You need about 3000 thousand warheads to put USA/Russia out of action ( including duds, intercepts, malfunctions, etc), from what I've seen speculated
China now has around 300, give or take. It does not need more as it's arsenal is intended to counter India, rather than SUA/Russia (China was a nuclear power back in the '70s and almost got nuked by the Soviets, who couldn't care less about their nuclear response). Same holds true now.
This is also the reason that they have a no first use policy - ie , don't start a war that you can't win.
If the decision is made to massively increase the Chinese arsenal (which it won't because there is no gain in it, on the contrary) , things would look like this : China gets 1000 nukes (just a figure) > Japan gets nukes, > S Korea starts nuclear program > Indonesia starts... and the ball starts rolling. At that point, besides the obvious danger of things going south, and fast, China loses it's conventional military edge (with everyone having nukes it doesn't matter that much anymore as things are bound to get nuclear in any conflict with it's neighbours). Lose-Lose situation.
The rest about some uber-secret Chinese nuclear weapons, subs, dragons or whatever is ga-ga and wet dreams
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SinoSoldier my understanding is that MAD is a side effect of nuclear proliferation, and not a purpose in itself, and that both NATO and the former USSR trained to fight
and win a nuclear war.
In that context, everyone will push the button if the time comes, and try to win it out (not that you would need that pretext after your family got incinerated)