On March 4, 2007, at the annual session of the National People’s Congress (NPC), the Chinese government announced that the country’s 2007 defense budget would be 350 billion yuan, or about $44.9 billion, an increase of 17.8 percent over the 2006 budget, and the largest increase in five years. [1]

U.S. reactions to China’s hike in defense spending and its expected military buildup were cautious but concerned. U.S. Defense Secretary Robert M. Gates told reporters that greater transparency on Beijing’s part could help clarify both its strategies and intentions. Joint Chiefs of Staff Chairman General Peter Pace expressed concern over China’s recent anti-satellite (ASAT) weapon test and submarine activities. [2] Deputy Secretary of State John Negroponte echoed this view and emphasized that Beijing should be less secretive about its military, even as Chinese officials assailed Washington for its latest arms sale of air-to-air missiles worth $400 million to Taiwan. [3] Even before the 2007 budget announcement, Vice President Dick Cheney had called the Chinese ASAT test and China’s accelerating military buildup “not consistent with China’s stated goal of a peaceful rise.” [4] An analysis from the Heritage Foundation, a conservative U.S. think tank, characterized Beijing’s latest spending increase as an effort to challenge the status of the United States as the world’s sole military superpower. [5]

China Responds to U.S. Charges
Chinese officials and analysts reject U.S. concerns and allegations, pointing out that China’s defense spending remains modest, despite the recent increase, and in line with the Chinese government’s overall policy of making economic and social developments its top priorities. Beijing’s rebuttal can be summarized in four lines of argument.

The Budget Is Modest
First, it is argued, China’s defense budget and military modernization programs support the general goals of peace and development and are not meant as a threat to other countries. Premier Wen Jiabao, in his press conference at the conclusion of the NPC plenum, pointed out that China has vast land borders (22,000 kilometers) and coastlines (18,000 kilometers) and must act to protect the country’s sovereignty and territorial integrity. Moreover, this line of argument states, the current level of armed forces and defense spending, both in absolute terms and relative to other countries’ spending, remains very modest. Indeed, according to a March 16 People’s Daily Online story, China’s defense budgets for the past five years have represented a relatively small amount of government spending, ranging between 7.7 percent in 2004 to 7.5 percent in 2007 of total government expenditures. [6]

Not only is the overall budget thus relatively modest, officials argue, but military missions have significantly expanded in recent years. [7] In addition to defending China’s extensive territory, the People’s Liberation Army (PLA) has been required to undertake additional missions, such as United Nations peacekeeping operations, international cooperation on anti-terrorism, and international disaster response and rescue activities. Also, the military is increasingly tasked with dealing with non-traditional security challenges, ranging from piracy on the high seas to drug trafficking. And, with China’s growing demands for and reliance on overseas energy supplies, securing safe passages and protection of sea lines of communication (SLOCs) have also required added funding.

Budget Is Transparent and Its Intent Peaceful
Second, Chinese analysts have addressed Western allegations that China’s military modernization, and especially its defense spending, remain shrouded in secrecy. Chen Hu, executive editor-in-chief of the magazine Shijie Junshi [World Military], argues that transparency is always a relative term, and China’s goals for peace and development, as well as for national unity and territorial integrity, are always clearly and openly stated. As for the so-called extra-budgetary allocation of resources (or the “hidden budget”), he also points out that portions of the U.S. defense budget are not disclosed and that many expenditures, such as Department of Energy spending on nuclear weapons, are in addition to those contained in the budget of the Department of Defense. [8]

Also on defense transparency, one Chinese military analyst, implicitly alluding to the United States and China, respectively, argues that in today’s information age, the greater a state’s military power, the more capable it is of acquiring intelligence on its opponents and the more it can afford to be “transparent” about its own military capabilities. Conversely, the weaker one’s military, the greater the need to keep some military “secrets.” [9]

Chinese commentators also argue that the growth in defense spending does not upset the international balance of power or pose serious threats to other countries. They point out that China has not engaged in any military conflicts with surrounding countries since the end of the Cold War and has maintained relative peace and stability in the region. At the same time, China continues to face serious threats to its security in the forms of separatism, terrorism, and “international hegemonism,” a veiled reference to U.S. power. The United States blames China for upsetting the region’s military balances, the commentators argue, to stimulate U.S. arms sales to additional countries. Indeed, they point out, arms imports by Asian states ($13 billion) accounted for half of all U.S. arms sales in 2006. [10]

Budget Increase Needed to Update Military in Information Age
Third, Chinese analysts emphasize that Chinese defense spending must be seen from both comparative and historical perspectives. Even though in absolute terms, the Chinese defense budget has been growing at double-digit rates over the past decade, in comparison with the defense spending of other major powers, China’s remains modest. An unsigned People’s Daily Online commentary points out that China’s defense budget is only one-tenth that of the United States and that in per capita terms, Beijing spends only 0.5 percent, or 1/200th, as much per citizen as Washington. China’s military budget, it continues, is only about 67 percent of overall Japanese defense spending and only 7 percent of Japanese spending in per capita terms. [11]

In some of their more revealing analyses, Chinese experts justify China’s double digit defense spending growth over the past decade as necessary to modernize China’s military. [12] First, they claim that for years, especially since the introduction of economic reforms and an open door policy in the late 1970s and early 1980s, defense expenditures actually declined, which in turn led to deficits in equipment and military infrastructure, and the loss of technical expertise within the PLA. Thus, the last decade’s defense expenditure increases have merely compensated for past deficits. Second, the revolution in military affairs (RMA) further widened the gap between the PLA and the world’s other advanced militaries. The RMA is the combination of “informationization” (xinxihua) and mechanization (jixiehua), and providing the Chinese military with up-to-date information capabilities requires significant investment. The PLA’s order of battle is 10 to 15 years behind that of advanced countries and is still at the stage of mechanization and semi-mechanization, while most advanced militaries have already moved into the information age. The U.S. military spends billions each year on building up its information networks. To narrow this gap and to catch up, Chinese analysts stress, China must maintain its current level of defense spending for years to come.

Need to Develop Indigenous Military Technologies
The fourth line of argument supporting China’s defense budget highlights the cost of defense modernization, which requires advanced weapons systems and military technologies. For many countries, especially those either allied to or close friends with great powers, these requirements can be met through imports. However, China has to face continued Western embargoes on arms sales and restrictions on dual-use technology transfers. This has forced China to rely on more costly indigenous research and development, augmented by such imported equipment as it can obtain. To prevent Taiwan’s independence and anticipate military contingencies (especially a potential China-U.S. military conflict over Taiwan), China has to maintain and improve its military capabilities to be able to fight and win local wars under high-tech and information-intense conditions. [13]

Conclusion
Western analysts may view these arguments by Chinese officials and analysts as self-serving and sometimes containing distortions of fact or analysis. Nonetheless, incorporating the factors identified by these commentators may significantly enhance the quality of outside assessments of China’s military trajectory. [14] These factors include careful evaluations of: China’s strategic priorities and near-term goals; the PLA’s current force structure and order of battle; the PLA’s current and emerging missions and existing deficiencies; China’s domestic defense industrial base and its ability to deliver the equipment necessary to meet the PLA’s procurement needs; and China’s available foreign arms suppliers and the costs of weapons imports. Greater focus on these parameters may help U.S. decision-makers develop a more complete understanding of Beijing’s intentions and emerging capabilities as reflected in its military budget.


Jing-dong Yuan - Monterey Institute Center for Nonproliferation Studies