China’s Military Budget: 19th Double-Digit Boost in a Row

Red flag to abull defense market On March 4, 2007, Jiang Enzhu, the Deputy Secretary General and spokesman for the National People’s Congress, announced that China’s official military budget would grow 17.8% this year, to $45 billion. This continues a trend covered in 2006 and 2005, and will mark the 19th consecutive year of double-digit military budget growth in the “People’s Republic” of China. As in the Soviet Union, however, the official budget and the real budget are not the same thing. Many items are hidden under other ministries, or simply not reported truthfully. 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. Sources discussed in our 2006 article were closer to $100 billion, which is in agreement since increases of 12% and then 14.7% give an FY 2006 range of $96-110 billion with 2% inflation. The FY 2007 range would be $115-130 billion, given another 17.8% increase. Other analyses have placed China’s real defense budget at up to 4x official spending, in which case actual Chinese defense spending could be as […]