Over the past two decades, China's People's Liberation Army has transformed itself from a large but antiquated force into a capable, modern military. Its technology and operational proficiency still lag behind those of the United States, but it has rapidly narrowed the gap. Moreover, China enjoys the advantage of proximity in most plausible conflict scenarios, and geographical advantage would likely neutralize many U.S. military strengths. A sound understanding of regional military issues - including forces, geography, and the evolving balance of power - will be essential for establishing appropriate U.S. political and military policies in Asia. This RAND study analyzes the development of respective Chinese and U.S. military capabilities.