China's boasts about its military may soon be put to the test, as new tension with Vietnam in the South China Sea comes on the heels of a months-long standoff with the Philippines. How confident Chinese leaders are in the strength of their armed forces will play a big role in how far they push their territorial claims. It also will indicate whether Beijing is trying to bluff America into staying out of these controversies roiling Asia.

The question is whether the People's Liberation Army is a paper dragon, and the honest answer is mixed. In theory, the growth in the PLA has been startling since the 1990s. Starting from a ground-centric force relying on 1950s technology, and with very little modern air or sea capabilities, China's military is now the second-largest in the world.

Most impressively, it is now able to operate at farther distances from the continent. Its navy can undertake long-endurance anti-piracy missions off the coast of Africa, while its various maritime patrol agencies are a constant presence in the South and East China Seas. Beijing clearly wants to project a blue-water navy, as the development of a 70-ship submarine fleet and the launching of its first aircraft carrier this year show.

The air force is also modernizing, introducing advanced fourth-generation fighters. It is also slowly increasing the complexity of its operations, venturing into more night missions and joint operations where it works with army or navy units. While still overwhelmingly a self-defense force, it can reach most of the contested South China Sea islets.

Then there are the missile forces, all of whose variants—like intercontinental ballistic missiles—have grown since the 1990s. Much attention has been paid to China's advances in an anti-ship ballistic missile, the DF-21, which may be able to target U.S. aircraft carriers.

The problem is these numbers tell only a part of the story. There is far more debate over the quality of China's armed forces than over their quantity or ostensible modernity.

Here is where doubt that Beijing packs a powerful punch grows. China's military does not train nearly as much as its Western counterparts. Pilots have very few flying hours, while the large submarine force rarely transits far away from its bastions near the shore. Nor does China have a large and professional non-commissioned officer corps, which forms the backbone of modern militaries.

In practice, Beijing's military systems and protocols are weak or unknown. Western military officers who have been given access to Chinese naval ships, for example, talk about a lack of rudimentary damage control systems on board, leading some to conclude that these ships may not survive in a conflict.

Meanwhile, we don't know how well-stocked Chinese weapons magazines are. The PLA could run out of munitions fairly early in a fight. We also have no certainty about China's command-and-control system. Finally, there is evidence that the ethos of the PLA is similar to that of the Soviet Union's military, whose doctrinal rigidity removed any sense of initiative from its battlefield commanders. This lack of flexibility and innovation may be the greatest weakness in China's armor.

China's detractors use these data points to dismiss its military might—and while they may be right about these weaknesses, they are actually missing the point. Though the PLA may not be the equivalent of the U.S. military anytime soon (if ever), Beijing's military buildup isn't just to challenge U.S. dominance.

Beijing has other political aims, most importantly regional hegemony, and arguably these are being satisfied. China's military is far larger and more capable than that of any other Asian nation, including Japan. And the risk of local conflict is tied to how confident it feels about the chances of its forces. Last week, Beijing announced it was starting "combat-ready patrols" near the contested Spratly and Paracel islands, in response to Vietnamese air patrols.

Washington is struggling with how to check Beijing's regional ambitions, but faces its own problems. Just keeping America's military presence credible in Asia is increasingly a challenge. The U.S. may possess the capacity to increase its Asian presence, yet it has no current military strategy for doing so.

Washington's rhetoric suggests it is active in the Asia-Pacific, but its actions say otherwise. The big problem is the Pentagon's budget is being cut drastically. Even otherwise, its strategists refuse to deal with the reality of Chinese missiles that could disable American forward bases. They have also not protected adequately against Chinese electronic warfare capabilities, or considered whether America's seven forward-based squadrons of fighter jets in Asia are adequate to counter China's aerospace buildup.

If the U.S. loses its ability to operate at long distances in a timely and persistent manner, China could deny U.S. forces the ability to enter a conflict zone or operate freely once inside. That would give Beijing a far easier road toward achieving its aim of regional hegemony. A paper dragon just might yet best a grounded eagle.

Mr. Auslin is a scholar at the American Enterprise Institute in Washington. Follow him on Twitter @michaelauslin