… or Why We Shouldn’t Worry Too Much About China’s Latest Military Budget

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Ernest Chong

China’s official defence budget is set to rise by 11.2 percent this year to an estimated 670 billion RMB ($106B US).

Hold the Chicken Little routine. Is the budget increase really that big of a deal?

Not really.

The news should not be surprising. China has been increasing its military spending annually by double-digits for nearly two decades, largely to make up for when military budgets were neglected in favour of the country’s budding economic reforms. Now that the Chinese economy has taken off, the People’s Liberation Army (PLA) is merely reaping the rewards of its sacrifice.

Nor should the news be all that alarming. Like any other sovereign nation, China has every right to develop military capabilities to defend itself and its interests. Moreover, the budget increases still place Chinese military spending far below that of the United States or the United Kingdom as a proportion of GDP. The PLA is nowhere near parity with their Western counterparts, as the Chinese inventory consists predominantly of antiquated equipment that is only now being slowly phased out with modern fleets. In this regard, China’s military build up more closely resembles a catch up.

To be sure, the PLA has certainly achieved some tremendous milestones. It has built a stealth fighter prototype, launched more than a dozen satellites in the last year, and has joined the exclusive aircraft carrier owners club, among other achievements – but significant work remains. Possession does not necessarily equal capability. A refurbished aircraft carrier, for example, does not a power projection tool make. The modern American carrier strike group is the product of decades of trial and error, training, doctrinal refinement, and operational experience – ingredients presently lacking in the PLA.

These are skills that no amount of money can buy. Materiel quantity cannot replace doctrinal competency. The historically coast-patrolling PLA Navy (PLAN), for example, is only beginning to explore the intricacies of deploying an ocean-going task force despite shipyards full of new warships. Indeed, the PLA as a whole does not yet seem to have mature modern operational doctrines or true joint inter-service cooperation. At the small-unit level, the professional development of junior leadership and initiative – a foundational part of modern Western militaries’ inherent flexibility – has only just begun. All of these skills are arguably still in their infancy, and will take time to foster and refine.

This having been said, there are some concerns with the new budget.  Queue Chicken Little.

We would be mistaken to assume that China requires the same amount of time as the West to ‘catch up’ with modern capabilities. As a latecomer to modern military development, China has a number of offsets that will shorten the time it takes to overcome the abovementioned technological and doctrinal hurdles. The PLA can learn from the trials and errors of Western militaries, absorb a wide selection of openly-disseminated publications, and participate in military exchanges with other nations. The PLA can also ‘leapfrog’ technologically by reverse-engineering foreign equipment, legally obtained or otherwise. In fact, as a cursory look at the PLA’s domestically-produced equipment can attest, the Chinese have proven to be remarkably adept at producing copies with indigenous additions.

At the same time, we are not entirely sure what the PLA is spending its ever-increasing budgets on. Beijing has historically disclosed less information about its military spending because it was (and remains) the weaker party. It has used ambiguity in part to compensate for technological and strategic inferiority. Indeed, some experts believe that Beijing’s actual military spending is far more than what is publicly acknowledged – as much as double the official numbers.

This lack of concrete information is disconcerting. When combined with Beijing’s equally-murky foreign policy, it paints an incredibly opaque and incomplete picture of Chinese intentions. Without more concrete answers to these Rumsfeldian ‘known unknowns’, China’s neighbours and the United States can only extrapolate from what little there is to see: exponential growth in modern equipment fleets, maturing offensive weapons technology, and aggressive diplomacy in the South and East China seas.

As a result, the region is bracing for conflict. China already outmatches any nation-member of the Association of Southeast Asian Nations (ASEAN) and is on track to dwarf the combined defence spending of the entire Asia-Pacific by 2015. The region has responded by embarking on military modernization programs of their own and has rekindled ties with the region’s traditional hegemon, the United States.

Washington has also responded to China’s information asymmetry. It has repeatedly asked for Beijing to clarify its military intentions and budgetary allocations. Last November’s “America’s Pacific Century” in Foreign Policy and the subsequent Asia ‘pivot’ was meant in part to reassert American strategic dominance in the Pacific and reassure the region that the United States remains firmly entrenched in its affairs.

Such reactions, of course, only serve to stoke Beijing’s fears of encirclement. This drives further Chinese military spending, in turn heightening tensions with its neighbours, leading to a self-perpetuating cycle of deepening mutual animosity.

Conflict is not inevitable, however. A more nuanced examination shows that China’s military growth is likely to be more bridled than commonly believed. Wait one, Chicken Little.

To start, China’s traditional advantage in lower military production costs is lessening as the PLA inches closer to technological parity with Western militaries. Despite obvious differences in operational capabilities, the PLA was previously getting more ‘bang for buck’ with lower-tech equipment. To match their Western counterparts, however, a substantial boost in high technology development is required. For example, indigenous production of high-performance turbofan engines for combat aircraft remains a significant qualitative technological hurdle for Chinese aerospace engineers. These and other endeavours are expensive and time-consuming, negating much of China’s low-skill labour and manufacturing cost savings.

The budget pressures do not end after development. The complexities of new hardware come with commensurate increases in maintenance costs. Training and paying personnel to operate this sophisticated equipment will consume ever-increasing portions of the military budget, as the PLA must compete with civilian Chinese industries for educated individuals. Beyond simply having and crewing the equipment, there is the added but necessary expense of deploying those assets to gain critical operational experience.

In contrast, the U.S. and its NATO allies already have modern equipment and a wealth of operational experience. The challenge for them is to balance rising personnel and maintenance costs with the development of new technologies for the future. The PLA, on the other hand, does not yet have an equivalent base of comprehensive technologies, nor does it have an established pool of skilled personnel. In seeking to modernize virtually every part of its organization and develop indigenous competencies in many major technological areas, Beijing has actually placed itself in a double-ended budget crunch.

China must therefore play the long game. Upgrading an entire establishment does not happen overnight. Despite new fleets of aircraft, ships, and satellites, the PLA is well aware that technological parity will take time to achieve. Institutional reform of specialty trade schools and junior leadership education has begun, but these will not see fruition before the end of the decade. We must remember that while the PLA is slowly accruing operational experience with task forces to the Gulf of Aden, expatriate rescue operations in Libya, and the annual ‘Miyako Run’, they remain far from fielding a force capability of starting, surviving, and prevailing in combat.

More importantly, we must also remember that military modernization is not Beijing’s overriding priority. National development remains the paramount objective. Monetary and commodity inflation, social divisions and stratification, social welfare pressures, and economic diversification all vie for Beijing’s attention. Given the domestic events that have unfolded ahead of this year’s leadership transition, Beijing is expecting more political, social, and economic instability on the horizon. Domestic, not military, issues will occupy Beijing’s attention in the near and medium term.

Chicken Little can sleep easy for another night.

Ernest Chong graduated from the Master of Public Policy program at the School of Public Policy and Governance in 2011. He also holds a Master of Arts in War Studies from King’s College London. He is currently assistant publisher at Global Brief magazine and is an affiliated analyst for Polaris Strategies, a Washington D.C.-based geo-political consultancy start-up. His areas of interest focus on defence and security issues in Canada, the United States, and the Asia-Pacific. This post is an updated summary of an analysis of China’s 2012 military budget announcement prepared for Polaris Strategies in March 2012.