Chinese to raise defense spending

Beijing seeks to create a “world-class” military under Chinese President Xi Jinping for which China announced a 7.5 percent growth rate in defence spending in 2019.

Background

The Chinese People's Liberation Army (PLA) is the armed forces of the People's Republic of China(PRC) and its founding and ruling political party, the Communist Party of China(CPC). The PLA is the world's largest military force and has the second largest defence budget in the world. China is also the third largest arms exporter in the world.

The PLA opened its first international base in Djibouti in July 2017. In the same year, Xi pledged to complete the modernization of China’s armed forces by 2035. 

Analysis

China's government announced a robust annual economic growth target and a 7.5 percent rise in military spending at a legislative session overshadowed by a tariff war with Washington

Under Chinese President Xi Jinping, the pace of growth and modernization has accelerated with a focus on fighting and winning future wars. Xi has also embarked on a massive internal reorganization of the PLA bringing it firmly under his control. There is a decrease in spending from last year and experts said the slight drop was likely to avoid domestic perceptions that the country's military spending far exceeded its overall economic growth, which is set to grow at no more than 6.5% in 2019.

Beijing is rapidly gaining ground on its American rival, by churning out naval vessels and making technological advances, according to Andrew Erickson, professor of strategy at the US Naval War College's China Maritime Studies Institute. "No one has presided over this level of Chinese military development in Chinese history before Xi Jinping," he said. "If you look where China's military was a few short years ago, under Xi the progress is truly tremendous. It is very impressive."

Between 2016 and 2017, 32 new ships were commissioned by the PLA, according to US government reports. Since 2014, China has launched more submarines, warships, principal amphibious vessels and auxiliaries than the total number of ships currently serving in the navies of Germany, India, Spain, Taiwan and the United Kingdom, according to a 2018 report by think tank IISS. The Chinese air force has also been regularly debuting new and improved planes and weapons, including the twin-engine J-20 stealth fighter.

Beijing's air force is now the largest in Asia and the third largest in the world, according to the US Defense Department.  The Chinese government has built a navy and armed forces designed to protect the country and exert its influence in the surrounding region, especially the East and South China seas. Beijing has rapidly produced Jiangdao-class corvettes, a small warship generally best suited to fighting close to home. A US Department of Defense report in 2018 said this move was designed with an eye to "littoral" combat. Backing this up is China's rapid production of frigates, another small type of warship, and the arming and expansion of the country's coast guard. 

Zhang Yesui, the National People's Congress spokesman said "China's limited defense spending, which is for safeguarding its national sovereignty, security and territorial integrity, poses no threat to any other country. “The formal defense budget process does not include funding for foreign weapons procurement, some research and development (R&D), and certain personnel benefits,” the DIA wrote in its 2019 China Military Power Report. 

Counterpoint

There is discontent within the Chinese military over the treatment of veterans. The decision in 2015 to lay off 300,000 soldiers led to repeated mass protests in a number of cities. The government also failed to pay all their pensions in full.

Assessment

Our assessment is that  China's rise in military spending comes at a time when there are tensions along the South China Sea with territorial disputes involving the Philippines, Vietnam, and Taiwan, as well as escalating tensions between China and Japan involving the disputed Diaoyu and Senkaku islands. 

We feel that China will find it hard to dominate maritime Asia, unlike America. America’s bases around the Pacific have given the US Navy enormous freedom of movement across the high seas. It can be noted that China appears to be trying to overcome this deficiency through foreign basing arrangements and by building artificial islands in the South China Sea.

India Watch

Military reforms undertaken by China will have far-reaching consequences for the balance of power in the Asia-Pacific and very specifically for India. Following deep manpower reductions and a commensurate expansion in firepower, the PLA today stands better poised to wage a decisive war against India at low cost. The Indian Army, the largest of the three armed services, is a manpower-intensive fighting force. The defence budget of 2019 has significantly constrained the Indian Army’s capital budget. Second, the implementation of the One Rank One Pension (OROP) from 2014 leaves little for hardware modernization or capital acquisitions.