Chinese military budget mostly hidden

March 10, 2001

Because so much of the People’s Liberation Army budget is secretive, experts say China’s recent announcement that it would increase its military expenditures over the next year is almost meaningless and instead carries much more “political significance.”

On Tuesday, Beijing announced an 18 percent increase — $17.7 billion — in next year’s military budget, though Finance Minister Xiang Huaicheng said most of that would be used to boost salaries as the People’s Liberation Army tries to professionalize its ranks.

And, because of huge demobilization efforts spanning the last few decades, the PLA is also saddled with a large pension bill for millions of now-retired officers and soldiers who have been eliminated from the ranks.

Salaries for officers and others “will be greatly increased from this year, as well as for retired officers,” Zhang Jian, a researcher at Strategy and Management Magazine told the South China Morning Post. “This is really a big proportion of the military budget.”

But Xiang also told the communist national legislature that the increase was needed “to adapt to drastic changes in the military situation of the world and prepare for defense and combat, given the conditions of modern technology, especially high technology” — an area in which most analysts think China is substantially behind.

And overall, analysts believe the 18 percent figure is arbitrary, because most don’t know how large Beijing’s military budget is to begin with.

Uncertainty over the figures

“It is hard to figure out what 18 percent means, starting with — 18 percent of what?” John Frankenstein, a U.S. expert on the People’s Liberation Army, told the paper. “There is really no standard definition of a military budget anyway.”

China’s most recent defense White Paper said a third of military expenditures go for personnel, a third for procurement and a third for operations and training. But no figures were given.

“Military expenditures will surely increase in the next five years, and the increases will not necessarily be publicly announced,” Zhang said. “They need a great deal of money for modern weapon research and development.”

In a paper published in the U.S. and foreign policy journal The National Interest, entitled, “China’s Hollow Military,” Bates Gill and Michael O’Hanlon said that despite the large size of the PLA — currently 2.8 million active-duty members — two-thirds serve as ground forces, are poorly trained and equipped, and spend much of their time doubling as farmhands.

The Asia experts said, however, that China’s defense budget grew about 50 percent in the 1990s, though a great deal of that was used as compensation for the PLA to divest itself of various business enterprises.

But much of the budget is kept under wraps and the Asian experts said China’s budget for the military does not include such high-expense items like foreign arms purchases, nuclear weapons development and maintenance, most military research and funding of local paramilitary troops.

Also, the figures don’t count subsidies Beijing pays to keep its ailing defense industry afloat, or other non-military costs like pensions and the cost of demobilization.

Modernizing the force

Writing for the South China Morning Post, analyst Jasper Becker said China’s announced military budget increase will no doubt cause concern in the West — as it has — because it is the largest in several years and it may signal the reversal of a policy begun under the late Chinese leader Deng Xiaoping.

In the 1980s, Deng implemented plans to begin reducing the size of the armed forces by one million men. Within two years, Hu Yaoban, Communist Party chief and Deng prot?g?, announced plans to demobilize another 2 million. Then, in the early 1990s, then-new party leader Jiang Zemin — who is now the Chinese president — said he wanted further cuts of one million personnel.

Out of the plans to demobilize four million troops, however, analysts say it is still not clear how many were actually eliminated.

Becker said instead of pouring money into a new defense build-up, as many in the West have suspected, China seems to be putting much of its military resources into personnel. He said China is spending more per soldier “to create well-trained, high-tech” forces and a smaller, more professional modern army. He anticipates that by 2010, the PLA will likely consist of around 1.9 million troops — “but only about half will be on active service, and only some will have the latest weaponry.”

Other analysts have said China — realizing the foes it is likely to face, such as the U.S. — is years ahead of the curve in terms of professional troops, as well as equipment and technology.

Like India and, to a lesser extent, Russia, China also realizes it must modernize its vast but outdated arsenal of tanks, fighter planes and naval ships. Becker said a recent study showed that China would have to boost defense spending by about $22 billion to $39 billion annually for the next decade just to “give a show of force abroad.”

And, he said, the PLA will have to train soldiers to use the new weaponry.

A Chinese destroyer

Burgeoning capability

Nevertheless, despite the dire analyses, in some sectors, China is making at least some headway in the bid to develop better and more lethal weapons.

Besides buying sophisticated weapons from just about the only nation that has them and will sell them — Russia — China is also working to create “asymmetrical” and cyber-warfare technology, anti-satellite technology and a domestic warship and jet fighter production capability.

China has built planes, tanks and ships for years, but nothing that is capable of outclassing U.S. or Russian vessels. With new cooperative agreements signed over the past few years with Moscow, Beijing could soon garner enough technology to begin producing comparable aircraft, ships and ground attack systems.

Also, as the Washington Times’ Bill Gertz and Rowan Scarborough reported more than a year ago, the “developing anti-U.S. alliance between Russia and China continues to grow,” as U.S. intelligence officials have “discovered a new area of alarming secret cooperation: nuclear weapons.”

The super-secret National Security Agency at Fort Meade, Md., obtained an electronic intercept in November that was passed to senior officials in a top-secret report. The report said Russian nuclear weapons experts are assisting China with “tritium extraction” for thermonuclear warheads, Gertz and Scarborough reported.

Tritium is a gas used to boost the explosive power of nuclear explosions.

“This effort was already helped immensely by China’s theft of design information on every deployed U.S. nuclear warhead. In addition to the nuclear weapons cooperation, Russian technicians also are helping China’s military build cruise missiles,” the report said.

“Moscow also has sold advanced Su-27 and Su-30 warplanes and Sovremenny-class destroyers with high-speed SS-N-22 Sunburn anti-ship missiles.”