The independent resource on global security

5 Mar. 2012: China increases defence budget for 2012 by 11.2% to 670.3 billion Yuan


Thus, while China's military expenditure growth and modernization may raise legitimate concerns in the region, this increase essentially continues China's long-term policy direction, and should not be overdramatized. However, the lack of transparency in Chinese military spending remains a concern. Improvements in transparency would be an important contribution to regional confidence building.


The 'true' level of Chinese military spending

China's official defence budget does not include all elements of Chinese military spending. Most importantly, there is almost certainly substantial expenditure on military research and development from elsewhere in the state budget, although the size of such spending is very uncertain. In addition, the defence budget does not include spending on the People's Armed Police, which fulfils a dual internal security and military role, although expenditure figures for the PAP are published separately by the Chinese government.

Overall, SIPRI's estimates for Chinese military spending tend to be a little over 50% higher than the official defence budget, but this comes with a substantial margin of error. I am, however, very sceptical of some other western estimates that suggest that the 'true' level of Chinese military spending is double the official figure or more. SIPRI's estimate includes a rather large estimate for additional research and development (R&D), which would give China one of the highest R&D to procurement ratios in the world, and the other extra-budgetary items for which we include figures or estimates are in line with other expert assessments. So I just don't see where these much higher figures would come from."


Dr Sam Perlo-Freeman is an Associate Senior Researcher at SIPRI.