I now present the first part of China's navy cruises into Pacific ascendancy, by Peter J. Brown, April 22, 2010 (please read the entire original for content and to review cited sources):
In mid-April, two Japanese Maritime Self Defense Force (MSDF) destroyers, the Choukai and Suzunami, unexpectedly encountered several Chinese People's Liberation Army Navy (PLAN) warships, including a pair of submarines and eight destroyers, approximately 140 kilometers west-southwest of Okinawa near the Nansei (Ryukyu) Islands.
The Chinese warships were heading out of the East China Sea and into the Western Pacific. They passed north of Miyako Island - the northernmost island in the Nansei group - through the Miyako Strait and then proceeded to head southeast.
They were there to practice anti-submarine warfare, underway refueling and helicopter flight training, to name a few of the procedures.
During one PLAN helicopter flight, the Suzunami was subjected to a close encounter which prompted a formal protest by Japan's SDF Joint Staff Office. The presence of the PLAN subs also sparked a protest.
Japan's Defense Minister Kitazawa Toshimi was upset that so many Chinese warships had sailed so near to Japan on their way to the western Pacific Ocean without any prior notification by China. 
Kitazawa said nothing about whether or not any of the five new Chinese earth observation/military reconnaissance satellites launched since late 2009 were engaged in assisting the PLAN warships during their unannounced passage.
Gary Li, a PLA specialist at the London-based Institute of International and Strategic Studies (IISS) said the PLAN's actions in this instance were very significant. Li describes the incident as unprecedented and an attempt by China to "send a very clear message to the region that it should be prepared to see a China unafraid to really test its reach and move into new areas". 
Drew Thompson, director of China Studies at The Nixon Center in Washington, DC, did not agree with Li, adding that the recent PLAN "blue water" activity off Japan did not prove that the PLAN has entered a disturbing new phase in its development.
"Calling this a new phase is overly dramatic. The PLA has been working for a long time on expanding their ability to operate farther from their shores and conduct joint operations closely coordinating air, land and sea platforms," said Thompson. "These PLAN exercises certainly demonstrate expanded capabilities, or at least the willingness to exercise the hardware they have more vigorously, but it should be viewed as part of a continuum rather than a departure from a previous period of development."
The article goes on to address the developing capabilities, predicting as many as four carrier battle groups and four amphibious groups in the next two decades. Current capabilities include support of naval operations by a satellite network that is growing in size and quality, and by land-based airpower - and it should be noted that the People's Liberation Army Air Force (PLAAF - the Chinese Air Force) is very large, if not as technologically equipped as western air forces.
[Abraham] Denmark [a fellow at the Center for a New American Security in Washington, DC] cautions that whatever conclusions are drawn, there is no question that PLAN still has a long way to go before it can be classified as a formidable "blue water" naval force.
"The PLAN currently does not have the experience required to operate for extended periods of time far from home, nor does it have sufficient numbers of ships to be able to operate in the Indian Ocean without significantly diminishing its ability to respond to threats closer to home," said Denmark. "Moreover, the PLA is traditionally dominated by leaders with experience in ground operations, and significant doctrinal and conceptual changes will have to take place within the PLA before the PLAN would be able to protect SLOCs."
Operations far from home - for example, in the Indian Ocean and the Middle East - do not have an adequate support network, leaving the Chinese Navy at the end of a long and tenuous supply line that stretches through places where the line is easy to interdict, and past potential enemies, including the US and India.
But such operations are increasingly becoming potentially necessary, as Chinese interests spread around the globe, both increasing the possibility that China may need to defend those interests, and increasing the opportunities China has to establish bases from which to defend them. (For some pretty pics, see Time Photo Essay: China Goes to Africa.) From China's Navy Grows, and the World Watches Warily by Ishaan Tharoor, May 13, 2009:
Though publicly muted, there is growing concern in capitals across the rest of Asia over Beijing's burgeoning pre-eminence. "There's no escaping the fact that, in the past ten years, China's negotiating power has increased while others have weakened," says C. Raja Mohan, a leading Indian foreign policy expert and professor at Singapore's S. Rajaratnam School for International Studies.
(See also The Chinese Navy: How Big a Threat to the U.S.? by Bill Powell, April 21, 2009, for thoughts on how recent developments present historic opportunities.)
Though China appears determined to challenge US naval supremacy during the course of this century (and, while Americans think perhaps as far as the next election, China plans in decades), current capabilities and trends seem to target the Indian Ocean.
Here we review the last half of Who will rule the waves? by Harsh V. Pant, August 7, 2009:
As China's economic and political prowess rise, there has also been commensurate growth in its Indian Ocean profile. China is acquiring naval bases at crucial choke points not only to serve its economic interests but also to enhance its strategic presence in the region. China realizes that its maritime strength will give it the strategic leverage to emerge as the regional hegemon.
China's growing reliance on bases across the Indian Ocean is a response to its perceived vulnerability, given the logistic constraints that it faces due to the distance from its own area of operation. China is consolidating power over the South China Sea and the Indian Ocean with an eye on India, something that comes out clearly in a secret memorandum issued by the director of the General Logistic Department of the PLA: "We can no longer accept the Indian Ocean as only for the Indians. We are taking armed conflicts in the region into account."
China has deployed its Jin class submarines at a submarine base near Sanya on the southern tip of Hainan Island in the South China Sea, raising alarm in India. The base is merely 1,200 nautical miles from the Malacca Strait and will be its closest access point to the Indian Ocean. The base also has an underground facility that can hide the movement of submarines.
The concentration of strategic naval forces at Sanya will further propel China toward consolidating its control over the Indian Ocean region. The presence of access tunnels on the mouth of the deep water base is particularly troubling for India as it will have strategic implications, enabling China to interdict shipping at three choke points in the Indian Ocean.
As the ability of China's navy to project power in the Indian Ocean region grows, India is likely to feel even more vulnerable and restricted in its freedom to maneuver despite enjoying distinct geographical advantages. Of particular note is what has been termed China's "string of pearls" strategy of bases and diplomatic ties, which has significantly expanded China's strategic depth in India's backyard. This includes the Gwadar port in Pakistan, naval bases in Burma, electronic intelligence-gathering facilities on islands in the Bay of Bengal, construction of a canal across the Kra Isthmus in Thailand, a military agreement with Cambodia, and the buildup of forces in the South China Sea.
Given that almost 80 percent of China's oil passes through the Strait of Malacca, Beijing is reluctant to rely on U.S. naval power for unhindered access to energy and so has decided to build up its naval power along the sea routes from the Persian Gulf to the South China Sea. China is also courting other states in South Asia by building container ports at Chittagong in Bangladesh and at Hambantota, Sri Lanka, as well as by helping to build a naval base at Marao in the Maldives.
China will have great difficulty in exerting as much sway in the Indian Ocean as India does. Still, the steps that China takes to protect and enhance its interests in the region will generate apprehensions in India, thus engendering a classic security dilemma between the two Asian giants.
Even from its southern base near Sanya, to get to the Indian Ocean, PLAN units still have quite a distance to travel. It is 1200 NM across the South China Sea from Sanya to the Malacca Straits.
These 1200 NM are past Vietnam, a nation with which China has historically not had the best of relations, despite their de facto cooperation against the US during the Vietnam War. Today, Vietnam's relations with the US are warming considerably, and India is cultivating Vietnam as an ally as well.
The Malacca Straits area itself is choke point vulnerable to interdiction, running between Malaysia and Indonesia. Once there, Chinese naval forces must transit the Andaman (or Burma) Sea.
One border of the Andaman Sea is India's Andaman and Nicobar Islands Union Territory, a location the Indian Navy routinely exercises to defend.
Once past this barrier of islands, Chinese units, far from home, will be in an ocean geographically dominated by India, whose air and naval forces, operating from home bases and with secure internal supply lines, will be positioned to interfere at will with Chinese operations - assuming the military capability to do so has been developed by India.
As this series continues, we will look at other aspects of China's projection of economic, political and military power into the coastal regions near the Indian Ocean. Assuming the PLAN will not be able to credibly threaten US interests this far from home, but may be able to threaten the interests of traditional rival India, we will, in other posts, also examine some of India's strategic and political countermoves, as well as relevant Indian military developments. For now, may I suggest a previous post entitled Indian Naval Upgrade?