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China's Defense Budget 2015: Beyond Official Explanations By Bhaskar Roy

C3S Paper No. 0059/ 2015

China’s State Council spokesperson Fu Ying announced (Beijing, March 03) that China’s defense budget for 2015 will increase by 10% to 889 billion Yuan (approx US $ 142 billion). This is less than 12.2% increase in 2014, and 10.7% in 2013.

China continues to insist that its defense expenditure still fails to fill the wide gap between its arms and equipment and that of some foreign countries. The US military budget for 2016 was recently signed by President Barack Obama at US $ 581 billion, while the Russian budget for 2016 is estimated at US $ 93.9 billion. Japan and India come way behind, in the range of US $ 42 billion and US $ 22 billion (approx) respectively.

Standing as the second largest military spender after the US, China has another argument – that its defense spending is around 1.5% of the GDP against the global average of 2.6%. Here, the Chinese officials avoid mentioning that theirs is the second largest economy in the world after that of the US. It is estimated that the Chinese economy will surpass the US economy in not too distant a future. There is no surety that China’s defense expenditure will remain within the current parameters. Beijing is assessing global reactions and is proceeding accordingly.

Experts on China’s military spending assess that the real military expenditure is much more. The declared expenditure goes towards salaries which have been rising in recent years, and living expenses. The hidden portion of the budget goes into Research and Development (R&D), manufacture of weapons and equipment, and foreign acquisition. Therefore, the actual expenditure would be well above US $ 200 billion.

China is also a major exporter of military equipment and small and medium arms. The earnings are ploughed back into the military.

A significant portion of China’s military exports go to small and medium developing countries, which earns Beijing political and strategic influence.

In South Asia, Pakistan’s military has been almost totally armed by Chinese arms and equipments, except for some fourth generation military equipment supplied by the USA. China’s calculated military transfers to Pakistan has strengthened Islamabad’s resolve to prosecute its confrontations with India.

Equally important, Chinese military and political support have made Pakistan the pivot of Beijing’s encirclement of India policy.

Bangladesh is another recipient of Chinese military transfers, which helped China acquire political allegiance of the anti-India sections in Bangladesh’s polity. The latest recipient of Chinese military and political patronage is Sri Lanka which, under the rule of recently electorally defeated President Mahinda Rajapaksa, had joined Beijing’s encirclement of India strategy.

China’s arms sales are without any strings like human rights, ideological leanings etc. In earlier years, China even supplied military equipment to friendly countries free or at “friendship” prices.

Many analysts make the mistake of viewing China’s military and the development of its military power through a narrow US prism. While discussing its military power, China also compares itself with the US, creating a false image of its overbearing power over its neighbours. China no longer describes its neighbourhood in terms of countries of East China Sea, South China Sea and South East Asia. It now goes beyond South Asia to the Indian Ocean under the new concept that the Pacific Ocean and the Indian Ocean are seamlessly joined and interests of countries of this large extended region overlap. Being one of the world’s busiest shipping lanes, there is fierce competition for safeguarding economic and strategic interests.

China’s growing military power and aggressive assertiveness on territorial disputes go hand in hand with its rapidly growing military budget. Japan has faced some of it over the Senkaku (Diaoyu in Chinese) Islands in the East China Sea which both countries claim but is under Japanese control.

But China’s assertiveness over its claims of the Spratly Islands in the South China Sea, also claimed by other countries of the region, especially Vietnam and the Philippines is overbearing. It is now strengthening its military presence on the islands it controls, as power projection platforms to capture islands not in its possession.

China claims almost the entire South China Sea as its sovereign territory. It has created a highly questionable map of nine-dashed lines of its claims in the South China Sea and has been seeking US acceptance of the South China Sea as its “core interest”, which will allow China to use full military force to secure this sea. The US has rejected this approach. China’s established core interests in order of priority are – ruling position of the communist party, Tibet, Xinjiang and Taiwan. China argues that freedom of navigation in the South China Sea is vital to its interests. But so is it for other countries, including India. China’s foreign minister Wang Yi defended (March 8) efforts to reclaim and build on reefs and islands in South China Sea saying, “We are merely building facilities in our own yard” which are “lawful”  and “justified” and poses no threat to other nations. This obviously has raised new concerns about China’s threatening assertiveness. So is the case in the Indian Ocean. These are global commons which should not be militarized. But China is well on its way to militarily control the South China Sea, and is probing a similar adventure in the East China Sea, to break out of what is known as the “first chain of islands” into the blue waters of the Pacific Ocean. The move is fraught with escalation of tensions with Japan.

The 21st Century Maritime Silk Route is another Chinese move that requires close monitoring, and response if necessary. China has stepped on the accelerator with the slogan “win-win” and development for all. It is an expansion of the Middle Kingdom in the Indian Ocean with trade at its heart for now. The East India Company did the same with some military backing, to be eventually taken over by the British crown establishing colonies essentially with military power, making India a British colony for 200 years.

This is not to say that China is out there to establish colonies. That is not how the Chinese work. China’s military activities, however, are already visible with its navy traversing the Indian Ocean on anti-piracy missions. But the appearance of Chinese submarines in the region is a red flag. China is expected to appease and coerce wherever necessary to form vassal states of the Son of Heaven (in this case sons of heaven) sitting in Zhongnanhai. And for those who do not fall in line the tactic will be to “squeeze” the offender. India would fall in this category.

In an interview to the Xinhua (March 04), Maj. Gen. Chen Zhou, a delegate to the National People’s Congress and a researcher at the Academy of Military Science, gave an insight into China’s increasing defense budget: “How much are the needs for national security and how much will, our defense spending be? Wherever our national interests extend, that is where our defense spending will follow. This is the principle that investment in national defense spending must follow”. He added, that “Strong material support is indispensable in achieving the Communist Party’s  goal of having a strong army in the new situation.”

Rear admiral Yin Zhou, a member of the CPPCC’s National Committee, observed (March 02) that China must continue to develop aircraft carriers to maintain the security of its Indian Ocean routes. He reasoned that Japan had two carriers and India will soon have three or four. In his view China required at least six aircraft carriers to meet its strategic needs.

China has one aircraft carrier, the refurbished “Liaoning”, which may not stand up to battle requirements. A second one is being built indigenously. It already has a series of nuclear submarines in service.

Aircraft carriers are floating airfields required for battle, not for anti-piracy engagements. What will they do in the Indian Ocean, carrying fourth generation aircraft like the J-20 (under trial) and supported with nuclear and conventional missile armed attack submarines?

Equally important is China’s growing anti-satellite or satellite warfare capability, in parallel with its cyber warfare capability to jam enemy communications or hack into enemy computers.

China has recently been disclosing its fast growing attack equipment which include missiles with possible multiple warheads capability. These exercises may be for domestic reasons, but they also put the rest of Asia on notice.

China claims its rise is “peaceful” and its military power is “defensive”. Neither claim stands close scrutiny. Its rise is peaceful as long it is on China’s terms. Otherwise, it is “What China wants, China gets”, in Asia.

(Note: The writer is a New Delhi based strategic analyst.  He can be reached at e-mail

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