Thank you. That's an extremely important issue. I think what many Canadians fail to appreciate is that in the last third of a century, a navy that is numerically as large as the United States Navy has suddenly appeared on the global scene. Just think about that. As I've said to this committee, I think, on previous occasions when I was a young navigating officer in the Royal Navy long ago, the Royal Navy had 152 frigates and destroyers. Now it has 19. The United States Navy has been cut in two numerically since the mid-1980s, the time of Ronald Reagan.
Now what we have is a new great game. Ambassador Grinius referred to it and I think he's absolutely right, but much of that I would suggest to you is going to be played out at sea. What we see is a country that has never paid attention historically to the sea, who saw the sea as a barrier and saw existential threats originating out of Asia, now embracing sea power as a critical instrument of state policy. You can see the shift within China's continually burgeoning defence budget, which has been rising 8%, 9%, 10%, 11% a year for the last 30 years. The reference was just made to the belt and road initiative, Xi's grand, pharaonic undertaking. This is something that I would suggest is entirely new. It's not to suggest that the Middle Kingdom construct has been abandoned, but China is now beginning to reach out beyond its borders in a way that it has never done historically, and the navy is one of the key elements.
What do we see? We see a growing contest in the western Pacific between the United States Navy and the Chinese and, of course, now, with the reference to the Indo-Pacific, we see the Indian Navy struggling to match the rise of the Chinese navy, this grand contest unfolding at sea. Other navies—Japan, South Korea's, and so on—are all beginning to position themselves alongside Americans, Australians, and Indians for some potential contest at sea.
The South China Sea is a complete exercise in highway robbery. This is enough to make a 19th-century British imperialist blush. Here are Marxists taking over territories that simply do not belong to them, and the arguments they advance are completely bogus. But the fact of the matter remains that, like Putin in the Crimea, Xi carefully calibrated the western response and realized that no one would in fact challenge the building of artificial islands in the South China Sea—and, of course, he has simply ridden roughshod right over the International Court of Justice ruling that came down in July 2016. He simply ignored it. That's one of the real threats that we see in the larger order, with nations like China and Russia simply ignoring international order, where lying is a fundamental pillar of the foreign policy.
What the Chinese have done is consolidate their approaches to one of the critical areas of China from a maritime and naval perspective. They now control the South China Sea. It's their lake.