China’s Official Military Budget to Grow by 17.6% in 2008Mar 06, 2008 20:08 UTC by Defense Industry Daily staff
As was the case in the communist Soviet Union, China’s official military budget and real military budget are not the same thing. Many items are hidden under other ministries, or simply not reported truthfully in the absence of accountable government. Official figures are given, however, and for the last 2 decades those figures have shown uninterrupted double-digit increases. Hot on the heels of the Pentagon’s release of its Congressionally-mandated “Military Power of the People’s Republic of China 2008” [PDF] report, Chinese “People’s Congress” spokesman Mr. Jiang Enzhu announced an 17.6% increase in China’s 2008 military budget, to 417.77 billion yuan ($58.81 billion). The increase follows a 17.8% increase in 2007, and a 14.7% increase in 2006.
The real math, of course, lies in compound interest; over 20 years, an increase averaging 10% per year would grow a budget to 6.7 times its original size; at 12.5% per year, the figure is 10.5 times, and at 14% per year the budget would be 16.4 times its original size. Military modernization programs appear to be accelerating in step, including reports that China’s navy has already announced plans to build its first aircraft carrier by 2010. While estimates regarding the true size of China’s military budget vary…
The Chinese Government recently claimed that the average annual rise in the defense budget from 2003-2007 had been 15.8%, well below the average 22.1% growth of overall government revenues. Neither figure can be independently verified, of course. One reliable statistic, however, is that inflation rose to an 11-year high in January 2008, which makes it likely that pay raises to soldiers account for at least some of the total increase.
RAND’s Project Air Force, which has also studied China’s arms industry modernization, estimated the 2004 Chinese military budget at $65-79 billion in FY 2001 dollars; at 2% inflation, this would equal $76-86 billion in FY 2006 dollars. Various professional sources discussed in our 2006 article were closer to $100 billion, which is in agreement with RAND since increases of 12% in 2005 and then 14.7% in 2006 give an FY 2006 range of $96-110 billion with 2% inflation.
Accepting this figure and the officially announced percentage rise, the FY 2007 range would be $115-130 billion, and the FY 2008 figure would be $138-156 billion. The US Defense Department’s report places the 2008 figure between $97-139 billion.
Regardless of the exact figure, officials from the US Pentagon and from India’s RAW (Research and Analysis Wing) intelligence service now agree that the Chinese defense budget remains the second largest in the world. A slightly different take comes from the Stockholm International Peace Research Institute (SIPRI), which places China behind the United States, Britain and France in total defence spending, but 2nd to the United States in purchasing power parity at $188 billion to Washington’s $529 billion.
For a set of additional links & resources concerning China’s socio-economic, geo-political and military plans, challenges, and issues, see: “China’s Stresses, Goals, Military Buildups… and Futures” at Winds of Change.NET.
Sources and Readings: China Daily (government controlled) | Agence France Presse | The Australian | Bloomberg news (USA) | The Guardian (UK) | National Post (Canada) | Financial Times (UK) | Taipei Times (Taiwan) | Times of India | Wall St. Journal (USA) | Washington Post (USA).
See also TIME Magazine’s December 2007 “Enemies at the Firewall,” which discusses rising concern in the USA and Europe over Chinese cyber-attacks; this was a larger entry in the 2008 Pentagon report than it had been in past years.