China’s Defence, Domestic Security Spending to Grow

A National People’s Congress spokesman has announced a planned 11.2% increase in China’s defence spending to 670 billion yuan (US$106.4 billion) in 2012. Though down slightly from last year’s 12.7% rise, the defence spending figure is unlikely to put others in the region at ease, but should satisfy domestic parties such as the Global Times newspaper, which last week urged a solid double-digit rise. From Jeremy Page at The Wall Street Journal:

“China’s limited military strength is aimed at safeguarding sovereignty, national security and territorial integrity and will not pose a threat to other countries,” Mr Li said. He said China’s military spending had decreased as a proportion of GDP and overall fiscal expenditure, and was still relatively small compared to that of the U.S. He said China’s defense spending was 1.28% of GDP in 2011. The U.S.’s spending on defense equaled 4.8% of its GDP in 2010, according to the World Bank.

“You see, China has 1.3 billion people, a large territory and long coastline, but our defense spending is relatively low compared with other major countries,” he said. He added that the defense budget would mostly be spent on daily necessities, training and equipment for military personnel but also covered “research, experiment, procurement, repair, transport and storage of all weapons and equipment, including new types of weapons ….”

Spending on external defence will once more be outweighed by expenditure on domestic security, set to climb 11.5% to 701.8 billion yuan ($111.4 billion). From Reuters:

The numbers show how vigilant China’s ruling Communist Party is against unrest, despite robust economic growth and years of budget rises for law-and-order agencies, which pushed outlays on them past military outlays for the first time in 2010.

The rise in China’s budget for police, state security, armed militia, courts and jails and other items of “public security” was unveiled in the Ministry of Finance’s report issued at the start of the annual parliamentary session.

Bloomberg’s Michael Forsythe notes that China’s defence spending more than doubled between 2006 and 2011, while dropping slightly as a percentage of GDP. A recent report from IHS Jane’s predicted a further doubling by 2015, but the newly announced figure falls well short of the 18.5% annual increase necessary for this to occur. Nevertheless, official figures do not tell the whole story, as Forsythe explains:

U.S. analysts say actual Chinese defense spending is much higher than the amount announced by Li yesterday. Phillip Saunders, director of the Center for the Study of Chinese Military Affairs at National Defense University in Washington, estimates China’s true defense spending is 50 percent higher than the official budget because items such as research and development as well as foreign weapons procurement are not included. Li said research and procurement are included.

Taylor Fravel, a professor at the Massachusetts Institute of Technology who studies China’s relations with its neighbors, said the number of off-budget items such has foreign arms procurement have decreased in recent years. China includes support for veterans in its budget while the U.S. does not, Fravel said.

The drop in foreign procurement reflects Beijing’s determined drive towards military self-sufficiency. But the the prospective purchase of Su-35 fighters from Russia suggests a setback, according to Trefor Moss at The Diplomat:

China isn’t transparent about defense procurement, so nobody knows for sure whether buying the Su-35 has always been part of its strategy, or whether it’s an admission of failure. But it’s been a decade since China has ordered any foreign jets – Russian Sukhoi Su-27s and Su-30s – for the People’s Liberation Army Air Force (PLAAF), leading many aviation analysts to conclude that the Chinese would only return to the international market if they had no choice.

Now, with both India and Japan ordering advanced new fighter aircraft, the PLAAF may have determined that it needs the new Russian jets as a stopgap while the Chinese aerospace industry continues to work through some critical technology challenges, notably aircraft engines and radar systems. By ordering the Su-35, China’s defense planners would essentially be demonstrating that they aren’t willing to gamble on the J-20 and the other advanced planes that the Chinese defense industry is working on.

March 4, 2012 6:32 PM
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