China Expands Defense Budget Over 12% To $132 Billion

Tyler Durden's picture

Submitted by Ankit Panda via The Diplomat,

The biggest Asia-Pacific defense story this week is China’s decision to increase its defense budget by 12.2 percent to about $132 billion for the next fiscal year. Notice that the figure is noticeably uncorrelated with China’s 7.7 percent actual growth rate (with a 7.5 percent target rate). The numbers are expected, of course, and send a clear signal across the region that China is taking its investments in military hardware seriously. Contrast the Chinese trend with the United States’ belt-tightening on defense spending. The United States and China are, of course, nowhere near to a convergence in defense spending. Our China editor Shannon Tiezzi takes a look at the similarities and differences between the two budgets.

Beijing and Washington’s Defense Budgets: A Tale of Two Cities

Recently released defense budgets by China and the U.S. reveal different approaches but similar goals in Asia.

Beijing released its defense budget for 2014 today, as a draft budget was submitted to the National People’s Congress for review. Xinhua reported that the new budget called for a 12.2 percent increase, raising defense spending to 808.2 billion yuan ($132 billion). Outside of China, analysts and reporters viewed this increase with suspicion. “China’s Xi ramps up military spending in face of worried region,” a Reuters headline read. The article cited unease within Japan and Taiwan over a lack of transparency on how the money will be used.

Meanwhile, at the end of the February the Pentagon released its spending proposal, which called for cut-backs that would reduce the Army to between 440,000 and 450,000 troops (down from a peak of 570,000 in the post-9/11 period). News outlets across the country screamed variations of the New York Times’ headline:  “Pentagon Plans to Shrink Army to Pre-World War II Level.”

The official Pentagon budget, released yesterday, called for $496 billion in spending, keeping the budget effectively static. Over the course of the five-year budget plan, however, the Pentagon actually seeks $115 billion more than was allocated for it by the 2011 Budget Control Act. The fiscal year 2015 budget in particular “seeks to repair the damage caused by the deep spending cuts imposed by sequestration,” according to an article on the Defense Department’s website.  

The timing of Beijing and Washington’s defense budgets practically begs analysts to make comparisons—particularly since China and the U.S. seem locked in a long-term strategic battle for dominance in the Asia-Pacific region. The two defense budgets reinforce a narrative that suggests U.S. dominance is slipping in the face of a rising China: China raises its budget by double-digits while the U.S. undergoes painful cuts. As Zach wrote yesterday, spending cuts in the U.S. military particularly call into question America’s ability to finance the pivot to Asia.

The budgets also have different priorities for spending. Sun Huangtian, the deputy head of the general logistics department of the People’s Liberation Army, told Xinhua that the defense funds “will be spent mainly on modernizing the army’s weapons and equipment, improving living and working conditions for service personnel, and updating the army’s management system.” Chinese officials and academics cited in the article all agreed that an increase in spending was necessary due to external security challenges facing China, presumably including its territorial disputes in the East and South China Seas as well as a long-term strategic competition with the U.S.

Foreign Ministry Spokesman Qin Gang told the press that that China’s defense policy “is defensive in nature” and that spending increases were necessitated by China’s size and the geopolitical environment. “Some outside China hopes to see China stay as a boy scout and never grow up,” Qin said. “If that is the case, who will ensure our national security and how can the world peace be upheld? If that is the case, will China be tranquil, the region stable and the world peaceful?”

A spokesperson for the National People’s Congress was even more direct: “Based on our history and experience, we believe that peace can only be maintained by strength,” she told journalists.

Meanwhile, the U.S. budget focuses more on streamlining the armed forces as America transitions away from the war in Afghanistan. In a statement, Hagel said that the FY2015 budget and the new Quadrennial Defense Review explain “how we will adapt, reshape, and rebalance our military for the challenges and opportunities of the future.” Yet while Hagel and other DoD officials seem optimistic that the 2015 budget will allow them to do their jobs, they warned of disaster should another round of sequestration cuts take place in 2016. Assistant Secretary of Defense for Acquisition Katrina McFarland told a conference that further sequestration would result in a “hollow force,” as the DoD could not reduce troop numbers fast enough to be able to “preserve the integrity” of the armed forces. (Her alleged remarks that the pivot to Asia “can’t happen” may have been made in this context).

Hagel’s statement also warned that “continued sequestration requires dangerous reductions to readiness and modernization.” Such reductions, he said, “would put at risk America’s traditional role as a guarantor of global security.”

The defense budgets released by Beijing and Washington share few similarities, but they do have one thing in common: spokespeople claiming that their increased military spending is good for “global security” or “world peace.” On a global level, and more particularly on a regional one, both the U.S. and China are convinced that security can be achieved through an increased military presence.

China believes that the U.S. is pursuing a policy of containment, egging on its friends and allies in the region to challenge China over territorial disputes. Many top-level academics in China worry that U.S. support for Japan and the Philippines in particular has encouraged these two nations to directly challenge China, thus worsening the security environment. Accordingly, China is forced to build up its military to defend its claims, and also to discourage provocation by its neighbors.

The U.S., however, thinks recent actions by Japan and the Philippines are a natural response to what is viewed as increased Chinese aggression. Under this line of thinking, a more robust U.S. military presence in the region is taken as a positive contributor to regional security, because it would reassure countries that are increasingly nervous about China’s strength.

It’s a classic question of the chicken vs the egg: which came first, China’s aggression or U.S. containment?

Regardless of who is blamed for starting the cycle, it’s hard to deny that China and the U.S. are locked into a low-key (for now) arms race, where military spending by one side is used to justify defense budget increases by the other. But already, given the divergent trends in spending, some in the region are wondering how long the U.S. will be willing or able to match China’s investment in a regional military presence. Though the announced Chinese military budget is less than 27 percent of the U.S. budget, it’s safe to assume that close to 100 percent of China’s budget will be focused on upping Chinese readiness in the Asia-Pacific region. With a variety of global security concerns, the U.S. cannot make the same claim.

China’s J-20 stealth fighter has been the target of much peering and speculation by analysts in the West. The J-20’s design appear to be flawed  particularly if it’s goal was stealth above all else. However, according to new reports, several problematic elements of the aircraft’s design have been modified, ostensibly to improve stealth performance. The J-20 isn’t expected to serve in the PLAAF anytime soon; the Pentagon estimates that it will enter service in 2018. As far as anyone knows, the J-20 appears to be designed specifically for indigenous use by the Chinese air force. China has not yet pitched it for export unlike the J-31.

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Soul Glow's picture

Spend it like you got it!

prains's picture

so they've upped their budget to cover 1/10 th of a carrier, Ho Lee Fuk!!

FieldingMellish's picture

You nice man! For you, carrier only $20B. Special, today only! $15B. Buy now, I sell for you $10B.

prains's picture

wat yu mean it no float? it nummer won!

SafelyGraze's picture

expand by a hundred billion all you want

we got trillions that "aren't accounted for"!

don rumsfield 


Mister Kitty's picture

I still sleep well at night.  Who gives a flying screw?  Bitches.

Angus McHugepenis's picture

Looks like Mister Kitty and his fellow Angry Sinner blogspot spam buddies are back. Hey Tylers, can you finally boot these assholes? Here's the known list again:

Mister Kitty, orez65, The Dunce, and one or two others. Every fucking post they make is linked to that worthless blogspot site. Check it out just for shits & giggles to see how moronic and useless it really is.

TruthInSunshine's picture

The U.S. Serf Taxpayers fork over 9x that, officially, and closer to 11x that, if one were to include "off book" and other military expenditures, and 13x that, if one were to include expenditures on "soft" military expenditures (i.e. Non-equipment but technological capacity).

In other words, American Taxpayer Serfs, who number 330 million (actually, only 40% of these pay any net taxes) officially spend 9x what 1.3 billion Chinese do, or to put it another way -

1,300,000,000 Chinese ÷ 330,000,000'Americans = 3.93

3.93 x 9 = 35.37

***Americans are charged 35.37 times per person what Chinese are for the cost of their Military-Industrial-Intelligence-Technology Complex***

prains's picture

but if you take the ability of being able to shit along any roadside that appears to be somewhat free of traffic, is that price too high?


freedom has a price

Dr. Engali's picture

Just don't do it in Venezuela unless you want to wipe with leaves or by scraping your ass on the grass.

Independent's picture

LOL its ok they solved the toilet paper problem, they use US DOLLARS now to wipe their ass, no shortoge of greenbacks and the diarrhea doesn't show when you wipe LOL

TheFourthStooge-ing's picture


but if you take the ability of being able to shit along any roadside that appears to be somewhat free of traffic, is that price too high?

I suppose that depends upon how much the writers at The Diplomat are paid to squat down and squeeze out these turds.

Soul Glow's picture

Does that count the trillions of dollars Rummie lost?

Payne's picture

Chinese don;t need a carrier unless they want to power project 1000 miles from the mainland.  Chinese do not need a big budget to cover defense needs.

The US needs enormous amounts of money based on Theaters of operation and necc supply lines and support.


Stuck on Zero's picture

On comparing Chinese and American militaries:

Chinese Military: 1/10 the spending, 100x the equipment, 50 times the failures. Probably nothing will work when fielded.

American military: 10x the spending, 10 times the brass, 1/100 the equipment, few failures.  Everything costs too much to actually use anyway.


RafterManFMJ's picture

At the rate the F35 boondoggle is going, 500 billion will buy about 7 of them in 2016.

I'd place a boondoge / graft factor of 3 on these Chinese numbers - in other words they likely get 300% more value for their defense dollars, and also spend a much lower percentage of outlays on pensions, veterans care, gay drag shows, etc.

RideTheWalrus's picture

Islands don't come cheap


agent default's picture

You don't suppose they are trying to tell us something, do you?

Dr. Engali's picture

$132 billion...... Pfffttttt let me know when the get to the U.S. level of offense..... er I mean defense spending of 700 billion. Another MIC war mongering article. Quick ramp up the spending to a trillion. The scary Chinese are going to invade us with trinkets and fortune cookies.

Bill of Rights's picture

Silver Doctors website reports that Putin is now blocking export of Russian ammo to the U.S.

The largest wholesale gun & ammo distributors in the US have informed us in private conversation today that a massive scramble is on for all 7.62 as Russia has reportedly halted all exports to the US of Russian made ammunition.  


I've have thought Bad Vlad would have waited, and let Obama be the one to ban U.S. importation of Russian ammo - and thereby take a PR hit from U.S. shooting community.

So far, I'm only seeing the ban reported on this one blog. But if this is true, we may have another panic round of ammo buying - especially in the cherished 7.62x39 caliber. Heck, I suspect Silver Doctors is right in one regard; that buying's already picked up on speculation.

zionhead101's picture

In RECENT months GUNS & AMMO sales have dropped like a rock.

MY personal guess is that the "SPORTS" industry will manufacture a PANIC to get guys to go out and clear the inventory.


Gun sales go in CYCLES, and the "FEAR OF OBAMA" has crested.

zionhead101's picture

Compared to the USA, the CHINESE might be a lemonade stand.

How many TRILLIONS of unlimited FIAT to the MOON has the CIA/NSA been spending for 50+ years?

Yes, exactly CHINA SPEND's MORE On "DEFENSE OF THE USA", but is it enough?

How much is enough to defend yourself from the 'US of ZIO'?

Will the CHINESE bankrupt themselves like the Russians did fighting the USA?

Me thinks the CHINESE will just drag their ass and let the World's-Policeman fuck himself to death.

Seasmoke's picture

Got to protect that Gold. 



reader2010's picture

The fired chief of the Chinese Navy in 2007 had a fleet of twelve concubines who happened to be on the defense budget. 

AlaricBalth's picture

That's so unethical!!!

Our Navy officers would never be caught up in a sex scandal involving Malaysian hookers and bribes for contracts from defense contractors.

SafelyGraze's picture

"Navy sex scandal widens, taints admirals"

it says "taints"


Tracerfan's picture

And the idiot U.S. is picking a fight in an area where it has no vital interests.

This also drives Russia closer to China.  Stupidity on parade.

LetThemEatRand's picture

Fucking Diplomat.  America spends more than the Chinese annual increase in a few days between QE, MIC, black ops, Homeland Security (sic), drug wars, and so forth.   You are worried that they are going to take over our serfdom and create their own?  I suppose that's what it's come to.  And thinking that a few weeks of QE in the form of an annual defense budget is a threat to something.  

edwardo1's picture

Calling this a "defense" budget is a misnomer, just as it is in the U.S. where both The Executive and Legislative collude in using the propagandistic term "defense" budget. Very little of the budget has anything to do with defending the nation's borders and territories.

Dr. Destructo's picture

Who needs a giant army when you have proxies to do the work for you? It's harder to prop up the lie when you have to divert funds from the propaganda machine and pour it into the war machine.


Chuck Knoblauch's picture

Chinese government regards Washington as an insane asylum.  They think they’re completely insane.

Leraconteur's picture

The Chinese either under report or over report depending on what they want to hide or convey.

1) People who have lived in Asia report that India feels more crowded than the eastern third of China.

India has 80% of the population, so it's likely Chine pads the population figures for many reasons - claiming 'a fair percentage of global economy/manu' is one of the many reasons.

2) The Chinese are hiding half or more of their DOD budget as well as underestimating their ballistic missile capabaility which is likely closer to 3000 than 300. The Chinese also do things very cheaply - things break down but they build high speed rail at 1/10th the cost in other countries. It's likely that $135 Bn spent in China goes as far as $300bn spent in the USA.

thamnosma's picture

Especially given the absurd profit-taking by all Pentagon suppliers, you know, those 300 dollar toilet seats

Leraconteur's picture

...which are designed to not fracture on a sub or ship should it take a direct torpedo hit. Can't have plastic shrapnel flying about.

Ace Ventura's picture

Now now....let's keep this in perspective. I know it makes for good headlines, but there is a reason for a $300 toilet seat. Essentially, they cost this much because DoD is DESPERATE to operate like a Toyota assembly line. Inventory=bad, Just in Time=good.

Problem is, military spending is completely NOT serviced by using commercial industry models based on advanced forecasting which rarely varies. Quite the opposite....advanced forecasting in DoD is essentially an exercise in 'reading the chicken bones' and hope your numbers are in the ballpark of reality.

So, DoD goes out and buys 5 toilet seats. Since no one is going to interrupt their manufacturing process to produce 5 of get the $300 toilet seat. For the REAL profit-taking....your #1 focus is on the whole concept of 'authorized distributors'.....THAT is where the bulk of stupid-money procurements occur. What's that? You paid $400 each for these electric motors in the past? Well, now they must be purchased through the approved distributors....and the new price is $2,000 each. You can imagine the kickbacks figured in with the OEMs as a result of this quaint little arrangement.


Atomizer's picture

BRIC bases are loaded. A known coalition batter with high home run stats steps up to plate.

Apostate2's picture

There is defense spending and there is domestic security spending (separate budgets). The domestic security budget has over the past three years greatly exceeded defense spending, and it is not clear whether this includes spending at the provincial and municipal levels. The following paper may be useful to those that are interested.

hero HNL's picture

That's exactly true.....domestic security is greater than the military and it makes you shake your head.


The reason is that there are riots everyday & the communist party has a hard time suppressing the people like in the past. Also, the PRC military spends more than what is stated in the budget. No one really knows the exact number, even though a lot of money is wasted or stolen.


As a side business, I also heard the military owns a lot of businesses. For example, I know the navy owns hotels, motels & even love hotels. It's like the US navy owning Holiday Inn & Sheraton....really wierd in that country.

Apostate2's picture

Yes, the PLA owns a gamut of commercial enterprises. The crack down on corruption geared up in the late 1990s and one sticking point with China joining the WTO was the PLA's non-market companies. However loopholes still exist and some provinces like Shaanxi would probably go bankrupt without the 3-5 billion (est) in revenues they generate. A legacy problem from the Maoist years that got a new lease on life under the reforms of 1978/9.

Spungo's picture

Yall gotta remember this is Chinese military. How much Chinese shit can you buy for 132 billion? Probably 30 aircraft carriers, enough missiles to destroy the world 10x, enough bullets to jam every Chinese gun ever manufactured.

zionhead101's picture

It ain't like it used to be, most places in CHINA shit is more expensive than the USA.

I remember $100 USD used to last me months in CHINA, today a $100 bucks, or 600 Yuan can't even get your a low end whore.

A nice room is 500 yuan, a shitty room 200 yuan, but in the big city's its like 2000 yuan, which is $300


Nothing is cheap anymore in CHINA, I would assume parity for HW costs, but labor like the USA can be assumed to be free for MIL.

Can't compare apples and oranges, besides the PLA is self-financing, they OWN most industry's, its not like the west where the MIL has to suck political cock.

All bullshit to talk about FIAT, ... anybody that tell's you its NOT unlimited to the moon is 'plant'.


In the USA most MIL goes to cover PENSION, ... in China the pensions aren't gold plated, that' for damn sure.

But the USA(USofZIO) is only a mercenary army owned by ZIO-, the CHINESE are businessmen, ... again were talking apples and oranges, comparing a penal-colony(usa), to a free country.

Leraconteur's picture

ZOMG. Don't post this when people who live in China post here.


Line by line:

I remember $100 USD used to last me months in CHINA, today a $100 bucks, or 600 Yuan can't even get you a low end whore.

Lie number one. 600 yuan gets you a mid-level girl in Beijing, Shanghai, Dongguan (when the smoke clears) and 2 girls in any provincial capital Tier 2 or 3 or smaller. Small cities it's 50 to 100 Yuan.

A nice room is 500 yuan, a shitty room 200 yuan, but in the big city's its like 2000 yuan, which is $300


Lie number two. Total nonsense unless you only want to stay at the Hyatt at SWFC or in Xianggang. Even then you can find rooms for 400-600 (600-800 HKD) yuan at bargain places in Hong Kong (not the mansions...) and business and local hotels are everywhere in China for 128 to 298/night. Plentiful rooms everywhere at 128/night.

In Hong Kong a nice room is 800 HKD or 640 CNY. Really really nice rooms are $300. That's 1800 CNY or 2250 HKD. Mainland you can find a hotel for 128 to 298 even in Shanghai. There are 10 business chain hotels that cater to the 128 to 298 per night. New, clean, small tv, not fancy, but not shitty. New hotels, new renovations everywhere. Those shitty rooms are 30 Yuan a night alley Lu Guans near all the bus and rail stations.

Did $100 go farther 10 or 15 years ago? Yes it did. The buses and trains also never exceeded 60 kms/hour, there were no highways, freeways or tollroads, and no TaoBao to shop for foreign goodies.

Give it a rest spoilt old-timer...the classic "I was here XX years ago and that was THE REAL (Insert Country Name Here)."

Spungo's picture

I'm inclined to think China might be telling the truth when they say it's for defensive purposes. What has America been doing for the last decade? Constant warfare. War against Iraq, war in Afghanistan, attempted war against Iran, attempted war against Syria, implicitly giving Japan the ok to taunt China, and now this shit in Ukraine. If I were Chinese, I really would be concerned about the US right now. I think every country should be a little concerned right now. Everyone is smiling and peaceful when the global economy is thriving, but countries turn more extreme and dangerous when the economy crashes.

Leraconteur's picture

I'm inclined to think China might be telling the truth when they say it's for defensive purposes. 


Consider that your definition of 'defensive' is FAR different than theirs.

Putin considers what he did in Crimea to be 'defensive', and the Chinese think much differently than the Russians do.

laomei's picture

Chinese military spending is generally focused purely on defense, with a portion now being directed towards force projection so as to safeguard trade and further deter any thoughts of agression.  The major difference is that for what the US relies on military and spending, China does using business and profit.  There's nasty under-the-table dealings on both sides, but China generally goes for cost-effective solutions to accomplish the same.  


My favorite comments are ones claiming that Chinese kit sucks and doesn't work.  Sorry to burst the bubble, but Chinese kit is quite good.  All that garbage you associate with China is consumer crap which is crap because that's what the state-side importers are willing to pay for because it results in massive profit margins.  Military manufacturing, is an entirely different ballgame.

q99x2's picture

There go the neighborhood.

Raytheon, Haliburton, Martin Marrietta, Lockheed, Boeing, GM Pratt & Whitney, Blackwater or whatever the hell their name is now.

Oh don't you love globalism and the globalists that have taken over the United States of America. They are going to get us killed.

old naughty's picture

Nah...Even if they spend all them 15 billion or so solely on drones, Obama still have a lot more than they.