Another Look At China's Defense Budget

China’s Defense Budget: A Mixed Bag -- The Diplomat

For the U.S. and its allies, China’s new defense budget contains both bad news and good news.

As my colleagues have already reported, China announced a military budget of 808.23 billion Yuan ($131.57 billion) for 2014, a roughly 12.2 percent yearly increase. Naturally, this has raised concern among many of China’s neighbors that are locked in territorial disputes with Beijing, as well as in the United States.

For the countries concerned about China’s growing defense spending, there is both bad news and good news (or at least less bad news) contained in this announcement.

Let’s begin with the bad. First, as is well known, China’s military spending in 2014 is almost certain to far exceed $132 billion, as Beijing is notorious for keeping much of its defense spending off the books. Many estimates of China’s 2013 defense spending put it closer to $200 billion, although any credible sources contain a caveat that the margin of error is high. Nevertheless, assuming it was around $200 billion in 2013, a 12 percent increase this year would put China’s defense spending at about $224 billion. The Pentagon’s base budget is about $527 billion for FY 2014, meaning that Beijing’s military budget is about 42 percent of the United States’. However, this gap is narrowing quickly given the stagnant or even declining U.S. defense budget and the large yearly increases in China’s military budget. As discussed more below, wide disparities in personnel costs further narrow the differences between U.S. and China defense spending.

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My Comment: What's my prediction .... America's defense budget will decrease as the U.S. economy continues to stagnate/debt continues to increase/and the electorate continues to demand (and elect) politicians who promise more entitlement spending. The Chinese defense budget will continue to increase because their economy is booming/there is general public support for a big and powerful military/and China has made the strategic decision to be the regional super-power in Asia.