The problem for China's naval ambitions is that a navy is really a luxury for a continental power. A blue water navy is great for challenging the dominance of the global naval power (that's us), but it doesn't add much to China's security.
Sure, they need a strong enough navy to defend their homeland for naval attack. But that doesn't require more than the ability to operate in the western Pacific. And they want the ability to attack Taiwan and otherwise secure nearby territorial claims. But that can be done more cheaply than building a large power projection blue water navy.
Yes, I know, China needs to secure their imports of critical raw materials and defend their exports. But the level of naval dominance that China would have to build to secure the lines of supply from Africa, the Middle East, and South America all the way back to China is beyond their grasp given that India and America can interrupt China's trade far from China.
So this is encouraging (tip to Instapundit):
China is poised to become the world’s largest producer of shale gas, though that might take a few decades. Still, test drilling has confirmed the Chinese are sitting atop the world’s largest reserves of the unconventional natural gas resource.
If true, that would reduce the pressure on China to build a stronger (and expensive) navy to actually fight for control of the seas and settle for a modest power projection navy to supplement a locally dominant navy. This would free China to build up land power to face Russia, Vietnam, and India (among others) and even focus their land power on expanding access to energy resources in Central Asia as well as land pipelines to Middle Eastern energy resources.
The locally dominant Chinese navy would attempt to keep other fleets away from China, allow China to project power in the Western Pacific, and defend future ballistic missile submarines as a survivable nuclear deterrent (if they follow the current thinking on the issue rather than just bury them in massive tunnel complexes), perhaps in a South China Sea bastion.
A smaller blue water navy built around 3 or 4 big deck carriers (probably more the size of France's carrier or Britain's planned carriers) and the same number of amphibious platforms would allow China to keep a carrier deployed in the Indian Ocean with another that could surge in support, with the amphibs doing the same thing to support a battalion-sized landing element in the area.
Chinese deployments to the central and eastern Pacific or the Atlantic (and Mediterranean extension) only make sense in a "show the flag" sense since Western powers in those areas could decimate any force deployed there with their own naval forces and land-based air power.
It will take decades to see if China will refocus as a land power because the energy resources will take decades to exploit and because China has a way to go for even the more limited naval power that could be appropriate for a land power. And there's inertia and bureaucratic interests involved, too.
But this could be the best thing to happen to our naval situation in a long time.