disputes to high levels of violence. This bargaining power depends on the amount of contested land that each side controls and on the military power that can be projected over the entire area under dispute. When a state's bargaining power declines relative to that of its adversary, its leaders become more pessimistic about achieving their territorial goals and face strong preventive motivations to seize disputed land or signal resolve through the use of force. Cross-sectional analysis and longitudinal case studies demonstrate that such negative shifts in bargaining power explain the majority of China's uses of force in its territorial disputes.

Since the 1995-96 Taiwan Strait crisis, scholars and policymakers have become increasingly concerned about China's territorial ambitions. Yet China has also used peaceful means to manage conficts, settling seventeen of its twenty-three territorial disputes, often with substantial compromises. This article develops a counterintuitive argument about the effects of domestic confict on foreign policy to explain China's behavior. Contrary to the diversionary war hypothesis, this argument posits that state leaders are more likely to compromise in territorial disputes when confronting internal threats to regime security, including rebellions and legitimacy crises. Regime insecurity best explains China's pattern of compromise and delay in its territorial disputes. China's leaders have compromised when faced with internal threats to regime security, including the revolt in Tibet, the instability following the Great Leap Forward, the legitimacy crisis after the Tiananmen upheaval, and separatist violence in Xinjiang.