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HomeGeopolitical CompassEast AsiaA New Estimate of China’s Military Expenditure

A New Estimate of China’s Military Expenditure

Authors: Dr. Nan Tian and Fei Su

Affiliation: SIPRI

Organization/Publisher: Stockholm International Peace Research Institute

Date/Place: January 2021/Stockholm, Sweden

Type of Literature: Report

Number of Pages: 38

Link: https://sipri.org/publications/2021/other-publications/new-estimate-chinas-military-expenditure

Keywords: China, Security, Defense, Budget, Arms Race, Military expenditure, SIPRI

Brief:

China is the world’s second-largest economy and also is second in most military expenditures, only after the US. However, mostly Western critics have alleged that Beijing is not transparent in its defense dealings. It has not been revealing the real figures, they claim. In 2019, China’s official estimates show it spent $175 billion on its defense. This paper estimates China’s military expenditures using SIPRI’s own methodology. “China’s limited transparency in military affairs has led many to question the accuracy and credibility of its official national defense budget,” the paper notes. It asserts the need to review the defense figures of China’s defense industry because the country’s economic, defense and security policies have “continued to change at a dramatic pace.” This report finds ten possible additional components “outside the official national defense budget.” It estimates Chinese military expenditures in 2019 at $240 billion – equal to 1.7% of its GDP; however, it is down from 1.9% under the old estimate by SIPRI. The paper notes that the gap between the official Chinese national defense budget and the spending estimates made by the US Department of Defense is “also decreasing meaning a growing share of China’s spending on military activities is now in the official national defense budget.” The authors insist on “continuous monitoring and assessment” of the country’s military spending. “Changes in defense and economic policies can have a significant effect on military activities and how they are accounted for,” they noted. The paper says changes in policies are reflected in how the budget is spent, and items which are considered “extra-budgetary” in the past can be important in a new set up. It also refers to using Chinese-language sources which provide “important insight into known and unknown possible military activities.”

 

By: Riyaz ul Khaliq, Non-Resident CIGA Research Associate

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