Military Spending




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China's expenditure on national defense falls into the following categories: personnel expenses, mainly including pay, food and clothing of military and non-military personnel; costs for maintenance of activities, mainly including military training, construction and maintenance of facilities and running expenses; and costs for equipment, including research and experimentation, procurement, maintenance, transportation and storage. In terms of the scope of logistic support, these expenditures cover not only active service personnel, but also militia and reserve requirements. In addition, a large amount of spendings are used to fund activities associated with social welfare, mainly pensions for some of the retired officers, schools and kindergartens for children of military personnel, training personnel competent for both military and civilian services, supporting national economic construction, and participation in emergency rescues and disaster relief efforts.

Every March, as part of its annual state budget, the Chinese release a single overall figure for national military expenditures. Most analysts estimate China's real spending on defense is at least three times as great as the publicly disclosed figure. For example, according to the Secretary of Defense's January 2001 report, Proliferation: Threat and Response, China's military funding levels were expected to average between $44 and $70 billion annually between 2000 and 2004.

In 2000, the official budget figure was approximately 121 billion yuan, or $14.6 billion.

In early 2001 China announced that it will increase its defense spending for the year by 17.7 percent--its biggest increase in the last 20 years. China's publicly-acknowledged defense budget of over $17 billion for 2001 is higher than the defense budgets of neighboring countries like India, Taiwan, and South Korea. Beijing explained this increase as a response to "drastic changes" in the military situation around the world, a reference to the US-led war in Kosovo in 1999.

In March 2002, Chinese finance minister Xiang Huaicheng announced that China is increasing military spending in 2002 by 17.6 percent, or $3 billion, bringing the publicly reported total to $20 billion. The publicly disclosed figures do not include major spending for weapons research and for the purchase of foreign weapons like the destroyers China bought from Russia. Actual military spending, including the large but difficult-to-assess off-budget financing portion, could total $65 billion, making China the second largest defense spender in the world after the United States and the largest defense spender in Asia.

The officially announced budget -- 185.3 billion RMB in 2003 (about $22 billion) -- most likely substantially underreports total expenditures on defense, to include off-budget funding for foreign weapon system imports. The US Defense Department estimated total defense-related expenditures for 2003, counting the large but difficult-to-calculate off-budget financing, could be between $50 billion and $70 billion, making China the third largest defense spender in the world.

In March 2004 the Chinese Finance Minister Jin Renqing proposed an increase of 11.6 percent [$2.6 billion] in military expenditures. The government forecast total revenue for the central budget at $157 billion, up 7 percent [$10.9 billion] from 2003, with a 7 percent boost in overall spending from 2003. The country's $38.7 billion deficit was the same as 2003. Adding off-budget funding for foreign weapons system imports, total defense-related expenditures for 2004 were estimated at between $50 and $70 billion dollars by Richard Lawless, the Deputy Undersecretary of Defence.

In the 1980s Chinese statistics indicated that defense spending represented a decreasing percentage of government expenditures, falling from 16 percent in 1980 to 8.3 percent of the state budget in 1987. However, United States Department of Defense studies suggested that the published budget figures understated defense spending by about one-half. With the growth of the Chinese economy under the modernization program, defense spending also represented a smaller percentage of the gross national product (GNP) than previously. United States Central Intelligence Agency analysts estimated that defense expenditures in 1978 absorbed 8 to 10 percent of GNP; in 1986 United States Department of Defense analysts estimated that China's military expenses fell within the range of 6 to 8 percent of GNP. Comparison of indices of defense procurement spending and industrial production from 1971 to 1983 revealed that the former increased by 15 percent, whereas the latter rose by 170 percent. These studies indicated that Chinese leaders have indeed subordinated military modernization to economic development.

United States Department of Defense officials in 1986 estimated Chinese defense spending by resources and force categories for the 1967 to 1983 period. Roughly 50 percent of defense expenditures were for weapons, equipment, and new facilities; 35 percent for operating costs; and 15 percent for research, development, and testing and evaluation. By service, these costs broke down to 25 percent for the ground forces; 15 percent for the Navy; 15 percent for strategic air defenses; 5 percent for ballistic missile forces; 5 percent for tactical air forces; and about 35 percent for command, logistics, personnel, intelligence, medical care, administration, research, development, testing and evaluation, and other support. Beginning in the late 1970s, China devoted more resources to its Strategic Missile Force, indicating an effort to increase its strategic security while modernizing the economy, and to national command and support activities, reflecting an emphasis on modernization of the defense structure.

Procurement of weapons and equipment represented 45 percent of the defense budget during the 1967 to 1983 period. This figure included 25 percent for aircraft, 15 percent for ground forces weapons, and about 10 percent each for naval and missile systems. China's military-industrial complex, the third largest in the world, produced a wide variety of weapons, including light arms and ammunition, armor, artillery, combat aircraft, fast-attack craft, frigates, destroyers, conventional and nuclear submarines, electronic equipment, tactical missiles, and ballistic missiles. With the notable exception of China's indigenously produced nuclear submarines, nuclear missiles, and satellites, most Chinese weaponry was based on Soviet designs of the 1950s and 1960s. Much of this equipment was obsolete or obsolescent, and beginning in the late 1970s China made great efforts to upgrade the equipment by changing indigenous design or by incorporating Western technology. The greatest weaknesses were in conventional arms, precision-guided munitions, electronic warfare, and command, control, communications, and intelligence. China attempted to address these weaknesses by focusing military research on electronics--essential to progress in the previously mentioned areas--and by selectively importing key systems or technologies.

By official accounts, the composition of China's defense expenditure in 1997 was as follows: 29.162 billion yuan for personnel expenses, accounting for 35.89 percent; 26.536 billion yuan for maintenance of activities, 32.66 percent; and 25.559 billion yuan for equipment, 31.45 percent. From the above, we can see that most of the defense outlay went to the personnel's living costs and maintenance of normal activities. In addition, more than four billion yuan, or about 5 percent, was spent to fund activities associated with social welfare.

The PLA has enjoyed over a decade of double-digit budget growth. However, its purchasing power was not enhanced until the mid-1990s, when inflation was brought under control. Since 1995, inflation continues to drop sharply, reflecting tighter monetary policies and stronger measures to control food prices. The PLAN has benefited the most in the 1990s, and receives the bulk of China's annual defense budget (an estimated 35 percent). The army and air force receive about 29 percent each and the 2nd Artillery Regiment about seven percent. Procurement, research and development, reserves and paramilitary are excluded whole or in part from the official defense budget. China’s improving economic situation has bolstered Beijing’s ability to acquire the latest weapons systems from countries that increasingly demand hard cash.

Additional double-digit defense budget growth is likely, at least through the 10th Five-Year Plan (2001-05). These increases will be used to offset losses from divested PLA commercial enterprises, underwrite escalating personnel costs, and fund PLA modernization. Beijing’s 2000 White Paper on National Defense and its predecessor editions detail the official PLA budget, but only by poorly defined resource categories and not by service or mission. The release of the white papers may be an attempt by China to appear to be increasing its military transparency to the West while in reality keeping much secret.

Although modernization is one reason for the budget increase, most defense modernization spending occurs outside the PLA budget. Imported weapon systems are financed by separate hard-currency allocations from the State Council and are not charged against the PLA budget. The PLA pays for domestically produced Chinese equipment, which makes up about half of the modernization effort, but it pays only the incremental cost of manufacturing one system and none of the substantial R&D or startup costs. Such costs appear in the budget of the state-owned industry that produces the equipment, including substantial hard-currency costs for foreign technology and assistance.

The PLA receives funding from numerous, extra-budgetary sources. These sources include special allocations for procurement, at least partially derived from arms sales profits; sales of military unit services (e.g., construction) and products (e.g., farm produce) and other traditional PLA self-sufficiency activities; earnings from PLA enterprises remaining after divestment, which still produce civilian services and products; and, defense-related allocations in other ministries (e.g., state science and technology budgets and agencies at the provincial and local levels). In addition, China’s proliferation of weapons of mass destruction (WMD)-associated technology and conventional munitions may help subsidize certain force modernization programs. Tracking these sources complicates the process of identifying and assessing defense budgetary trends.

The official defense budget for FY2000 is US$14.6 billion. However, the PLA probably spends 200-300 percent beyond what is revealed in the official budget, which places actual outlays between $29.1 and $43.7 billion.

Although estimates of defense budgets of non-NATO nations are inherently imprecise, The Military Balance, 2000-2001 by the International Institute for Strategic Studies set Chinese military expenditures at $40 billion.

The "actual" level of Chinese defense spending is hotly debated, and is probably not known with certainty to the Chinese authorities themselves. In March 2002 China announced another 17.6 percent rise in defense spending, bringing the publicly acknowledged defense budget to $20 billion. China increased defense spending by 17.7 percent in 2001, boosting the official budget from approximately $14.5 billion to just over $17 billion. In March 2000 China announced a 12.7 percent increase in military spending for 2000, allocating 120.5 billion yuan ($14.5 billion) for defense. An estimate of between $120-180 billion was provided for actual spending in 2000 on an exchange rate and purchasing power parity basis by a RAND Corporation analyst [Charles Wolf, “Asian Economic Trends and Their Security Implications,” RAND, MR-1143-OSD/A, 2000, p. 19].

Estimates of the 1994 budget ranged from the Chinese government’s official figure of $6.3 billion, to the $92 billion given by two American observers. The 1995 official Chinese budget was $7.5 billion, while the US Arms Control and Disarmament Agency estimated the actual number at $63.5 billion. The official figure was 14.6 percent higher in 1995 than in 1994, and 11.3 percent higher in 1996 than in 1995. As of 1997 China's official military budget was roughly $8 billion. Much of the increased spending has gone to improve the living standards troops and to keep pace with inflation.

Beijing's publicly announced budget does not include military spending contained in off-budget funding and revenue. As with the Soviet military budget, the official Chinese defense budget apparently covers salaries, but does not cover the research, development and acquisition of new weapons and equipment, which is funded through the budgets of the responsible ministries. The official budget does not include the cost of the People's Armed Police, nor does it include soldiers' pensions. The official budget also excludes proceeds from international arms sales and from business operations owned by the military.

Analysis of China's defense budget is complicated by purchasing power parity disparities, the difference between costs in China and the cost of an equivalent item in other countries with higher standards of living. Perhaps two-third's of China's expenditures are for items, ranging from salaries to weapons systems, that cost a fraction of their equivalent American value.

In the late 1990s estimates placed China's military spending from 4 to 10 times the official budget. In 1999 the Institute of Strategic Studies estimated actual Chinese military spending at $37.5 billion. As of 1999 China's actual defense expenditures were generally estimated at between $35 billion and $65 billion a year.

The United States Arms Control and Disarmament Agency (ACDA) estimates on Chinese military expenditure were "rough estimates," and are some 7-8 times higher than the official Chinese defense budget figures. The ACDA estimates suggested that Chinese military spending had remained relatively constant over time, when factored for inflation and the devaluation of the yuan, while representing a declining share of the overall economy and government expenditures.



Budget Year RMB Yuan = $US % of GNP % of CGE % Increase over last yr MILITARY EXPENDITURES (ME)
Million dollars
(WMEAT)
Current Constant
1999 Constant
1993


1983 6.8 30.4 53,050
1984 5.8 26.1 52,140
1985 5.1 23.8 52,160
1986 4.6 19.3 50,960
1987 4.2 19.5 51,400
1988 3.8 20.0 52,040
1989 3.6 19.1 $ 43,300 $ 54,400 51,320
1990 3.7 18.8 $ 47,800 $ 57,700 54,110
1991 32.5 3.9 3.3 17.3 – $ 47,100 $ 54,900 52,000
1992 37.0 4.5 3.0 16.9 13.8 $ 50,100 $ 57,100 54,870
1993 42.7 5.1 2.7 16.2 15.4 $ 52,100 $ 57,900 56,170
1994 55.0 6.6 – 28.8 $ 53,600 $ 58,400
1995 63.0 7.6 – 14.5 $ 58,700 $ 62,600
1996 – – – – $ 64,500 $ 67,500
1997 – – – – $ 73,200 $ 75,100
1998 93.5 11.3 8.7 – $ 86,100 $ 87,300
1999 107.7 13.0 8.2 15.2 $ 88,900 $ 88,900
2000 121.3 14.6 8.3 12.6
2001 141.0 17.0 8.3 17.7
2002 166.0 20.0 – 17.6
2003 185.3 22.4 – 9.6
2004 206.5 25.0 1.7 12.7 11.6
2005
2006
2007
2008
2009
2010

GNP = gross national product
CGE = central government expenditure

Oh no, the Chinese are covering up their military spending.

So what? It still doesn't come anywhere near what America spends, and still doesn't pose a realistic threat.

__________________
"I see no reason why...there should not arise a United States of Europe" Winston Churchill, 1946

Last I heard America spends more on it's military than the next 20 nations...combined.

This is a drop in the well.

the Chinese have never invaded any other territory, and don't have any aggressive ambitions.

Why distract from the theme of "The U.S. is the evil empire"?

__________________
Job 13:5 (New International Version)
If only you would be altogether silent! For you, that would be wisdom.

Chinese mililtary action (post WWII)
Civil war: 1946-1949
Conquest of Hainan; March 1950 - May 1950
Conquest of Tibet; 1950
Korean War; June 1950 - July 1953
Civil unrest in Tibet; 1956 - 1959
Indian border dispute; 1962
Vietnam; 1979

American Military action (post WWII)
IRAN 1946
YUGOSLAVIA 1946
URUGUAY 1947
GREECE 1947-49
CHINA 1948-49
GERMANY 1948
PHILIPPINES 1948-54
PUERTO RICO 1950
KOREA 1950-53
IRAN 1953
VIETNAM 1954
GUATEMALA 1954
EGYPT 1956
LEBANON 1958
IRAQ 1958
CHINA 1958
PANAMA 1958
VIETNAM 1960-75
CUBA 1961
GERMANY 1961
CUBA 1962
LAOS 1962
PANAMA 1964
INDONESIA 1965
DOMINICAN REPUBLIC 1965-66
GUATEMALA 1966-67
DETROIT 1967
UNITED STATES 1968
CAMBODIA 1969-75
OMAN 1970
LAOS 1971-73
SOUTH DAKOTA 1973
MIDEAST 1973
CHILE 1973
CAMBODIA 1975
ANGOLA 1976-92
IRAN 1980
LIBYA 1981
EL SALVADOR 1981-92
NICARAGUA 1981-90
LEBANON 1982-84
HONDURAS 1983-89
GRENADA 1983-84
IRAN 1984
LIBYA 1986
BOLIVIA 1986
IRAN 1987-88
LIBYA 1989
VIRGIN ISLANDS 1989
PHILIPPINES 1989
PANAMA 1989-90
LIBERIA 1990
SAUDI ARABIA 1990-91
IRAQ 1990-?
KUWAIT 1991
LOS ANGELES 1992
SOMALIA 1992-94
YUGOSLAVIA 1992-94
BOSNIA 1993-95
HAITI 1994-96
CROATIA 1995
ZAIRE (CONGO) 1996-97
LIBERIA 1997
ALBANIA 1997
SUDAN 1998
AFGHANISTAN 1998
IRAQ 1998-?
YUGOSLAVIA 1999-?
YEMEN 2000
MACEDONIA 2001
UNITED STATES 2001
AFGHANISTAN 2001
IRAQ 2003-?

http://www.zmag.org/CrisesCurEvts/interventions.htm

China was been engaged in wars, yes, but I think America trounces them somewhat in terms of how many wars either side has been in.

__________________
"I see no reason why...there should not arise a United States of Europe" Winston Churchill, 1946

There is a difference between being involved in a globally sanctioned peace operation and a war for conquest. You realize this, right?

__________________
Job 13:5 (New International Version)
If only you would be altogether silent! For you, that would be wisdom.

here we use the word "conquest", but u must understand hainan is a chinese territory, tibet, u maybe think it is a country, but for us chinese, it is a part of china.

globally sanctioned peace operation
i just wonderding, if a country in south american is in war status, will us allow other countries send the army there??
do one nations have the right to send armies to other countries as long as that countries is not in peace. or can one country have the right to send army to a country as long as the country claims he is peace keeper

When you say "us Chinese" do you mean the PRC government or the masses that they control? They are not the same thing.

Either way, it does not belong to them simply because the PRC says it belongs to them. That would be like the US saying one day that Canda belongs to us because they share so much of our history and culture...what do you think Canada would say to that?

...we surrender?

I said Canada....not France.