Amid growing international concerns, the People’s Republic of China presented its latest defence budget on 4 March 2011, a day ahead of the opening of the Republic’s Ninth National People's Congress. The budget shows a marked increase of 12.6 percent over last year’s budget, which means that the PLA gets to spend a whopping amount of USD 91.5 billion through the current year. Announcing the defence budget, the Chinese spokesman Li Zhaoxing asserted that the increase was justified, and China posed no threat to anyone. Repeating previous assertions by Beijing that its defence budget was much smaller than that of the US, Mr Li said "China's defence spending is relatively low by world standards". Beijing’s stereotype defence of its defence budget however does not cut much ice with the international community. It is widely accepted that China’s spiraling defence budgets go well beyond her claims that such level of spending is needed for territorial defence. Scaling new heights every year, China’s defence budgets lead to cascading effects on defence expenditures by other countries, especially those countries which share adverse relationship with Beijing.

The burgeoning defence budget of China however needs to be viewed not only in terms of increased capabilities but also from the perspective of Beijing’s recent assertiveness with regard to territories contested by China with her neighbours. Last year China’s Defence Minister Liang Guanglie said the country was preparing for conflict “in every direction” and would use its rapidly growing economy and technological capabilities to speed up military modernisation. Countries lying at China’s periphery that are already facing heat from her recent assertiveness have a reason to feel concerned over the latest increase in China’s defence budget. Beijing is unlikely to keep its defence budget trimmed-down for any considerable length of years, specifically in view of a number of modernisation programmes which are presently underway for China’s military.

China has doggedly pursued growth of two digits in its defence budget over the past two decades - a trend broken only last year when its defence budget marginally declined to 7.3 percent, largely on account of the economic downturn. With its economy steaming again, China is expected to cross over the psychological barrier of USD 100 billion when the next defence budget is presented in 2012. The exponential growth of China’s defence budget over the past two decades is largely perceived as a red flag in a region which is fast gaining in notoriety due to increased muscle flexing by major powers with their eyes on region’s vast natural resources, share of markets and key trading routes.

China can not escape the responsibility for fueling militarisation in a region which is relatively low in terms of human development. The unwarranted growth of China’s military power (China faces no threats to her sovereignty, real or perceived) however is leading other countries, especially India to take away much needed resources required for social spending on health, education and poverty-related programmes etc. towards procurement of expensive weapon systems which cost billions in terms of foreign currency. Incidentally, China and India both figure in the medium category of countries listed on the Human Development Index (UNDP, 2010), ranked 69 and 119 respectively, in a list of 169 countries. China has allocated staggering 22.5 percent of its planned Central Government Expenditure for 2011-12 on security which includes 10.7 for national defence and 11.5 percent planned central expenditure for police, state security, armed civil militia, courts and jails.

Incidentally, internal security budget is pegged higher than national defence in China’s latest budget. However, it is believed that official estimates of China’s defence budgets are generally fudged so as to avoid international censure, making her defence budgets appear more palatable to the western audience. Expenditures incurred on account of Second Artillery (nuclear forces), foreign acquisitions, military‘s space programmes, asymmetric warfare, and research and development, among others, do not figure in China’s official military’s budgets. Defence budget to GDP ratio at 1.4 percent, as reiterated by the Chinese spokesman is again a gross understatement. The western estimates of China’s defence budget in terms of GDP ranges from three to five times the official estimates. By some estimates, China’s defence budget is already one quarter of the US defence budget and the gap is narrowing down further, especially with Washington mulling to reduce its defence budget over the next five years.

Adding a further edge to China’s military build-up is the fact that China has succeeded considerably in reducing its dependence on foreign weapons over the years, especially with maturing of its local industry. In so far China’s indigenous arms production is concerned, availability of cheap labour gives the PLA an added advantage vis-à-vis defence budgets. In other words, China manages to get more bang for every buck it spends when compared to country like India which imports hardware to the tune of 70 percent of military’s total arms requirements, paying hard-earned foreign currency through its nose. India’s inadequate defence budget for modernization thus does not go far enough. Procurement procedures which are too cumbersome in India often results in cost overruns, putting extra burden on the exchequer. Due to bureaucratic sluggishness or inter-departmental wrangling, bulk of defence deals in India are finalised only towards the end of financial years which sometimes results in military not getting exactly the same equipments it would have preferred. In addition, parts of defence budgets usually get returned to the treasury unspent, considered by many a cardinal sin, especially in view of the meager budgetary allocation for defence in India. The Ministry of Defence, India however needs to be congratulated for exhausting its budget thoroughly last year. The budgetary allocation at USD 36 billion for India’s military in 2011-12, an increase of 11.5 percent over last year, does not stand testimony to the Finance Minister Pranab Mukherjee’s assertion in the Parliament that combined threat of China and Pakistan has been taken note of. Asymmetry between the defence budgets of China and India however remains too high which gets even more pronounced by other factors influencing defence budgets of both the countries.

As stated above, defence budget of China needs to be analysed not only in terms of capabilities but also in terms of intent. While China strives to oust the US from its numero uno position any year after 2030, Washington is increasingly losing its appetite to retain its stronghold in the region. Scaling down of important modernisation programmes by the US military over budgetary constraints is helping China to reduce its military parity with the US quicker than anticipated. China, on the other hand, is reaching out to new heights in military power year upon year. Flight-testing of a stealth fighter (proto-type) carried out recently by the PLA, many years ahead of schedule, has surprised many western analysts. Pentagon fears that China has already acquired capabilities to strike at key US military installations in South Korea and Japan. The anti-ship ballistic missile developed by China can become a game-changer and pose serious challenges to the US and other navies.

Beijing has running territorial disputes with a number of countries in the region including India. China views that a military victory against a major country in the region will give her legitimacy to claim global power status. It is increasingly evident from Beijing’s recent coercive postures in her dealings with neighbours that she is running out of patience to stake that claim. Coupled with that, there is a growing world view that Beijing could be urged by its own internal dynamics to engage in conflicts with her neighbours, possibly as a means to deflect the attention of local population from rising political dissent, inflation, growing rich and poor divide, and corruption at the official levels within the country. Besides, secessionist tendencies are running high, specifically in two of China’s provinces, Xingjian and Tibet Autonomous Region. Chinese leaders, who remain apprehensive of the ‘Jasmine Revolution’ replicating itself within China, are seized with the imperative to bring about social management through innovative methods. Beijing’s international conduct which is increasingly marked by a high degree of assertiveness is leading to rise in nationalist sentiments within the country. China’s return to double-digit growth in defence budget, especially at a time when her ambition for power projections are increasingly aligned with the internal dynamics, would adversely impact regional security dynamics.

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Published date : 16 March 2011