- As China’s “parliament” convenes for the 2nd session of the 12th NPC, the country is announcing another year of double-digit defense spending growth, with a budget up 12.2% to 802.2B yuan (about $131B). This growth rate is notable not just for its high level, but more importantly for its decorrelation from GDP growth. Up until recently, China could claim it was playing catch up with its military spending, thanks to a booming economy emerging from the medieval levels of poverty previously inflicted by Mao. But as of early 2014 GDP has officially been growing at about 7.7% for 7 quarters in a row, slightly below the 2012 growth level (7.8%) when the defense budget had increased by 10.7%.
- In other words, while its economic growth rate continues to cool down, China is increasing the relative growth rate of its defense budget, and it is doing so from a higher base, compounding the year/year growth in absolute terms. China is adding about $14B to its defense budget, or about a quarter of Japan’s total. China downplays this by pointing out dubious ratios such as defense spending/GDP, spending/capita, or even making land mass comparisons as if having strategic depth was a liability! Isn’t it convenient to be the world’s most populated country?
Continue Reading… »