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China’s Defence Budget 2016: What It Spells – Analysis

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By Bhaskar Roy*

On March 5, China declared one of its lowest increase in defence budget since it started modernization under Revolution in Military Affairs (RFA). The increase of 7.6 percent, taking defence spending for 2016 to approximately US $ 146 billion, is the first single digit increase in the last six years.

Analysts are asking why this drop in the budget given the fact that China’s last defence white paper emphasised stronger defensive and offensive postures in the immediate region and extended military protection to Chinese interests overseas. Pertinent questions have been asked and very plausible expiations have also been written. It is near impossible for any outsider to get a peek into the brain of the Chinese Communist Party at Zhongnanhai in Beijing. The Chinese media and intellectual experts who had been given a little room for independent comments have been shut tightly by President Xi Jinping. The media has been dictated to publish “What is good for China” and “What is good for the Party”. In brief, this means media and commentators have to be ideologically and politically correct. Any deviation from this line attracts punitive action. Hence, analysts have to depend on peripheral information. But analysts have done a pretty good job.

It is quite possible that the increase in defence expenditure has been pruned because of economic slowdown. Fall in GDP growth will have to be shared by all sectors including defence. There are increasing challenges from rising unemployment. At this juncture when the party is trying to reassert its control over the people and the country, social unrest has to be avoided at any cost. Though Party Chief and President Xi Jinping appears to have liquidated most of his political enemies, they have not vanished. Xi’s anti-corruption campaign has targeted and eliminated most of his powerful enemies in the party and the PLA, there would hardly be any official high or low who has not been touched by corruption in his or her career. He would be looking back over his shoulders all the time. Hence, he needs finances to try and fill social inequities.

For decades China stuck to its foundational strategy of four modernizations, that is “Agriculture, Industry, National Defence and Science and Technology”, in that order of priority. One has not seen any alteration of priority in the four modernizations, though this strategy does not seem to be in vogue in the speeches of leaders.

The agricultural sector has stabilised, but the same cannot be said about industry and S & T. Although China is called the workshop of the world, it is also called “sweat shop” of the world. It floods the world, especially the developing and underdeveloped countries with low end and under-priced goods, it is now feeling the pinch of remaining at that level for a long time. This would take the sheen off Xi Jinping’s “Chinese dream”. Falling exports have to be addressed. It would require heavy injection of finances. Cutting edge S & T has to give inputs to industry. This is still behind the level that Chinese leaders want urgently to achieve. On the other hand, S & T for defence is a separate section.

According to some American reports, both from government and non-government analysts, Chinese cyber-attacks across the spectrum is devoted to steal not only trade secrets but also high end technology. The Chinese, of course, deny this. But this is the cheapest route to acquire high end technology.

Every route, however, costs money big or small. China may have also reduced the defence budget to assuage the rising concerns of neighbours in the Asia Pacific region especially those who have territorial disputes with China. It is, however, unlikely that this ploy will work.

China’s actions in South China Sea and East China Sea defeat any intention, if there was any, to calm the nerves of its neighbours. It has become highly assertive, if not threatening, in its neighbourhood. Its defence plans remain opaque, and keeps room for propaganda manipulations.

China’s plans to reduce its military by three hundred thousand personnel will release a substantial amount of expenses for the budget. Pension and rehabilitation expenditure does not come from the military budget. It sheds unnecessary flab from the military. At the same time the military is not rendered any weaker. It has established civil-military amalgamation for any emergent situation. Finance for such an eventuality will come from budgets of other ministries engaged in such an exercise.

China’s military export earnings do not figure in foreign trade. They are ploughed back into the defence expenditure, and this is not an insignificant amount.

Whether the anti-corruption campaign in the PLA will release a sizeable chunk from the budget allocation is questionable. In terms of individual gains from corruption look large, it really has little effect on the overall budget. Corruption made the army unprofessional and negatively affected the fighting capacity in some manner. The crux of the anti-corruption campaign was political.

According to Zhou Qiang (March 13), Chief Justice of China’s Supreme Court, China will set an International Maritime Judicial Centre to “safeguard China’s sovereignty, maritime rights, and other core interests”. Zhou was addressing delegated to the ongoing annual NPC conclave. This move appears to have been taken to counter the action taken by the Philippines to approach the UN law of the seas conference (UNCLOS) to arbitrate in the South China Sea dispute. But that is not the only point. It appears that China is planning to shift the responsibility of its claimed maritime possession to maritime security establishment. This will try to give a more benign image to China’s position. From the military expenditure point of view this will release a big amount for the military’s modernization and growth.

The defence budget does include research and development, nuclear weapons development and foreign acquisition. The real budget is estimated to be well above US $ 200 billion.

China claims its defence expenditure is far below that of USA, which is true. The US Defence Department budget for 2016 is US $ 573 billion. On the other hand, China’s declared defence budget is more than that of India, Japan and South Korea put together. In fact, China’s defence budget dwarfs the rest of Asia. A review of military strategies between China and the US will make it clear that the agenda of the two are very different. The US has a global agenda, while that of China is more regional but gradually expanding outward to secure its interest as far as Africa.

Since 2008, China drastically reorganised its military planning. A notable aspect of this reorganization was “aggression with impunity”. This was particularly visible in the South China Sea over sovereignty of the Spratly group of islands, and the Senkaku islands in East China Sea in the case of Japan. India has been the recipient of this aggressive behaviour along its unresolved borders with China in recent years.‘

In the period between 2010 and 2016 China invested a lot in building its military power. Long term out lays especially in the navy, missiles and air power. China plans at least four or five aircraft carriers. After refurbished Liaoning, a second carrier is under construction indigenously. The DF-21D carrier killer missile have become operational. New inter-continental ballistic missiles are on the plat form. While Russian Sa series aircraft remain as frontline fighters, the JF-15 and J-20 are no mean machines. These need no new funding at the moment.

The problem, however, is that most western analysts compare China with the US. The Chinese also do so to keep the focus out of the region. The fact is Asian countries, especially those who have territorial disputes with China and those perceived by Beijing to be in the US camp on its periphery, are becoming increasingly vulnerable. For India- Do not be complacent.

*The writer is a New Delhi based Strategic Analyst. He can be reached in e-mail [email protected]

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SAAG

SAAG is the South Asia Analysis Group, a non-profit, non-commercial think tank. The objective of SAAG is to advance strategic analysis and contribute to the expansion of knowledge of Indian and International security and promote public understanding.

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