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On 5 March, China opened its annual session of the National People’s Congress in Beijing and amidst tensions with both India and the US, announced a defence budget of USD 209.4 billion (CNY 1.355 trillion), an increase of 6.8 percent over FY2020 (USD 196.44 billion/ CNY 1.268 trillion).
The increase is consistent with the last five budgets.
This defence budget — over three times India’s (USD 65.7 billion including pensions) but a quarter of USA’s (USD 740.5 billion), is particularly significant. It has now breached the USD 200 billion mark, and is also the first within China’s new 14th Five Year Plan (2021-2025).
China’s defence budgets have close linkages to doctrinal guidance and geopolitical events:
Thus, from 1999, China’s defence budget has witnessed double-digit annual growth, with the highest increase being 17.7 percent. From FY2016 however, the budget has been augmented in single-digit percentages.
But how did its defence budget grow 14 times in two decades — from USD14.6 bn in 2000 to USD209 bn in 2021 – considering that at no stage in the last two decades has the defence budget allocation exceeded 1.5 percent of its GDP?
The answer lies in China’s rapidly expanding economy – even at 1.5 percent, it translated into very large allocations for the PLA. With its annual GDP growth averaging 9.5 percent, between 1979 and 2019, and its economy doubling every eight years, the Chinese economy is now, on PPP basis, the same size as the US’s. The PLA’s modernisation however, hasn’t come from just the official defence budget.
China’s official defence budget does not reflect its actual defence spending as many outlays are not found included in it, for example
The Pentagon and many think tanks aver that China’s actual defence spending has been at least 3.5 to 1.2 times its official defence budget in various years. However, such exclusions are not unique to China — most countries including the US and India exclude some spending from their official defence budgets.
China has a landmass of 9.6 million square km, a population of 1.3 billion, land borders of 22,000 km and a coastline of more than 18,000 km; in addition are island coastlines of over 14,000 km. It faces numerous internal threats, including secessionist movements; has land borders with 14 nations, including with 4 nuclear weapons states (North Korea, Russia, India, Pakistan).
It is also jousting with India in the Indian Ocean, and the US for control over South China Sea. China’s defence budget, and the PLA’s deployment have to cater to this strategic and operating environment.
The most notable modernisations have been wrought in Chinese naval, air, missile, space, and C4ISR capabilities. But contemporary weapon systems have far higher costs as compared to legacy systems. For example, the US Navy spends over USD 7 million per day to operate a Carrier Strike Group.
A conservative estimate for China to build a new, US-type of aircraft carrier would be USD 11 billion. China is developing Ballistic Missile Defence (BMD) systems; the US has — between 1985 to 2019 — appropriated USD 200 billion for its BMD. Add to this mix the numerous other systems, platforms and support systems, as also new military bases, training facilities, etc. The PLA’s per-soldier-spending is also rising as it focuses on attracting better-educated personnel, providing better clothing, facilities, training and welfare measures, etc.
The US has tried to address this dilemma by maintaining smaller standing armed forces, but ramping up defence spending and troop strengths at the onset of a crisis. Chinese plans to downsize the PLA therefore maybe a pointer.
But China is also shifting tack. The blueprint of the 14th Five Year Plan now outlines China’s objective as: “Make major strides in the modernisation of national defence and armed forces”, and accelerate the PLA’s transition from “mechanisation” towards “informationisation” and “intelligentisation”. This implies shifting from standard military platforms to networked information systems which integrate both autonomous and AI based ‘intelligent’ systems.
Earlier, in 2017, China had introduced its ‘Next Generation Artificial Intelligence Development Plan’ to turn China an AI superpower by 2030. A US national security commission on AI recently outlined that China (and Russia “to a lesser extent”) could overtake the US in military AI and automation.
China has issued doctrinal guidance every 15-20 years to direct the PLA’s focus on modernisation, equipment acquisition and war-fighting strategies. Since 1993, such guidance has been part of a long-term continuum, and never disruptive. Successive military chiefs are not allowed that “I have my vision”. And it is this long-term perspective, which is supported by well thought-out budgets, and persistence with that perspective, that has allowed China to make substantial progress in its military modernisation.
(The author is a retired Brigadier of the Indian Army. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)
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