China Should Come Clean on Military Spending

March 31, 2001 • Commentary

China recently made a surprise announcement that it would boost military spending this year by 17.7 percent — the biggest inflation adjusted increase in two decades. The large increase, Finance Minister Xiang Huaicheng stated, was needed to “meet the drastic changes in the military situation around the world.”

Critics understandably found both the size of the increase and the justification cited for it alarming. Some China watchers even speculated that the PRC regime might be gearing up for a military confrontation with the United States in a few years.

But another point also should have received attention. The new “official” defense budget figure of $17.2 billion is pure fiction. Virtually all experts believe that China’s real level of military spending is somewhere between $35 billion and $55 billion. Much of the spending (especially on the acquisition of weapons) is either concealed in other budget categories or is off‐​budget entirely.

Why does Beijing persist in presenting a military budget that is so phony? The most likely reason is that PRC leaders want to keep other nations guessing about the actual extent of spending. After all, the range of even expert calculations is large. A $55‐​billion budget (if wisely spent) can produce considerably more military capability than a $35‐​billion budget. Another reason for Beijing’s obfuscation may be that, having published false spending figures for years, Chinese officials would now find it politically embarrassing to offer honest figures.

Whatever the motive, the Beijing government is making a serious mistake in perpetuating such fraudulent budgeting. It breeds suspicion. Not only the United States but China’s neighbors in Asia have reason to wonder what the PRC is hiding–and why.

Ironically, the actual level of military spending is not all that terrifying. The lower end of the range would put the PRC’s outlays at virtually the same level as such mid‐​sized powers as Britain, France and Germany. Even the higher end of the range would mean that the PRC is spending only a little more than Japan’s $45 billion. And even the highest of the estimates is dwarfed by America’s $300 billion budget.

There is little doubt that China is modernizing its military and intends to have a first‐​class force someday. There is also some reason for concern about Beijing’s strategic goals in East Asia–especially regarding Taiwan. But a military budget somewhere between $35 billion and $55 billion is not the massive spending one would expect from a country determined to embark on an expansionist binge throughout the region.

The PRC would be wise to allay the suspicions and worries of its neighbors. An essential first step is to be honest about its military budget. Not only should Beijing be forthright about the actual level of spending contemplated in its new budget, but it should restate the figures in previous budgets for at least the past five years. That is what corporations seeking to regain the public’s trust and confidence must do if they have misstated revenues and earnings because of dubious accounting methods. We should expect no less of a nation that says it desires the world’s trust and confidence.

Transparency about defense spending–and the country’s defense doctrine–would be the most effective rebuttal to critics in the United States and elsewhere who argue that China harbors aggressive intentions. Beijing needs to come clean about its actual military outlays and do so without delay.

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