The PLA's Intelligent Transformation Enters Deep Waters: A Comprehensive Observation from Budget Growth to AI Militarization

On March 5, 2026, China announced a 7% increase in its defense budget during the National People's Congress, marking the lowest growth rate in five years, yet still far exceeding economic growth targets. Behind this seemingly calm figure lies the most radical transformation in the modernization process of the People's Liberation Army (PLA) — a leap from mechanization and informatization to intelligentization.

Recently, the Center for Security and Emerging Technologies at Georgetown University conducted a systematic analysis of thousands of publicly released PLA procurement documents from the past three years, revealing a shocking fact: the Chinese military is integrating artificial intelligence (AI) technology into its operational systems at an unprecedented speed and breadth. This is not an isolated equipment upgrade, but a comprehensive transformation covering land, sea, air, space, network, and electronic domains.

The Victory Day parade in September 2025 became an important symbol of this transformation. Unlike traditional parades, what attracted global attention this time was not the orderly formations or imposing tanks, but new weapon systems representing the future of warfare: unmanned ground combat vehicles, underwater and aerial autonomous drones, and "Loyal Wingman" systems capable of collaborating with manned aircraft. The concentrated display of these systems sent a clear signal to the outside world — the PLA has made intelligentization the core pillar of its future combat capabilities.

According to official Chinese plans, the modernization of the PLA is divided into three stages: mechanization addresses the question of "whether or not," informatization addresses "whether or not to connect," while intelligentization aims to solve the core operational effectiveness issues of "how fast and how accurately." The first two stages have been largely completed: mechanization has equipped the PLA with modern ships, tanks, and aircraft; informatization has connected these platforms into a network through data links and digital communication networks. Now, the third stage is being vigorously advanced.

The research from Georgetown University reveals the astonishing breadth of the PLA's military applications of AI. In the field of unmanned combat platforms, the PLA is developing drone swarm systems capable of identifying, tracking, and coordinating attacks on targets, as well as various robotic platforms including robotic dogs and humanoid robots. In the decision support domain, the Chinese military is building AI systems that can quickly understand and anticipate enemy movements to compensate for its lack of real combat experience.

In the realm of cyber and information warfare, the PLA's AI experiments are even more radical. Multiple procurement documents indicate that the Chinese military is developing AI tools for automatic detection of network intrusions, systems to enhance military communication resilience, and deepfake technologies for cognitive warfare. The latter is seen as a powerful weapon to influence public opinion and manipulate enemy perceptions. Additionally, PLA personnel are using AI systems to simulate virtual battlefields and enemy behavior to enhance training preparedness for future conflicts.

In the space and maritime domains, the PLA is actively using AI to undermine traditional U.S. advantages. China is openly pursuing satellite strike algorithms and new anti-satellite weapons, including small robots capable of attaching to and incapacitating enemy space platforms. In the maritime domain, the Chinese military is experimenting with various autonomous underwater vehicles and has deployed advanced sensor networks to map and monitor underwater activities, with the ultimate goal of tracking U.S. submarines globally.

It is noteworthy that the militarization of AI by the PLA is not waiting for technological breakthroughs but is adopting a rapid iteration model of "testing, applying, and improving." Many procurement documents set short development cycles, allowing for quick and relatively low-cost experiments across different applications and domains. Meanwhile, Beijing is encouraging domestic tech companies to adapt civilian products for defense applications through subsidies and tax incentives, a military-civil fusion strategy that enables the PLA to fully leverage China's commercial technological advantages in areas such as smart manufacturing, robotics, and battery technology.

From the perspective of underwater combat capabilities, a report from the Washington Times on March 4 indicates that the PLA is rapidly expanding its underwater combat power, with new capabilities including six nuclear-powered attack submarines as "offensive backbones" and at least two nuclear-powered missile submarines for precision strikes. The construction of these platforms is coordinated with the development of AI underwater tracking systems, forming an important part of China's strategy to counter U.S. maritime superiority.

In terms of aerial power, the developing H-20 stealth bomber can perform both nuclear and conventional strike missions, and combined with new medium- to long-range stealth platforms and advanced refueling aircraft like the Y-20U, the PLA's long-range delivery capabilities are undergoing a qualitative leap.

However, the intelligentization transformation is not without its challenges. As demonstrated by the war in Ukraine, developing technologies such as autonomous drones is one thing, but effectively deploying them in a fiercely contested battlefield is another. Rapidly training drone operators, formulating attack plans, and preventing "drone misfires" are capabilities that are as important as the technology itself. Furthermore, training military AI systems requires a large amount of data that is not available on the internet, such as classified images of military platforms or the electromagnetic characteristics of various radars and weapons, and the PLA lacks both real combat experience and these data sets.

On March 7, Xi Jinping delivered an important speech at the plenary meeting of the delegation of the PLA and the Armed Police Force at the National People's Congress, emphasizing the need to fully leverage the unique advantages of enhanced political loyalty within the military and calling for concerted efforts to steadily advance the modernization of national defense and the military. This statement coincides with the ongoing expansion of the PLA's anti-corruption campaign, highlighting that alongside technological modernization, political control and organizational restructuring remain core concerns in the construction of the Chinese military.

From a strategic competition perspective, many of the PLA's AI application concepts are similar to major projects of the U.S. Department of Defense, such as unmanned and autonomous vehicles, computer vision models, and predictive maintenance. The U.S. Department of Defense plans to procure thousands of low-cost, expendable drones through the "Replicator Initiative," while the PLA is also requesting a large number of small, inexpensive drones for future conflicts. However, the two militaries differ in their emphasis on AI-assisted decision-making: the U.S. military stresses "appropriate human judgment," while the PLA may lean towards using AI decision support systems to compensate for the inexperience of its officer corps, which could lead to misjudgments of military and diplomatic signals due to over-reliance on computer-generated analyses.

Overall, although China's economic growth target has been lowered from the past three years' "around 5%" to a range of "4.5%-5%" for 2026, the 7% growth rate in the defense budget indicates Beijing's long-term commitment to military modernization. The PLA's intelligentization transformation is not merely a technical upgrade, but a systematic change aimed at gaining military advantages over the U.S. through emerging technologies. The outcome of this competition will depend on which side can more quickly develop and scale new capabilities and operational improvements. Given the pace of evolution in many defense technologies, technological advantages may be hard-won yet fleeting, indicating that the military technology competition between China and the U.S. has entered a more intense and uncertain new phase.