China is raising its defense budget by 8,1 percent in this year. In the year 2017 and five years in the row the raise has been 7%. Overall, China is not a big defense spender: the military expenses constitute only of 1,3% of GDP. And the budget is about 175 billion U.S. dollars – somewhat around one fifths that of USA. So why this is important?
China is and will remain in a foreseeable future a communist state and some obviously things needed to be addressed.
The yuan purchasing power parity doubles the overall budget. GDP PPP of china is at least twice bigger than nominal. Thus everything included in the military budget will be at least two times cheaper than it is in USA.
The structure of the expenses is also a factor to watch for. China expenses on purely administrative part of the budget are lower than of US. Chinese army and navy is mostly bound to the mainland. And all military supplies are designed, manufactured and sold by state-owned enterprises. There is no private contractors or their part in the total expenditures is minimal.
There is no – at least known – earmark projects, also. US defense budget loses at least one billion dollars each day on dubious projects.
All things considered we should look at the new China’s military spending as at least comparable of that of the US.