Announced in Beijing last week with much fanfare, China’s already colossal official defence budget of US$130 billion is this year set to expand by a whopping 10 per cent.
To calm the nerves of jittery defence planners in Tokyo, Taipei, Manila and Washington, Beijing was quick to insist that this year’s rise was the smallest percentage increase to the defence budget in five years.
Such clarifications are, however, cold comfort for China’s nervous neighbours and other beneficiaries of the US-led strategic status quo.
A radical rewrite of the globe’s military hierarchy is under way, and China will likely end up on top.
A February PricewaterhouseCoopers (PwC) analysis of the globe’s economic trajectory projects that Chinese GDP will grow to nearly 130 per cent of US GDP in market exchange rate terms by mid-century.
Although this story of China’s impending economic primacy is well trodden territory, the likely military implications are rarely explored.
According to the Stockholm International Peace Research Institute, China’s real military spending in 2013 was approximately US$188 billion, or roughly the equivalent of 2 per cent of the country’s GDP. This left China’s defence budget dwarfed by US defence outlays, which at 3.8 per cent of GDP totalled approximately US$640 billion.
Since the end of the Cold War, the levels of US and Chinese military spending have averaged 4 per cent and 2 per cent of GDP, respectively.
If US and Chinese military spending as a percentage of GDP remain constant in the coming decades, the PwC projections would see the US defence budget expand to approximately US$1.7 trillion by 2050, with Chinese military spending rising to US$1.1 trillion.
This would constitute a massive military power shift in China’s favour: from a defence budget worth 30 per cent of US military spending in 2013 to one worth 65 per cent of US military spending less than 40 years later.
Striking though it is, such a scenario grossly underestimates the scale of likely Chinese military spending in 2050.
The Chinese Communist Party is already raising military spending above the long-term average of 2 per cent of GDP.
Although this year’s 10 per cent rise in the Chinese defence budget is modest compared to previous years, it is still well above the expected GDP growth rate of 7 per cent for 2015.
More importantly, Beijing’s extensive and expanding geostrategic interests will likely compel Chinese political leaders to push for much higher levels of military spending in the coming decades.
Beijing’s contested territorial claims in East, Southeast and South Asia pit China against Asia’s emerging great powers and key US allies.
Beijing is intent on seizing vast tracts of the East and South China seas from Japan and the Philippines and incorporating Taiwan into the People’s Republic of China. But Tokyo, Manila and Taipei enjoy de jure and de facto US security guarantees, while Japan already hosts US military forces and the Philippines will soon follow suit.
China is equally uncompromising in its claims to territory administered by India and Indonesia, and yet these Asian demographic giants are likely to emerge as two of the world’s top five economic and military powers by 2050.
As China’s economic and strategic interests grow worldwide, Beijing is also taking on the responsibilities of a great global power. Consider, for example, Chinese efforts to safeguard political stability in South Sudan and protect critical trade routes in the Gulf of Aden.
Nations that must either contend with severe geostrategic tensions (e.g. Pakistan and India) or that become great global powers (e.g. the Soviet Union and the United States) typically spend significantly more than two per cent of their GDP on defence.
Given that China is set to simultaneously assume the status of a truly great global power and remain embroiled in multiple territorial disputes, it would be historically anomalous for Chinese military spending to remain at two per cent of GDP.
A more likely scenario in which China eventually spends the equivalent of at least 4 per cent of its GDP on defence would see Chinese military spending balloon to a staggering US$2.1 trillion by mid-century. This would make China’s defence budget the world’s largest by a wide margin, and roughly the equivalent of 124 per cent of US military spending in 2050.
Of course, projections of the scale of Chinese military spending in the decades ahead are highly speculative. Defence budgets can fluctuate wildly depending on a host of external and internal factors, including GDP growth rates, the global security environment, and domestic fiscal constraints.
Moreover, military spending (an input) is at best a rough guide to military might (an output). Factors like morale, corruption and the pre-existing stock of infrastructure, technology and accumulated knowledge are not reflected in a given year’s defence outlays despite obviously having a huge influence on military power.
Nevertheless, even accounting for these caveats, the sheer scale of the fiscal resources available to Beijing will soon give it the means to end the era of decisive US military superiority in the Asia-Pacific.
Beijing might insist that it has modest military ambitions, and yet the underlying economic and strategic trends tell an altogether different story.
Dr Benjamin Herscovitch is a Beijing-based Research Fellow at The Centre for Independent Studies.
Home > Commentary > Opinion > A US$2.1 trillion Chinese defence budget?
A US$2.1 trillion Chinese defence budget?
Announced in Beijing last week with much fanfare, China’s already colossal official defence budget of US$130 billion is this year set to expand by a whopping 10 per cent.
To calm the nerves of jittery defence planners in Tokyo, Taipei, Manila and Washington, Beijing was quick to insist that this year’s rise was the smallest percentage increase to the defence budget in five years.
Such clarifications are, however, cold comfort for China’s nervous neighbours and other beneficiaries of the US-led strategic status quo.
A radical rewrite of the globe’s military hierarchy is under way, and China will likely end up on top.
A February PricewaterhouseCoopers (PwC) analysis of the globe’s economic trajectory projects that Chinese GDP will grow to nearly 130 per cent of US GDP in market exchange rate terms by mid-century.
Although this story of China’s impending economic primacy is well trodden territory, the likely military implications are rarely explored.
According to the Stockholm International Peace Research Institute, China’s real military spending in 2013 was approximately US$188 billion, or roughly the equivalent of 2 per cent of the country’s GDP. This left China’s defence budget dwarfed by US defence outlays, which at 3.8 per cent of GDP totalled approximately US$640 billion.
Since the end of the Cold War, the levels of US and Chinese military spending have averaged 4 per cent and 2 per cent of GDP, respectively.
If US and Chinese military spending as a percentage of GDP remain constant in the coming decades, the PwC projections would see the US defence budget expand to approximately US$1.7 trillion by 2050, with Chinese military spending rising to US$1.1 trillion.
This would constitute a massive military power shift in China’s favour: from a defence budget worth 30 per cent of US military spending in 2013 to one worth 65 per cent of US military spending less than 40 years later.
Striking though it is, such a scenario grossly underestimates the scale of likely Chinese military spending in 2050.
The Chinese Communist Party is already raising military spending above the long-term average of 2 per cent of GDP.
Although this year’s 10 per cent rise in the Chinese defence budget is modest compared to previous years, it is still well above the expected GDP growth rate of 7 per cent for 2015.
More importantly, Beijing’s extensive and expanding geostrategic interests will likely compel Chinese political leaders to push for much higher levels of military spending in the coming decades.
Beijing’s contested territorial claims in East, Southeast and South Asia pit China against Asia’s emerging great powers and key US allies.
Beijing is intent on seizing vast tracts of the East and South China seas from Japan and the Philippines and incorporating Taiwan into the People’s Republic of China. But Tokyo, Manila and Taipei enjoy de jure and de facto US security guarantees, while Japan already hosts US military forces and the Philippines will soon follow suit.
China is equally uncompromising in its claims to territory administered by India and Indonesia, and yet these Asian demographic giants are likely to emerge as two of the world’s top five economic and military powers by 2050.
As China’s economic and strategic interests grow worldwide, Beijing is also taking on the responsibilities of a great global power. Consider, for example, Chinese efforts to safeguard political stability in South Sudan and protect critical trade routes in the Gulf of Aden.
Nations that must either contend with severe geostrategic tensions (e.g. Pakistan and India) or that become great global powers (e.g. the Soviet Union and the United States) typically spend significantly more than two per cent of their GDP on defence.
Given that China is set to simultaneously assume the status of a truly great global power and remain embroiled in multiple territorial disputes, it would be historically anomalous for Chinese military spending to remain at two per cent of GDP.
A more likely scenario in which China eventually spends the equivalent of at least 4 per cent of its GDP on defence would see Chinese military spending balloon to a staggering US$2.1 trillion by mid-century. This would make China’s defence budget the world’s largest by a wide margin, and roughly the equivalent of 124 per cent of US military spending in 2050.
Of course, projections of the scale of Chinese military spending in the decades ahead are highly speculative. Defence budgets can fluctuate wildly depending on a host of external and internal factors, including GDP growth rates, the global security environment, and domestic fiscal constraints.
Moreover, military spending (an input) is at best a rough guide to military might (an output). Factors like morale, corruption and the pre-existing stock of infrastructure, technology and accumulated knowledge are not reflected in a given year’s defence outlays despite obviously having a huge influence on military power.
Nevertheless, even accounting for these caveats, the sheer scale of the fiscal resources available to Beijing will soon give it the means to end the era of decisive US military superiority in the Asia-Pacific.
Beijing might insist that it has modest military ambitions, and yet the underlying economic and strategic trends tell an altogether different story.
Dr Benjamin Herscovitch is a Beijing-based Research Fellow at The Centre for Independent Studies.
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