The Growth in Chinese Defense Spending: 3/4 of All Asian Defense Spending


2017-03-06 By Richard Weitz

According to the China Ministry of Finance, the declared defense budget of the People’s Republic of China (PRC) now exceeds one trillion yuan, up from last year’s figure of 950 billion yuan.

The declared sum of 1.044 trillion yuan amounts to some $151 billion on international currency markets.

Chinese Minister of Defense Graphic: Credit: Global Times

Some foreign calculations, such as those by the Stockholm International Peace Research Institute (SIPRI), assess that China’s actual yearly defense spending—calculated by including defense costs excluded by the PRC figure–might exceed $200 billion.

According to SIPRI, which estimates the actual budget as more than 150 percent of the official one,

China devoted 1.9 percent of its gross domestic product on the People’s Liberation Army (PLA) in 2015.

Fu Ying, spokeswoman for the National People’s Congress, who released the figure at a news conference immediately before this year’s opening session of the annual meeting of the Congress, said that China’s military spending would amount to about 1.3 percent of GDP, the same percentage as declared for the past few years.

However, PRC officials indicated they were prepared to raise this figure as needed. “We advocate dialogue for peaceful resolutions, while at the same time, we need to possess the ability to defend our sovereignty and interests,” Fu said. “The strengthening of Chinese capabilities benefits the preservation of peace and security in this region, and not the opposite.”

PRC naval expert Ni Lexiong pointedly recalled that, “You have seen how the Chinese were willing to starve to build an atomic bomb. We do not worry about poverty when we think a larger military is necessary.”

Some Chinese media commentary called for a higher figure already due to expectations, probably correct, that the Trump presidency will present a more serious threat to Beijing’s regional security goals than the departing administration.

The budget released at the opening NPC session did not offer a formal figure, stating only that, “We will support efforts to deepen the reform of national defense and the armed forces, with the aim of building a solid defense and strong armed forces that are commensurate with China’s international standing and are suited to our national security and development interests,” but the Finance Ministry released a figure after Western reporters complained about the lack of transparency.

The figure had been included in the parliamentary reports in previous years.

In his address to parliament, Premier Li said that, despite slowing Chinese economic growth, he insisted that China would “strengthen maritime and air defense as well as border controls and ensure the important operations related to countering terrorism, safeguarding stability, international peacekeeping and providing escorts on the high seas are well organized….”We will boost military training and preparedness, so as to ensure that the sovereignty, security, and development interests are resolutely and effectively safeguarded.”

This figure amounted to some 7 percent over that for 2016, a slightly higher percentage than the growth of the Chinese economy of 6.5 percent, as announced by Premier Li Keqiang in his speech before the Congress.

This sum is slightly lower than the 7.6 percent increase announced last year, and substantially lower than the double-digit increases the PRC government stated occurred from 2010 and 2015.

Nonetheless, the official Chinese defense budget figure excludes spending on foreign (Russian) weapons, state funding for certain military construction and infrastructure, government subsidized research and development, military pensions, and the costs of China’s growing nuclear forces.

Furthermore, the PRC government does not count the costs of China’s paramilitary forces, such as the Chinese Coast Guard. Beijing is cleverly relying on these sub-conventional tools to advance its territorial claims in the East and South China Seas without directly challenging the powerful Japanese and U.S. militaries through overt acts of military aggression.

Putting the increase in perspective, whereas in 1990, the PRC’s defense spending amounted to less than one quarter of the total military spending in East Asia, that figure is now almost three-quarters of the Asian-Pacific region’s aggregate total.

The government’s limited defense transparency compared to Western countries like Japan and the United States (the PRC figure, for instance, does not even identify broad spending totals for the army, navy, or air force); difficulties in establishing purchasing power parity with Western currencies due to China’s semi-command (competitively constrained and limited market) economy;

And separating expenditures on China’s civilian versus military cyber, space, and other dual-use activities presents added complications.

A new constraint on Western understanding of PRC intentions has been the reduced level of Sino-American military engagements in recent months.

The Wall Street Journal observed that the latest budget plus-up “continues a robust modernization program that over the past quarter-century has transformed the Chinese military into a formidable regional power and burgeoning global one, with outlays going to build naval, air force and other capabilities that allow Beijing to project power far from the Chinese mainland.”

Residents hold posters showing late Communist Party leader Mao Zedong during a protest in Jilin, China, on Sunday calling for a boycott of South Korean goods due to the planned deployment in that nation of a U.S. missile-defense system. | AFP-JIJI

The PLA has been using the budget plus-ups to replace outdated Soviet-era weapons with modern systems, which enable the PLA to project power at longer distances with more impact.

This buildup includes new Army, Navy, and Air Forces capabilities as well as a variety of missiles, cyber weapons, and outer space and electronic warfare systems. In 2016 alone, for instance, the PLA Navy was able to launch 22 new warships, amounting to a total displacement of about 150,000 tonnes.

According to IHS Jane’s, China’s defense spending will reach about $233 billion in 2020, and five years later the PLA budget would exceed that of all other Asian countries combined.

In its latest annual edition of the The Military Balance, the International Institute for Strategic Studies recently assessed that China’s military is fast approaching “near parity” with Western militaries in important capabilities. Bonnie Glaser, the director of the China Power Project at the Center for Strategic and International Studies, projects that China’s aggregate budget will exceed that of the United States by 2040.

Even now, though the government has ceased announcing double-digit increases in its budget in 2016, important military reforms have been strengthening the PLA’s immediate operational military capabilities.

These include personnel cuts, new organizations, and additional reforms also promote objectives designed to strengthen the military’s combat effectiveness.

For example, the government has been reducing the number of active-duty troops, creating new structures (Strategic Rocket Forces, a Strategic Support Force, and a separate PLA Army general command headquarters), and strengthening civilian party control through a streamlined command-and-control bodies under a reorganized Central Military Commission (CMC) for both the Military Services as force providers and an operational path for the enhanced joint theater commands that no longer are dominated by the ground forces.

Editor’s Note: While significantly increasing defense spending and pushing out into the South China sea, the Beijing government tries intimidation of South Korea via the “protest” and trade boycott route.

Even though THAAD has nothing to do with China, unless China has a first strike nuclear policy, the Beijing clique is sponsoring “protests” against South Korea’s legitimate defense decision.

Dozens of people holding posters showing late Chinese Communist Party Chairman Mao Zedong protested in northeastern Jilin province on Sunday, calling for a boycott of South Korean goods as part of a backlash against the country’s Lotte Group.

The retail giant has faced growing opposition in China since signing a deal last Tuesday to provide land for a U.S. missile-defense system.

The plan to install the Terminal High-Altitude Area Defense (THAAD) system was prompted by threats from North Korea, but Beijing fears the move will undermine its own military capabilities.

“No to THAAD! Boycott Korean goods!” chanted the protesters.

“Patriotism starts with me! Long live the Communist Party!”

Any US response needs to focus on shaping a 21st century defense capability, rather than recapitalizing yesterday’s force.