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China? And the war on terror? No way. The Chinese are making way more money, even if behind the scenes, with the war on terror going on. Where'd you think the terrorists get their AKs from? China is one of the main producers of AK copies, so I'm pretty sure Norinco would like the current war on terror to go on.
The so-called War on Terror is also doing wonders in dealing damage to their American rivals. Anyway, from a political point of view, China doesn't have a reason to be involved, their country has been unscathed by terrorist attacks and most likely the situation will remain the same for some time to come.
Though it would be an interesting scenario. I'd love to see how the Chinese equipment would handle in the Middle-East. As far as the PLA goes, they haven't seen much modern war. The most recent conflict I can think of is probably the Indian-Sino border skirmishes and Sino-Soviet border fights too, all of which happened way back in the 60s and 70s when they still had to use Type 79s and Type 89s.