PLA soldiers patrol border on Himalayan mountain range in China’s Tibet autonomous region
PC : YouTube/ SCMP Clips/screenshot

A YEAR into the global pandemic, China’s Two Sessions declared that the Chinese Communist Party (CCP) government was increasing the country’s official defense budget by 6.8 percent in addition to declaring a gross domestic product (GDP) target of plus 6 percent for 2021. At a time of increasing Sino-U.S. tensions, it was reported that China’s top generals also called for greater military spending in order to confront the “Thucydides Trap” with the United States.

As usual, most of the media attention was focused on the increase in the official defense budget—now approaching $209 billion—compared to last year’s rise of 6.6 percent. Given these continued increases in military expenditure, many have inferred that Beijing is becoming more and more inclined to utilize force (or threaten the use of force) to realize its national ambitions.

What is missing in these unsettling inferences that “war is on the horizon” is the larger context. Recent trends in Chinese military expenditures, along with the CCP’s other contemporary pronouncements on national defense, make it clear that the People’s Liberation Army (PLA) sees the present period more as a strategic window whereby it can reorganize and restructure its forces.

CHINA HAS been engaged in an aggressive, multi-decade effort to modernize its armed forces and upgrade its capabilities. On paper at least, the PLA expects to achieve mechanization and make “major progress” toward “informatization” by the early 2020s, achieve “complete military modernization” by 2035, and become a “world-class” military by 2049.

In documenting how the PLA has arrived at this stage, one first needs to be cognizant of the many long years it had taken the PLA to pursue a “double construction” approach of mechanization and “informatization” to concurrently upgrade and digitize itself. This “two-track” approach had called for both the near-term “upgrading of existing equipment combined with the selective introduction of new generations of conventional weapons,” together with a longer-term transformation of the PLA along the lines of the information technologies-led “revolution in military affairs.” Critical to China’s emerging military capabilities is the PLA’s emphasis on “fighting and winning informationized wars,” defined as the process of “using information to conduct joint military operations across the domains of land, sea, air, space, cyberspace, and the electromagnetic spectrum during a conflict.” “Informationization” particularly emphasizes improved capacities for command, control, communications, computing, intelligence, surveillance, and reconnaissance (C4ISR). In that regard, the PLA

…sees networked, technologically advanced C4I systems as essential to provide reliable, secure communications to fixed and mobile command posts—thereby enabling rapid, effective, multi-echelon decision-making. These systems were designed to distribute data including intelligence, battlefield information, logistical information, and weather reports via redundant, resilient communications networks to improve commanders’ situational awareness … [making] near-real-time ISR data available to field commanders.

But even as the PLA labors to adopt “informationized warfare,” it is already planning for the next phase of its modernization, which it has termed “intelligentized warfare.” This would entail the militarization of the so-called fourth industrial revolution—artificial intelligence, big data, man-machine interfacing, autonomous unmanned systems, 5G networking, and the like—in order to create new dominant military-technological advantages, particularly over the U.S. military. Such intelligentization builds upon the PLA’s earlier phases of mechanization and informatization. As its 2019 defense white paper puts it, “war is evolving in form towards informationized warfare, and intelligent warfare is on the horizon.”

In line with China’s recent defense white papers, the PLA continues to subordinate land operations to sea power and force projection. While the 2015 white paper declared that “[t]he traditional mentality that land outweighs sea must be abandoned, and great importance has to be attached to managing the seas and oceans and protecting maritime rights and interests,” the 2019 iteration states even more explicitly the desired shift away from the PLA’s traditional “Big-Army” mentality.

As regards possible naval deployments, the PLA Navy (PLAN) is rapidly moving from being mainly a brown-water force and becoming a blue-water navy, and as such is improving its capabilities for power projection and maritime joint operations. And as for the PLA Air Force (PLAAF), it is likewise transitioning from territorial air defense to more aggressive operations, improving its capabilities for strategic early warning, air strikes, air and missile defense, and airborne operations.

MOREOVER, THERE is a method to the thinking of the CCP leadership as regards the proportion of GDP allocated for military purposes under its “economic-military development principle.” Ever since reform and opening-up, the PLA’s development has been inextricably linked with the country’s economic fortunes. It is a well-known fact that during China’s initial phases of economic liberalization, the PLA leadership had to defer to Deng Xiaoping’s mandate that the Chinese military subordinate its professional interests to that of the civilian economy and to help it grow.

Thereafter, as the country’s economic development began to take off, the PLA did subsequently receive increasingly greater economic resources (in absolute terms). Indeed, even when Chinese military expenditure as a proportion of GDP began to dip before leveling off to around 1.3 percent on paper since the 2000s, the total economic pie had in fact grown bigger. Given the plus 6 percent GDP stipulated this year—wholly achievable in view of the aberration that is the modest 2.3 percent of last year—the trend-line of around 1.3 percent will likely persist.

In accordance with the regime’s principle of “striving for the coordinated development of national defense and the economy,” as stipulated in the 2019 defense white paper, China’s military expenditure has grown at a fairly consistent rate as a percentage of GDP plus inflation. Thus, as well as being subordinated to the total economic output as seen under Deng, China’s military expenditure post-Deng is also coordinated with total Chinese GDP. As Xi Jinping is only too aware, the former Soviet Union had disintegrated largely due to an over-militarized national economy. The principle of “subordination” and “coordination” can therefore be expected to continue in China—even if the PLA has gained greater prominence under the incumbent Central Military Commission chairman.

GIVEN THE lack of disaggregated data in its annual military budget and how funds have previously been funneled directly from the Chinese State Council towards weapons research, it is no surprise that China’s actual military spending exceeds official figures since they were published in 1978. In recent decades, a number of reliable estimates put its actual expenditure at 1.36 percent greater than the approved versions, although growing evidence suggests that the discrepancy between the two has been decreasing. Regardless, China’s military build-up has been underwritten by considerable sustained growth in the country’s military expenditures for more than two decades and this will continue to be the case.

China’s national approach toward military-technological modernization is driven by two “M’s”: motivation and money. In the first place, China’s civil-military leadership comprised of the CCP and the PLA is united around the central idea that the Party’s armed wing must become a modern, twenty-first-century fighting force—with the regime unwavering in its commitment to modernizing the PLA. Such steadfastness has, in turn, manifested itself in large, steady annual increases in the country’s military expenditures over the years. For several years, in fact, China experienced double-digit annual real growth in its military spending (that is, after taking inflation into account). According to its own official national statistics, the Chinese defense budget from 1999 to 2008 expanded at a rate of 16.2 percent per annum.

This trend remained basically unchanged throughout the second decade of the twenty-first century. Between 2009 and 2020, for instance, Chinese military expenditure grew from $70.3 billion to around $179 billion. Overall, between 1997 and 2020, the PLA budget grew by at least 600 percent, after taking inflation into account. Beijing has never been very forthcoming as to how it spends its defense monies. Chinese defense white papers used to break down spending by personnel, training and sustainment, and equipment (presumably including defense research and development, or R&D). Interestingly, these documents consistently revealed a near-even split among these three categories, that is, approximately one-third to two-fifths of the defense budget going to each of them.

If this same formula were to be applied to the 2021 budget, it would mean that China could spend as much as $70 billion this year just on equipment alone (i.e., procurement and military R&D). Such spending would place the PLA budget for equipment as greater than the combined defense budgets of Japan, India, or any of its other Asia-Pacific rivals. Only the United States spends more on its military.

If anything has supported Beijing’s expansion in military power, it is this rise in defense spending, which has permitted the PLA to significantly increase procurement. At the same time, China has been able to phase out arms imports in favor of home-grown weapons. Consistent and sizable defense budget increases have translated into more money for innovation, procurement, and R&D, as well as greater funds to upgrade its indigenous defense industry with new tools, new computers, and new technical skills. This has also enabled the growth and modernization of the nation’s military-industrial workforce—from its R&D institutes to its factory floor labor force.

Consequently, the country’s domestic defense industry has begun churning out scores of new, modern weapons systems for the PLA. These include the made-in-China J-10 and J-11 (copied Su-27) fighter jets, Type-055 cruisers, Type-054D destroyers, Yuan-class diesel-electric submarines, and at least three aircraft carriers. In addition, the PLA’s expanding budgets have also allowed it to fund an array of new military R&D projects, such as its fifth-generation J-20 fighter, its DF-21D anti-ship ballistic missile, and its far-ranging nuclear submarine program.

NEVERTHELESS, BEIJING’S stated desire in this year’s work report to “promote mutual support between civilians and the military” lends credence to the idea that the CCP intends to modernize its coercive forces without having to exhaust the national coffers—preferring instead to utilize dual-use technologies as part of its new-fangled “military-civil fusion” strategy. Moreover, the same document also stands out by its increased attention on PLA personnel and veterans. Whereas the Party’s armed servants past and present continue to be referred to as “key groups” and “entitled groups,” this year’s report has underlined the regime’s commitment to ensure that authorities “at all levels” would “vigorously” support the development of the country’s “national defense and […] armed forces.” The declaration to improve soldiers’ welfare may be further proof that Chinese defense spending this year will increasingly be geared towards personnel and training—the other two components of the main PLA budget alongside equipment costs. According to the Stockholm International Peace Research Institute, economic compensation for PLA veterans in 2019 alone cost around $20 billion—or about 12 percent of the military budget that year. Despite the recent 300,000-troop reduction, leftover funds (if any) will likely be balanced out by higher personnel expenses (including salaries, food, and insurance) in addition to upgrades to the cost of their training and sustainment (such as training, education, and the “construction and maintenance of installations and facilities”).

One other important but less well-covered event in China also leads to the conclusion that the PLA is delivering more expensive programs to its active-duty personnel. In that regard, the reforms that began in late-2015 are now squarely focused on upgrading the PLA’s human elements. With the Ministry of National Defense making known a major policy shift on January 28 from a “grade-centric” to “rank-centric” officer management system, more generous remuneration packages are now also made available alongside more clearly defined career tracks. China’s best and brightest likewise are given more incentives to join their ranks. The enhancement of the PLA’s professional appeal continues the trend of the CCP’s pursuit of the former’s corporate interests. But in order for it to compete effectively with the Chinese private sector, such initiatives will not come cheap.

WHERE CHINA’S military build-up is concerned, adding some context to make up for the lack of transparency in its annual budget provides us with a better—albeit still limited—appreciation of the PLA’s budgetary allocations. In that regard, those trends in its previous expenditure and its official publications help bring us one step closer to understanding what the $209 billion might be used for this year. Notwithstanding that China’s military expenditure has grown exponentially in recent decades to become the second-largest in the world since 2008, it still remains about one-third of the U.S. defense budget, at last count. With continuing PLA shortcomings vis-à-vis other advanced militaries (particularly in terms of combined arms and joint operations), the rational assessment can be made that Beijing would rather exercise prudence in its dealings with Washington and other countries in the region—rather than contemplate all-out war.

Certainly, over the next fifteen years, China is expected to make major progress toward mechanization and informatization, with the goal of achieving “complete military modernization” by 2035. Should that come to fruition, the PLA’s C4ISR infrastructure should be vastly improved, with satellites and other platforms/sensors (e.g., HALE UAVs) for surveillance, command and control, communications, navigation, and target acquisition set up. Other improvements would include the modernization of its capabilities to conduct ever more aggressive operations against regional rivals, and the expansion of its capacity for sustained power projection, in addition to operations in space, cyberspace, and in the electronic domains. These would also include improvements to the PLA’s abilities to conduct real-time surveillance and reconnaissance, joint operations, and joint logistics.

Should that day arrive, the PLA will likely possess naval and air assets capable of projecting sustainable power out to the second island chain and, on an intermittent basis, into blue water oceans. The PLAN would comprise 530 surface combatants and submarines, confirming its status as the largest navy in the world. In particular, the acquisition of four (or more) aircraft carriers by then would likely mean the reorientation of the PLAN around carrier battle groups; with such a development constituting a major shift in PLAN strategic direction.

Meanwhile, by 2035 the PLAAF should be recapitalized with fourth-generation and fifth-generation fighter jets, along with a fleet of modern transport and tanker planes, airborne early warning aircraft, and increasingly sophisticated unmanned aerial systems. Put together, a growing inventory of modern warships and submarines in the PLAN, along with air-refuelable combat aircraft and long-range transport planes, supported by expanded overseas basing (such as China’s first foreign military base in Djibouti), will particularly expand the PLA’s global footprint—first in the western Pacific, then the Indian Ocean, and eventually almost everywhere. China’s military activities this past decade and its “Wolf Warrior” diplomacy of late suggest that Beijing will likely be anything but a benign hegemon, should it somehow manage to catch up with Washington. At the same time, to suggest—as some media have suggested—that China is somehow “itching for a fight” in the foreseeable future is unhelpful.

Richard A. Bitzinger is a Visiting Research Fellow with the Military Transformations Programme at the S. Rajaratnam School of International Studies at Nanyang Technological University, Singapore. He is the co-editor of Reshaping the Chinese Military: The PLA’s Roles and Missions in the Xi Jinping Era.

James Char is Associate Research Fellow with the China Programme at the S. Rajaratnam School of International Studies at Nanyang Technological University, Singapore. He is the co-editor of Reshaping the Chinese Military: The PLA’s Roles and Missions in the Xi Jinping Era