China’s defense spending slows as Xi turns graft push on PLA

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China’s central government will increase defense spending at a slower pace than last year as President Xi Jinping overhauls the military and seeks to stamp out the corruption that hinders the country’s combat readiness.
The defense budget will rise about 10 percent this year, in line with the increase in the general budget, Fu Ying, National People’s Congress spokeswoman, said at a briefing on the NPC meetings that start tomorrow. Last year military spending rose 12.2 percent to 808.2 billion yuan ($128.9 billion).
“They are tightening up anti-corruption inside the PLA, so that would probably mean more efficient use of resources,” said Zhang Baohui, director of the center for Asian Pacific studies at Lingnan University in Hong Kong, referring to the People’s Liberation Army. “It is too early to tell if spending is tapering off. We’ll need a few more years to detect a trend.”
China’s military expansion has fueled tensions as it asserts its territorial claims in surrounding waters, testing U.S. allies such as Japan in the process. Defense spending has more than doubled since 2006, though widespread corruption and a lack of military engagement have undermined efforts at modernization.
Naval expansion
Much of China’s spending has been focused on expanding its navy as it seeks to enforce its claims to more than 90 percent of the South China Sea and build a maritime Silk Road, a trade route linking a network of ports through the Indian Ocean with Europe via the Suez canal.
“It seems that all the action is happening in the maritime area,” said Sam Perlo-Freeman, director of the military expenditure and arms production program at the Stockholm International Peace Research Institute, citing recent increases in spending on navy and air force equipment. “The importance of the sea in the current territorial disputes, the importance of air in joint operations is a lot higher.”
China’s military expenditure as a share of its economy was 2 percent in 2013, less than the 3.8 percent in the U.S. and 4.1 percent for Russia.
This year’s 10 percent increase in spending is the slowest since 2010, when it climbed 7.5 percent.
“Our history has taught us that you get beaten up if you’re backward,” said Fu. “Our country will need to achieve modernizations, and one of them is military modernization, which will need sufficient financial support.”
Fighting ability
The country’s armed forces suffer from “potentially serious weaknesses” that could limit fighting ability, according to a Rand Corp. report published last month, which cited corruption as a reason.
“The PLA leadership are worried that corruption within the PLA is likely degrading or inhibiting readiness and war-fighting capabilities,” said Andrew Scobell, a senior political scientist at Rand in Arlington, Virginia. “The PLA hasn’t fought an actual war since 1979 so there is some question as to its level of military readiness and state of combat effectiveness.”
Xi’s anti-graft campaign recently snared a second retired deputy commander of the armed forces as he undertakes the most significant military clean-up in more than three decades, according to a person with direct knowledge of the investigation.
Graft targets
Guo Boxiong, a former vice chairman of the Central Military Commission, the highest military body, was put under investigation in recent weeks, the person said. The probe follows that of Xu Caihou, another ex-CMC vice chairman, who was expelled from the party last June after allegations of corruption.
The purge of China’s military is gathering momentum. The PLA this week released a list of 14 generals who have been investigated in recent days, including Guo’s son, Xinhua reported March 2. Those names are in addition to 16 generals named in January as being under investigation for graft.
China has been upgrading its military since the early 1990s when its economy started to take off and as the technological prowess displayed by the U.S. forces in the first Gulf War exposed the PLA’s shortcomings.
“They realized there was a significant gap between what the PLA could do and what its potential adversary, the armed forces of the United States, were able to do on the battlefield,” said Scobell.
Defense expenditure
In the 20 years to 2013, China’s defense expenditure rose by an average of 15 percent a year, according to Sipri data, which are unadjusted for inflation. The economy grew an average 9.8 percent over the same period, with an average inflation rate of 4.1 percent. The PLA doesn’t provide a breakdown of spending between the army, navy, air force or strategic services.
Sipri estimates China’s actual spending is about 55 percent above the officially stated figure to take into account items including military research and development, arms imports, military construction and PLA pension costs.
China’s defense spending has propelled it into the number two position behind the U.S. worldwide, though its outlays are dwarfed by its bigger rival. The U.S. Defense Department has requested $534.3 billion for the year starting Oct. 1.
South China Sea
“China’s still a long, long way from the U.S. and will remain so for the foreseeable future,” Sipri’s Freeman said. Still, “when that’s combined with assertive behavior in relation to certain territorial disputes, that is cause for concern.”
China’s assertiveness in the South China Sea was on display when it deployed an oil rig in disputed waters off Vietnam last May, as well as a fleet of civilian and military vessels to protect it. It is also embroiled in a spat with Japan over a group of uninhabited islands in the East China Sea. Military aircraft from both nations regularly tail each other around the area.
China’s stepped-up spending is contributing to neighbors boosting their defense outlays.
Japan will increase spending for a third year in 2015, reversing 11 years of declines. India last month raised its defense budget for the coming year by 11 percent to 2.47 trillion rupees ($40 billion) and commissioned six new nuclear powered submarines and six new frigates. Vietnam, Singapore, Indonesia and Taiwan are all buying, or have plans to buy, submarines.
China’s military is also increasing its participation in international exercises, taking part for the first time in the U.S.-led Rimpac drills last year, with four of its ships joining.

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