We use cookies for site personalization and analytics. You can opt out of third party cookies. More info in our privacy policy.   Got it

China’s military spending: is there a new arms race?


It's a biggun': Commander of US Pacific Fleet (right) receives a briefing on capabilities and equipment at the People's Liberation Army (PLA) Navy's South Sea Fleet. US Navy under a Creative Commons Licence

As the world’s second largest military power, China’s announcement of a 12 per cent increase in its military budget has elicited grumbles from Taipei, Tokyo and Washington. But what does this increase signal regarding China’s intentions, and how does it affect the balance of power in the Western Pacific?

China’s military strength over the last decade has been characterised by modernisation and double digit growth. It includes the development of military flagship programs such as its first aircraft carrier and anti-ship hypersonic missiles that can theoretically breach current generation US naval defences.

Moreover the estimated US$132 billion budget probably understates total defence spending since it leaves out many items, including procurement. The true budget is often estimated at almost double the official figures.

The announcement also comes against a background of China’s seemingly uncompromising claims of sovereignty over the whole of the South China Sea and the heightened tensions with Japan over the East China Sea. Likewise the United States has committed to its ‘pivot’ (or rebalance) to Asia, and aims to have 60 per cent of US naval capacity located in the Pacific by 2020. Other major players such as Japan and India are strengthening their defence ties and Japan has also recently announced its own increases in it military budget.

China points out, correctly, that its $US132 billion defence budget is still well below the USA’s level of $527 billion. Nevertheless this comparison, based on market exchange rates, probably understates China’s relative position. Comparing expenditures based on estimates of the actual purchasing power of each currency in its own country suggests that China’s real spending is closer to 70-80 per cent of the United States. Moreover the USA’s budget is declining, and its military is globally stretched.

So is there a new arms race in Asia?

Possibly. But there there is some cause for a more sanguine interpretation of these numbers.

The first thing to note is that this year’s increase in China’s nominal spending is pretty much the same as last year’s increase and, in fact, smaller than the average annual rate of increase since about 2000, of 15 per cent. So, importantly, the defence spending increase is not an acceleration. Rather it is simply ‘business as usual’.

Now double digit growth may not sound like ‘business as usual’, but remember this is China. In China just about everything – roads, cars, steel, guns and butter – has double digit growth.

To see this we only need to look at China’s military spending as a fraction of its total economic spending, measured by GDP, which has been almost constant since 2000. This reveals a much less hawkish picture.

Moreover China’s level of spending, even allowing for under-reporting, represents only about 2 per cent of its GDP. This is approximately the world average (1.9 per cent). Further it is is less than half that of the United State’s relative military spending, which exceeds 4 per cent of GDP. In terms of arms races both of these numbers are dwarfed by the 20 per cent of GDP spent by the Soviet Union in the 1970s – so in these terms it doesn’t look like an arms race.

Thus China’s commitment of economic resources to its military is remarkably average. And the double digit growth in China’s military budget is not a reflection of ‘increased militarisation’, but simply a result of its rapid economic growth. This allows it to increase spending in real terms without any additional stress on the economy.

So as China grows, its potential military capacity has grown commensurately. This is not to deny China’s rise as a military power. But importantly, at this stage at least, there is no sign of an escalation in spending, or an increased commitment to military ambitions.

A growth rate of 12 per cent would be a lot for the USA’s, Japan’s or Australia’s military. But in China, at the moment, it’s pretty much par for the course.

Peter Robertson receives funding from the Australian Research Council.

The Conversation

This article was originally published on The Conversation. Read the original article.

Help us produce more like this

Editor Portrait Patreon is a platform that enables us to offer more to our readership. With a new podcast, eBooks, tote bags and magazine subscriptions on offer, as well as early access to video and articles, we’re very excited about our Patreon! If you’re not on board yet then check it out here.

Support us »

Subscribe   Ethical Shop