Defence Spending: China And India – Analysis


By Maj. Gen. (Retd.) Dipankar Banerjee

In the first week of March 2011, within a week of each other, both China and India announced their defence budgets for the coming year. Each reflected a double-digit growth of about 12 per cent. But, the similarities end right there. In overall terms China plans to spend US $91.6 billion whereas India’s budget is pegged at about one third at US $ 34 billion. China today is not only the world’s second largest economy, but is also the second biggest defence spender. Besides, this double-digit growth has continued for two decades except for last year, with all its accumulated accretions.

Under China’s opaque accounting system its actual defence spending is considerably higher. According to SIPRI, the noted think tank based in Stockholm, the actual amount is likely to be at least a third more. In addition the Public Security Department (under the Ministry of Defence) responsible for internal security has a budget of $ 95 billion, more than the PLA. This may be justified with rapidly increasing domestic unrest, but many of these capabilities actually reinforce national defence. Besides, many expenses, such as weapons modernizations, domestic military acquisitions, weapons development, pension benefits and others are not included in the official budget.

On the other hand some amount actually allocated to Indian defence will probably not be spent at all, as has happened often in recent years. It is true that the Finance Minister has said this time that if additional requirement arises, more money would be found, presumably in the event of a major acquisition. But, it must be seriously questioned whether 1.84 per cent of GDP is all that we can afford to secure national defence?

It may be argued that China has larger security concerns. Its challenge is countering the US Navy in the Pacific, break through the first island chain and secure long sea lanes from the Persian Gulf. It has also recently declared as its ‘territorial sea’ almost the entire South China Sea. It is true that Beijing has the largest number of land neighbours, some with disputed borders. Equally, China has growing security needs in defending its heavy investments far afield in Africa and Latin America.

This is precisely what causes regional concerns. There are other means of securing legitimate national interests. Land borders can be settled through constructive engagement and mutual adjustments. Equitable and responsible resource sharing arrangements can be worked out at sea where there are maritime disputes. Distant investments are normally secured through local arrangements by all nations. Problems occur when there is an absence of flexibility, lack of transparency and instead a national policy of assertiveness combines with a call to arms.

This is why the nature of arms being acquired and capabilities being developed arouse more than mere curiosity. The thrust of China’s military spending over the years focuses on three critical areas. First, in developing a force projection capability to dominate not merely the three seas that border China (Yellow, East China and South China), but also further afield, to secure bases to conduct anti-piracy operations in the Persian Gulf. This is being supported by new aircraft carriers for sea control and a fleet of 60 increasingly modern nuclear submarines for sea denial with attack and nuclear weapons delivery capability. It also has a large fairly modern surface fleet. While no match for the US Seventh Fleet, it is surely more credible than the Japanese Self Defence Maritime Force and all other regional navies combined.

The second thrust area is developing a range of asymmetric capabilities; from anti-satellite weapons, cyber warfare, J-20 stealth fighter, aerial refuelling, anti-ship missiles, cruise missiles and a new range of solid fuel medium range nuclear capable ballistic missiles.

The final thrust area is less visible, but perhaps the most potent. It is the rapid reaction mobile forces, capable of being moved at short notice to distant parts of its periphery for offensive operations. These rapid deployment forces were the earliest elements of force modernization and by now have sufficiently matured, but their capability is being enhanced through large transport aircrafts for mobility and combat potential using aerial and ground fire support.

The question that logically arises is what objectives is this military capability likely to serve? The answer is to be found in China’s recent national policy of assertiveness. Even as it exploits recent US absence from Asia through a quick assertion of influence, it knows that policy has to be backed through military capability.

It is in allowing this development to go uncontested that India’s policy is likely to suffer. While India has done remarkably well in building within the last decade a set of relationships in Asia with the US, Japan, Australia and possibly Vietnam and Indonesia, realistically it is way below China’s influence. However, recent Beijing assertiveness and probable missteps with some of its neighbours allow an opening to India, which should not be missed.

In its current state of evolution, Asia needs a stable environment and a balance to China. It is important that New Delhi realizes this historic need and crafts its defence policy to match its own urgent security concerns.

Maj. Gen. (Retd.) Dipankar Banerjee
Mentor, IPCS
email: [email protected]


IPCS (Institute for Peace and Conflict Studies) conducts independent research on conventional and non-conventional security issues in the region and shares its findings with policy makers and the public. It provides a forum for discussion with the strategic community on strategic issues and strives to explore alternatives. Moreover, it works towards building capacity among young scholars for greater refinement of their analyses of South Asian security.

One thought on “Defence Spending: China And India – Analysis

  • March 20, 2011 at 1:38 am

    Thanks Maj. Gen. Bannerjee. I hope the Indian establishment capitalizes on the estrangement of China with its neighbors. I’m deeply concerned about the share of GDP our armed forces are getting, to develop a deterring force against China.


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