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China’s Defence Budget: Unravellingthe Mystery
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Bhartendu K Singh | Date:23 Mar , 2017 0 Comments
Bhartendu K Singh
is in the Indian Defence Accounts Service.

China has just increased its defence expenditure for 2017 – 18 by 7 percent, claiming a slow growth due to sluggish economy. However, those following Chinese defence expenditure over the years find the official allotment of US $ 151 billion (estimated) yet another circumspect figure, a carry-on tradition by China to hide its actual defence expenditure. China could be spending much more than it claims and Sinologists all over the world have little in their kitty to decode this mystery! 

Ever since China started its military modernisationprogramme since the mid-nineties, its defence budget has been a subject of speculation and guesswork. The official Chinese defence budget of one percent of its GDP had very few takers. While Stockholm-based research think tank SIPRI has been reflecting a  conservative view, showing actual defence expenditure around 1.5 times higher than official figures, the US Department of Defence, in fact, started publishing annual reports on Chinese military modernisation where it claimed that China was spending at least three times more than its official figures. The two decade old debate about China’s defence expenditure has continued engendering China – threat theories.

However, of late, the debate is metamorphosing towards futility due to several factors. First, the tendency of fudging defence expenditure is ubiquitous; the propensity is only quite acute in case of China. The Transparency International places countries in five groups on transparency index. China is placed among 21 countries that have ‘low transparency’in its national defence budget. Whatever little official defence budget information is released by the Chinese Government excludes any data on military R & D, infrastructure projects, strategic forces and foreign acquisitions. Second, China has responded, at least symbolically, to international pressure for more transparency by opening up about its defence expenditure and military modernisation in its biannual white papers. At the same time, it has undertaken some baby steps on budgetary and accounting reforms in the defence sector, the contents of which have been selectively leaked on its ministerial website. Third, for long, China that had been the largest arms importer, is importing less and less from the international arms market. Thus, a valuable tool for studying the Chinese defence budget is no more available!

The futility of actual defence expenditure apart, certain developments indicate China’s quantum leap in military modernisation and power projection. First, its military industrial complex (MIC) has become largely self-sufficient, making exports even to Afro-Asian countries. Far from the days of ‘reverse engineering’, the defence R and D sector has crossed many milestones and has been producing higher shelf items like military planes. Second, China has made rapid strides in various aspects of military modernisation and combat capability that could not have taken place without a liberal dose of budget. From being a vulnerable continental power, China is taking strides as a confident maritime power reaching out to far-flung operational areas like Gulf of Aden. In all the conflict zones involving China, the PLA has emerged as a confident party. It has by and large sealed the Taiwan issue in its favour unless the US under President Trump unsettles the matter. China has consolidated its military position in South China Sea unnerving the regional players there. A confident China is now reforming its military commands on ‘theater command’system and is making rapid progress towards space command. All these would not happened with ‘so-called’one percent of GDP on defence budget. Third, there has been a sea change in Chinese strategic behaviour. It is back to aggressive strategic culture and a nationalist foreign policy dictated by the PLA. The hyperboles in the series of white papers on defence notwithstanding, China is busy picking up new fights in the Asia – Pacific region or pricking its neighbors through a series of offensive policies.

Intents, rather than actual budget, have emerged as new debatable propositions about Chinese military capabilities. Several factors allude to this reality bite. First, China would continue to hide its actual defence expenditure in future as well since it is an authoritarian state with very little prospects of democracy that encourage tools like transparency. The PLA enjoys substantial influence in the decision making system and it would continue to shield vital statistics coming out of the pigeon’s hole. Second, China also wants to avoid an open rivalry with the US or other Asian countries by going open with its real defence expenditure figures that might send alarm bells! Its sloganeering of ‘peaceful rise’or ‘peaceful development’may get derailed amidst new energies to the China-threat chorus. Third, China has been hinting towards its strategic intentions in the Asia – Pacific region. Witness for example, this year’s annual government work report that said that China will work, among other things, for ‘providing escort in high seas’. A separate budget report said that China will support the reform of national defence and armed forces, with the aim of building a solid defence and strong armed forces commensurate with China’s international standing and suited to national security and development interests.

With or without actual defence budget figures being available, China is the second largest military spender and military power after the US. Instead of debating China’s actual defence budget, its intents need to be debated for better management of Asian security.


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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

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