March 04, 2016

China's military spending will only increase by 7-8% in 2016 because of a slowing economy

There had been rumors that China would have a big 20% military budget increase but instead military spending will grow by 7 to 8 percent in 2016, the smallest increase in six years.

Although experts say actual spending is significantly higher than the official budget, China’s military spending is still dwarfed by that of the United States, both in monetary terms and as a proportion of the overall economy.

China’s President Xi Jinping is trying to modernize and streamline the country’s military, seeking to make it more effective and simultaneously curb corruption. The People’s Liberation Army is being trimmed by 300,000 troops, but the 2-million-strong force is still the world’s largest standing army.

The increase would be the first single-digit boost in defense spending since 2010, when the budget rose 7.5 percent, and is below the 10.1 percent boost in last year’s budget. It is roughly in line with official economic growth of 6.9 percent in 2015 and would take the military budget to around $150 billion, about a quarter of Pentagon spending of nearly $600 billion last year.

China’s official defense budget amounts to 1.3 percent of gross domestic product, compared to 3.1 percent in the United States.

The Stockholm International Peace Research Institute estimates that China’s actual military spending is more than 50 percent above the budgeted figure when items such as military research and development, arms imports, military construction and pension costs are taken into account. In 2014, the institute’s broader measure of military spending scored China as spending 2.1 percent of GDP compared to the United States at 3.5 percent.

World military expenditure in 2014 was an estimated $1776 billion. The total was equivalent to 2.3 per cent of world GDP.

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