China announces defence budget, reignites Taiwan rhetoric

Although an increase of $11 billion, the budget rise represents a growth of 6.6 per cent, the lowest rate of increase in 11 years. Despite the growth of China’s defence budget being at its lowest in percentage terms since the early 1990s, the 6.6 per cent figure only represents a slightly lower figure than the 7-7.5 per cent growth many analysts estimated before the pandemic. In real dollar terms, the $11 billion increase in defence spending is the fifth-highest increase ever for the country.

It appears that despite the impacts of the coronavirus on the Chinese economy, the CCP is focused on sheltering the People’s Liberation Army (PLA) from any ill effects as it continues its military expansion and technological advances.

Chinese Premier Li Keqiang, speaking in the opening of parliament, pledged that the PLA would not be worse off due to the crisis.

“We will deepen reforms in national defence and the military, increase our logistic and equipment support capacity, and promote innovative development of defence-related science and technology,” he told legislators at the opening of the National People’s Congress, which kicked off Friday at the Great Hall of the People in China’s capital, Beijing.

What an increase in China’s defence spending really means

It’s all good and well to highlight an increase in Chinese defence spending or even the slightly slower growth, but what does this actually mean? The Centre for Strategic and International Studies (CSIS) has reported extensively on the nature of Chinese military spending over the last decade or so. 

Firstly, understanding the connection between Chinese military spending and Chinese military power is complicated by a lack of transparency. Although Beijing provides figures for its defence spending each year, outside estimates of China’s defence budget are often significantly higher than the official numbers. China provides limited information on the distribution of its military spending, which further obscures spending patterns.

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How much China actually spends on its military is widely debated. The Stockholm International Peace Research Institute estimates the overall 2018 figure at nearly $254 billion, and the International Institute for Strategic Studies puts the number at $225 billion. The US Department of Defense concludes that China’s 2018 defence budget likely exceeded $200 billion.

Previous Chinese defence white papers outline three spending categories: personnel, training and maintenance, and equipment. Beijing has stated that it annually reports categorised military spending information to the UN. However, this information is only available from the UN in one-page reports for fiscal years 2006, 2007, 2008 and 2017. The reports from the mid-2000s show roughly equal spending between each of these three categories.

The 2019 white paper, which includes spending breakdowns between 2010 and 2017, reveals a noticeable shift away from this even distribution. Spending on equipment now accounts for the largest share of the defence budget, accounting for over 41 per cent of total spending in 2017. This is in line with the technological maturing of the Chinese forces and the move to more advanced and therefore more expensive military equipment such as advanced warships, fifth-gen and stealth fighters and even hypersonic missiles.

Official military spending also excludes spending on public security, which includes the People’s Armed Police (PAP). The PAP is a paramilitary police component of China’s armed forces that is charged with internal security, law enforcement and maritime rights protection. The Central Military Commission maintains direct control of the PAP. The official budget for the PAP was RMB179.78 billion ($26.8 billion) in 2019.

China’s defence spending has seen a nearly seven-fold increase over the past two decades, jumping from $39.6 billion in 1999 to $266.4 billion in 2019. China currently spends more on defence than Japan, South Korea, the Philippines and Vietnam combined. 

This growth in military spending is tied to China’s rising gross domestic product (GDP). Since 2000, China’s defence expenditures as a share of its GDP has hovered at around 2 per cent. In comparison, Japan’s military spending remains set at approximately 1 per cent of its GDP.

China’s rising defence spending follows from over two decades of modernisation efforts. China began military modernisation in earnest after the 1995-1996 Taiwan Strait crisis, which exposed fundamental weaknesses in China’s ability to deter foreign intervention in sovereignty disputes.

Aggregate spending increases have corresponded with several high-profile procurement programs, military reforms, and doctrinal and strategic shifts within the People’s Liberation Army. These shifts have facilitated China playing a larger role in regional and international security.

Taiwan rhetoric

Such a large announcement from the CCP and PLA would be incomplete without a statement of intent, Premier Li did oblige us so with comments regarding Taiwan. 

Premier Li stated that China would “resolutely oppose and deter any separatist activities seeking Taiwan independence”. He also called on the Taiwanese people to “join the mainland in opposing Taiwanese independence and to promote reunification”.

China views Taiwan as a breakaway province, with the self-governing island off its coast having formed its own government in 1949 when Nationalist forces fled there following defeat at the hands of Communists during China’s civil war.

The comments come as the US has also been recently actively voicing its continued support of the island nation’s continued opposition to the Chinese government. 

On 19 May, US Secretary of State Michael Pompeo congratulated Tsai Ing-wen on the start of her second term as “Taiwan’s President”, following her election victory on 11 January.

The reference prompted a strongly indignant response from the Ministry of Foreign Affairs in Beijing, which said that the remarks seriously violated the “One-China Principle” and interfered in China’s internal affairs.

China’s Ministry of National Defence also reacted, saying that the People’s Liberation Army has “the strong will, full confidence and sufficient capability to thwart any form of external interference and any separatist attempts for ‘Taiwan independence’”.

The remarks are just the latest in a series of acrimonious exchanges, with Washington accusing China of “attempting to exploit” the COVID-19 coronavirus pandemic and Beijing accusing the US of being a “troublemaker” and “the biggest facilitator of the militarisation of the South China Sea”.