Beijing’s increased expenditure on defence will likely translate into a larger gap between the Chinese and Indian military capabilities
China announced its annual defence budget of RMB 1.45 trillion (approximately $229.6 billion) in March 2022, a 7.1 per cent year-on-year increase over its 2021 budget of RMB 1.36 trillion ($209.2 billion). In 2020, China had increased its defence budget by 6.6 per cent to 1.27 trillion yuan (US$178 billion).
Given China’s priorities of military modernisation, this increase in expenditure is in continuation with the trend of increased spending on equipment acquisition. Given the border tensions with India and the gap in military technology between both the countries, continuing increase in Beijing’s defence expenditure can be detrimental to New Delhi’s interests.
Why is China increasing its defence budget?
This increase in the budget is expected for two reasons. Firstly, China’s military modernisation drive is in full swing. As per the centenary goals set by the Communist Party of China (CPC), the People’s Liberation Army (PLA) is to be modernised by 2027. The CPC has resolved that the modernisation of “national defence and the armed forces” should be completed by 2035.
During the recently concluded session of National People’s Congress, Chinese president Xi Jinping emphasised that the “focus should be placed on fully building revolutionary, modernised and standardised armed forces”. Hence, Beijing’s defence spending is expected to increase further over the next few years.
Secondly, the international security situation and intensification of rivalry with the United States (US) is also on the top of China’s policymakers’ minds. Tensions in the Taiwan Strait and the situation in the Indo-Pacific pose a security dilemma for the country. Global Times, China’s state-affiliated newspaper, cited US pressure; monthly warship transits in the Taiwan Strait; activities in South China Sea along with AUKUS, the grouping between Australia, UK and US; and QUAD, a strategic security dialogue between Australia, India, Japan, and United States, as “security threats” for China. So, for Beijing, shelling a few more yuans on defence is justified.
China’s defence spokesperson, Senior Colonel Wu Qian stated in a press conference on 10 March, 2022 that the increased budget will be used in four areas mainly. These include “accelerating the modernisation of weapons and equipment”, “cultivating military talents for the new era”, “deepening the national defence and military reform”, and improving living conditions and service benefits for troops.
Moreover, increased defence budget is due to increase in share of expenditure on equipment. The past practices have shown that personnel, training and maintenance, and equipment each are generally allotted roughly 33 per cent of total allocation for defence. This was true until 2010. After 2012, when Xi Jinping took charge of the Central Military Commission, the share of expenditure on military equipment has increased. China’s last defence white paper on its military spending, titled China’s National Defence in the New Era, was released in 2019. According to the paper, the share of expenditure on equipment increased from 33.3 per cent in 2010 to 41.1 per cent in 2017.
Equipment expenditure includes R&D, testing, procurement, repairs, maintenance, transport, and storage of weapons. Increase in expenditure over the years is aligned with the modernisation drive, where China has focussed on importing high-tech equipment from outside. Since a lot of acquisitions are underway, long-term maintenance cost of these acquisitions will also increase. Thus, the share of equipment expenditure in China’s defence budget will continue to go up in years due to procurement and long-term maintenance costs.
No clarity on China’s spending priorities
The budget allocation, however, does not give us the full picture of China’s priorities, an observation also highlighted by many China observers over the years. The budget announcement only includes the total defence budget and the increase over the previous budget. The total figure contains no information about specific spending priorities. In addition to spending by the People’s Armed Police (PAP) and the China Coast Guard, official figures exclude out-of-budget revenue from military-owned businesses, defence rallying funds, licensed land sales and the country’s space programme.
Given the importance of maritime militias in China’s activities in the South China Sea, this exclusion cannot be ignored. The budget also excludes the costs of food surplus generated by certain units, operating costs of state military bases and college recruitment bonuses.
Moreover, as civil-military fusion in China picks up pace, modernisation of the PLA is likely to go hand in hand with civilian development in the technology sector. For this, one has to also look into the allocations of other sectors like science and technology and basic research. Since many of the modernisation aspects, like integration of big data and AI, mentioned in speeches and PLA writings need a strong backing for research on science and technologies, military applications of these technologies cannot be neglected.
The implications for India
Increase in China’s defence spending has a major implication for India. The increased expenditure will likely translate into a larger gap between the Chinese and Indian military capabilities. Combined with China’s modernisation drive and emphasis on high-tech applications in the military, India has a significant gap to fill in terms of sheer hard power.
At around $70 billion, India’s military expenditure is very less, compared to China’s, and given the difference in the size of economies, it is unlikely that India’s spending will catch up soon. To compensate for this gap, India needs to take a leaf from China’s playbook itself and focus on the modernisation of the military and explore technological solutions. Some progress on this front is visible on leadership level. Conceptualised in 2018 and operational since August 2021, the Defence Cyber Command reflects India’s steps towards integrating modern technology into warfare. India’s budgetary allocations for FY 2022-23 and emphasis on the role of the private sector in defence technology research and development is also an indication in the right direction.
Moreover, Indian troops have a better chance of fighting in high altitude areas like Galwan if New Delhi modernises the Indian military with an eye on China’s activities along the India-China border. As conventional approaches are unlikely to fill the gap in military power soon, the need of the hour is to leverage India’s potential in emerging technologies for military applications.
Swayamsiddha Samal is a research assistant at China Studies Programme at The Takshashila Institution. She has a Bachelor of Arts degree from Jawaharlal Nehru University in Mandarin. She is currently pursuing her Masters from Pondicherry University.
Megha Pardhi is a research analyst at the China Studies Programme at The Takshashila Institution. Her research focuses on China’s People’s Liberation Army and the military applications of emerging technologies. She tweets @pardhimegha21
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