China Should Come Clean on Defense Spending

October 25, 2005 • Commentary
A shorter version of this article ran in the South China Morning Post on October 25, 2005.

For the second time this year, U.S. defense secretary Donald Rumsfeld has attempted to rattle China’s neighbors by pointing to the PRC’s opaque military modernization. In Singapore in June, Rumsfeld cited China’s “escalating” military budget and ruminated, “Since no nation threatens China, one must wonder why this growing investment?” He returned to the theme recently while visiting China. In Beijing, the defense secretary complained that China’s “rapid, non‐​transparent” buildup was sending “mixed signals” to the world.

Rumsfeld has a point. Although historically it has been notoriously secretive, China should consider that disclosing its actual defense spending may be in its own best interest.

At present, both the Defense Department’s estimate of China’s spending and Beijing’s official defense budget lack credibility. The DOD figure, which puts China’s spending as high as $90 billion, has been widely derided in the United States and many analysts disregard the estimate altogether. Nonetheless, that high‐​end figure is seized upon by China‐​bashers in Congress and many pundits, and it is deftly used as a club with which to beat China.

Meanwhile, China’s official figure, $30.2 billion, is equally dubious. Beijing has long excluded whole categories of spending from its defense budget, leading to the rather lame excuse from Rumsfeld’s counterpart, Gen. Cao Gangchuan, that China does exclude—ahem—“some funding for the development of equipment” from its official defense budget.

China has had a rough year in Washington. The anti‐​secession law it passed in March intensified tensions with Taiwan, caused an uproar in the United States, and led directly to the extension of the European Union arms embargo against China. The Chinese bid for Unocal—outrageously demagogued and ultimately defeated by economically illiterate members of Congress—caused more anti‐​China furor in the United States. Then, on October 19, implacable Sinophobe Rep. Dana Rohrabacher (R‐​Calif.) gave former Taiwan president, and pro‐​independence activist, Lee Tung‐​hui an effusive reception at Congress, creating the opportunity for still more anti‐​China rhetoric.

Meanwhile, the Bush administration, cowering under the cloud of domestic scandal and an interminable war in Iraq, does not appear to have the political capital to rein‐​in Congress and repair ties with China. Even so, many China‐​watchers in the United States—moderates from both parties—don’t want to align themselves with the hardliners. The trouble is, China has given these moderates little ammunition to counter the negative rhetoric from “panda‐​haters” in Washington. China should consider that opening its defense books could be a good tool to that end.

Of course, China would prefer not to disclose its actual level of defense spending. Any country would prefer more secrecy, rather than less, about its military programs. But China needs to recognize that it gains little from opacity in comparison to what it loses. Any respectable observer of the People’s Liberation Army knows about China’s growing capabilities. We know about the Sovremenny destroyers, the Sunburn missiles and the Kilo submarines. We know about the Sukhoi 30s and the new F-10 fighter. Large‐​scale hardware acquisition and development is hard to hide.

Beijing’s real level of military spending is somewhere between the official budget and the Pentagon’s bloated estimate. Most credible independent experts believe that the spending is in the range of $40 billion to $55 billion. While that is not a trivial level of defense expenditure, neither is it unduly alarming. It is comparable to the military budgets of several mid‐​size powers, including China’s neighbor in East Asia, Japan. And it is utterly dwarfed by Washington’s defense budget of more than $440 billion.

China should not fear losing face if it were to disclose its actual defense spending. Instead, doing so would demonstrate how inflated the Pentagon’s figure is, while simultaneously showing that China is—ever so slowly—moving away from its Maoist past and toward a future where it plays by international rules, and not just on economics. Those analysts and commentators who are not committed to a hard‐​line policy toward China would welcome a move toward transparency in Beijing’s defense budget and could herald it as further evidence that the panda‐​haters are wrong. As things stand now, especially with the way things have gone for China in Washington this year, the hard‐​liners are gaining strength. That doesn’t have to continue, but to counter the trend, Chinese leaders will need to act. Coming clean about its defense spending is one important step China should take.

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