Understanding the connection between Chinese military spending and Chinese military power is complicated by a lack of transparency. Although Beijing provides figures for its defense spending each year, outside estimates of China’s defense budget are often significantly higher than the official numbers. China provides limited information on the distribution of its military spending, which further obscures spending patterns.
Defense Spending Giants
Tracking Chinese Military Spending
Notwithstanding these differences, Beijing’s official figures may now more accurately represent defense expenditures than in the past. In 2002, the DoD reported that China’s actual defense spending may have been upwards of four times larger than its officially announced budget. In comparison, the 2019 estimate from SIPRI pegs China’s nominal defense spending at $261 billion – 1.5 times larger than the official figure.
Varying levels of transparency from Beijing compound outside efforts to estimate China’s defense budget. The publication of 11 defense white papers since 1995 has provided some insight into the nature of Chinese military spending, but with varying degrees of specificity. White papers published between 1998 and 2008 included comparative budget breakdowns between China and countries like Japan and Russia. These comparisons were removed from white papers after 2008, but reappeared in the most recent white paper that was released in July 2019.
Chinese Defense Expenditure Breakdown
Billions of Dollars (2017)
Amount Percentage (%)
Personnel 47.51 30.8
Training & Maintenance 43.41 28.1
Equipment 63.47 41.1
Total 154.39 100Source:United Nations
Most defense white papers – except those released in 2013 and 2015 – also outline three spending categories: personnel, training and maintenance, and equipment.4 Beijing states that it annually reports categorized military spending information to the UN; however, this information is only available from the UN in one-page reports for fiscal years 2006, 2007, 2008, and 2017. 5 The reports from the mid-2000s show roughly equal spending between each of these three categories. The 2019 white paper, which includes spending breakdowns between 2010 and 2017, reveals a noticeable shift away from this even distribution. Spending on equipment now accounts for the largest share of the defense budget, accounting for just over 41 percent of total spending in 2017.
China’s lack of transparency leads to discrepancies between official figures and outside estimates due to differences in what expenditures are included in the budget. Official figures do not account for a number of military-related outlays, including aspects of China’s space program, extra-budgetary revenues from military-owned commercial enterprises, defense mobilization funds, authorized sales of land or excess food produced by some units, recruitment bonuses for college students, and provincial military base operating costs.
Comparison of Official Military Spending Figures
|Billions of RMB (Billions of USD)|
|Year||Ministry of Finance||2019 Defense White Paper|
|2017||¥1023.7 ($151.5)||¥1043.2 ($154.4)|
|2016||¥954.6 ($143.7)||¥976.6 ($147.0)|
|2015||¥886.9 ($142.4)||¥908.8 ($145.9)|
|2014||¥805.5 ($131.1)||¥829.0 ($134.9)|
|2013||¥720.2 ($116.3)||¥741.1 ($119.6)|
|2012||¥650.6 ($103.1)||¥669.2 ($106.0)|
|2011||¥583.0 ($90.2)||¥602.8 ($93.3)|
|2010||¥518.2 ($76.5)||¥533.3 ($78.8)|
|Source: Ministry of Finance and Ministry of Defense.|
|USD values are based on average annual RMB-USD conversions using data provided by the IMF.|
China is not alone in excluding elements of defense-related spending from its official defense budget. India’s paramilitary forces, which make up the Central Armed Police Forces, fall under the Ministry of Home Affairs, not the Ministry of Defense. India is also not forthcoming about space and nuclear weapons expenditures. The United States funds its nuclear weapons through the Department of Energy and does not include these details in its defense budget. However, the US government maintains a high level of budgetary transparency, which enables analysts to readily account for discrepancies.
Estimates of China’s military budget are further complicated by the reporting of costs not typically included in many Western defense budgets. Historically, expenses incurred by military infrastructure construction were assumed to be included in the official figures, although many of these projects are designed to be dual-use and use funding from local and national non-defense budgets. Disaster relief is likewise funded through the defense budget and is to be reimbursed by non-defense agencies, but the mechanisms and effectiveness of this reimbursement remain unclear.
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Prerequisites for retired senior officers — including offices, assistants, and special access to hospital facilities — are all funded through China’s defense budget. Many of these functions and associated costs are typically incurred in Western countries by nonmilitary organizations, a discrepancy that further complicates estimates of China’s military budget. It remains unclear what percentage these expenditures constitute of China’s total defense budget.
The inconsistencies in estimates are further complicated by a lack of pricing information. Beijing does not release accurate cost data for military goods and services, making it difficult to make calculations based on purchasing power parity (PPP). Some of the chief challenges are uncertainty over which goods to place in China’s defense spending basket, and which goods to compare between China and other countries. Independent organizations, such as IISS, caveat their PPP estimates, noting that no specific PPP rate applies to the Chinese military sector and that there is no definitive means through which elements of military spending can be calculated using PPP rates.
Comparing Chinese Military Spending
Calculations in this section are derived from the SIPRI Military Expenditure Database.8
China’s defense spending has seen a nearly seven-fold increase over the past two decades, jumping from $39.6 billion in 1999 to $266.4 billion in 2019. China currently spends more on defense than Japan, South Korea, the Philippines, and Vietnam combined, and China’s military spending is second only to the United States.
This growth in military spending is tied to China’s rising gross domestic product (GDP). Since 2000, China’s defense expenditures as a share of its GDP has hovered at around 2 percent. In comparison, Japan’s military spending remains set at approximately 1 percent of its GDP, but this could change in the future as Prime Minister Abe has pushed for a spending increase.
China’s rising defense spending follows from over two decades of modernization efforts. China began military modernization in earnest after the 1995–1996 Taiwan Strait crisis, which exposed fundamental weaknesses in China’s ability to deter foreign intervention in sovereignty disputes. The increase in China’s defense spending during this period was, in part, also a response to domestic policies that left China’s defense budget relatively stagnant prior to the 2000s.
Aggregate spending increases have corresponded with several high-profile procurement programs, military reforms, and doctrinal and strategic shifts within the People’s Liberation Army. These shifts have facilitated China playing a larger role in regional and international security. Some of these efforts, such as China’s participation in UN peacekeeping operations, antipiracy efforts, and humanitarian assistance and disaster relief are welcome contributions to global governance. On the other hand, defending China’s growing security interests in the East and South China Seas has strained relations with other regional actors.
China’s naval expansion allows it to play a greater role in international security issues. As of 2018, the Chinese Navy consists of over 300 ships, making it larger than the US Navy’s 287 deployable vessels. Learn more.
Despite considerable increases over the past fifteen years, China’s military budget pales in comparison to that of the US. The US spent 3.4 percent of its GDP on defense in 2019, and its nominal expenditure was more than two and a half times higher than that of China. Even when accounting for reporting discrepancies, China would have to raise its spending considerably to match the US defense budget. However, it is worth noting that the United States maintains a global military presence while China remains primarily focused on security issues within the Indo-Pacific.
In the article “The Tragedy of the American Military,” author James Fallows posits that the U.S. military escapes external scrutiny due to a growing gap between those who have and those who have not served. The result of this gulf is that “outsiders treat it both too reverently and too cavalierly, as if regarding its members as heroes makes up for committing them to unending, unwinnable missions…” Fallows postulates that this results in the creation of a “Chickenhawk Nation, based on the derisive term for those eager to go to war, as long as someone else is going. It would be the story of a country willing to do anything for its military except take it seriously.”
Of course Biden was not alone, and neither were the Democrats. The House of Bush was always fond of the myth that economic engagement of China, evidently on terms favorable to Beijing, would turn an adversary into an ally. The myth lives on. Bob Zoellick, who was George W. Bush’s trade kingpin, has been an outspoken opponent of Trump’s effort to end U.S. dependence on China, lamely claiming, “You can’t contain China.”
"China Is A Threat To The World, Building Military Rapidly": Donald Trump
"At some point in the not-too-distant future, it'll be over USD 100 billion. We've never taken in 100 cents from China. It was always the other way around. With that, they lost over 3 million jobs there. Supply chain is crashing, and they have a lot of problems. And want to make a deal. So, we'll see what happens," Donald Trump said.