Understanding China’s defense spending

The Chinese are persistent and intelligent, and they have said where they intend to end up ー including taking territory that currently belongs to other countries.

China, as with the rest of the world, has had major economic setbacks over the past two years. First its economy was battered by COVID-19 and now it’s facing disruptions from the war in Ukraine that even threaten its oil and food imports.

But that hasn’t stopped China from spending freely on defense.

It has officially announced a 7.1% increase in defense spending this year. Last year the increase was 6.8%. The year before that it was 6.66%. The one before that was 7.5%. It’s been that way for many years – regardless of China’s overall economic performance.

For a nation that has no enemies – other than ones Beijing declares are its enemies – this may seem odd. So what’s going on?

First, the numbers themselves.

Experts say that the officially released military budget numbers (1.45 trillion yuan (CNY) or $ 230 billion USD this year) are far too low. Is this so? Why does the Chinese government hide the true figure? 

One has to assume China’s entire reported defense budget is a lie.  There is absolutely no reason for China to provide a correct number.

Indeed, it works in China’s favor to issue a ‘low’ number ー so it can claim it poses no threat to anyone and ‘spends only 1/3 or 1/4 what the Americans do’.  So it’s the ‘American war mongers’ who are to blame for trouble around the region and the globe.

The actual figure of China’s defense budget is debatable ー and perhaps not worth fixating on. More important is to consider what Beijing gets for its money. A couple useful data points:

• It pays its troops a fraction of what the Americans spend on personnel, and
• In recent years it has launched seven naval warships for every one the US Navy has launched.

It also incorporates civilian transport and logistic capabilities into its military far better than just about any other country ー all off the books, as far as official military expenditure is concerned.

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