Transformation of the economy and ensured continuation of party rule has priority over the continued push for military reform. China has a small and primitive intercontinental nuclear arsenal and a doctrine of minimal deterrence. The medium and short range missiles are more modern but primarily conventionally tipped. During the early 1980´s China decided to modernize several parts of its arsenal. The modernization was necessary due to aged equipment but was also a hedge against negative international developments. China now has a good chance to develop countermeasures to negate U.S. BMD development. China does not strive for a MAD relationship with the USA or Russia during the current decennium. The nuclear modernization is therefore aimed at securing a credible minimal deterrence vis-a-vi the USA and Russia. Despite developments since 1991 China and Russia are locked in the same geostrategic relationship. This leads to continued concerns for potential conflict. At the same time the U.S. will keep its presence in Asia for the foreseeable future. This will serve to balance a rising and militarily strong China. The regional nuclear arsenal will be kept at a level that assures deterrence of all other regional nuclear actors. China argues strongly against the militarization of space. At the same time China prepares technologically for what is seen as an inivitable development. China successfully launched its first mammed spacecraft in October 2003. Despite its ambivalent support for Taiwan the USA will most likely move to defend Taiwan in case of Chinese hostilities. U.S. failure to do so would lead to serious concerns about the credibility of u.s. nuclear and defence guarantees, concerns that could trigger Japan and South Korea to develop nuclear weapons. Presently the intact nuclear umbrella is being expanded with a BMD component. China, Russia and the USA agree on the need for North Korean nuclear development to cease. China and Russia want to see this done in a peaceful way. The nuclear triangle in south Asia seems to have stabilized after the crisis in 2002 but the nuclear acquisitions in India and Pakistan continue.