China’s defense budget signals will to outmatch US

Beijing has been clear about its desire to vanquish US and has the capacity for near limitless domestic defense spending

It’s that time of year when the People’s Republic of China (PRC) announces its defense budget. This year, defense spending is set to increase nearly 6.8% after last year’s 6.6% rise. Beijing perhaps only issues these figures as a favor to the Pentagon and US think tanks.

How’s that?

In the US a defense budget works as follows: Congress authorizes a certain amount of money to be spent on “defense.” Say, US$700 billion. The Department of Defense and the military services then have to live within that amount. If they over-spend, they’re Out of Schlitz, to borrow an old beer commercial jingle. And they’ll have to wait until next year, or else beg for something extra.

It’s not so different from our personal budgets and how we manage our income and expenses.

So it sounds familiar to us when China announces that it is spending a certain amount on defense. Analysts will argue over the “true” figure and whether there are “defense-related” expenditures that don’t go into the official figure. And they’ll try to adjust for the fact that things don’t cost the same in China as in the US.

But it’s basically the same idea: The PLA gets a certain amount of money and has to live within its means. Just like the US military.

Or so one might think.  But it’s in fact different with China. Here’s how:

In America, the secretary of defense goes to the Senate Armed Services Committee and asks: “How big is our budget this year?” The answer: “$700 billion.”

In China, the top dog in the People’s Liberation Army (PLA) goes to the Central Military Commission (atop which sits President Xi Jinping) and asks: “How big is our budget this year?” The answer: “As big as you want it to be.”

In other words, the Chinese government will spend whatever amount it takes, over as many years as needed, to build a military that can defeat the US. And Beijing has been clear about its desire to vanquish the Americans for many years, even if too many experts have refused to believe them.

One Western observer with several decades of experience in China describes how to consider PRC defense spending:

“Think of the Chinese Communist Party as the national central account holder for all of its departments: agriculture, power, coal, education, PLA. The party funds what needs to be funded – on an ongoing basis allocating funds to where party policy priorities are during any given period. It is a continuous process, not an annual budget that you spend until next year’s budget kicks in.”

“Remember, all expenditures in China are in non-convertible yuan. There are 12 regional printing centers that provide whatever funding is needed this week, this month, this year.”

“Funding the PLA’s domestic expenditures is easy – print yuan when and in the amount needed:

• Salaries – print yuan;
• Equipment from Chinese equipment suppliers – print yuan;
• Bombs, guns, bullets from Chinese suppliers – print yuan;
• Uniforms, boots, helmets, belts, caps, underwear (South China Sea island forces were just issued a new-fabric tropical underwear) made in China – print yuan;
• Pensions and payments to retirees – print yuan;
• Whatever the PLA needs that is supplied domestically – print yuan.”

Defense is the top priority for the CCP – and there are no Chinese Bernie Sanders or Green New Dealer types who will complain about the defense budget, for long. And once the PLA can outmatch the US military, every other nation will fall into line. That is worth almost any price.

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