China’s defense budget shows Xi’s priorities as the economy shrinks

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2020 will mark for the first time in decades that China has not set a growth target for its economy. Last year Beijing aimed for growth of between 6% and 6.5%. GDP grew 6.1%, its slowest pace in nearly 30 years.

Then came the coronavirus pandemic and a one-week economic shutdown in much of China. GDP declined 6.8% in the first quarter, the first contraction that Beijing has reported since 1976.

As the economy contracted, external pressures they were mounting.

The US military was increasing challenges to Beijing’s claims in the South China Sea, including naval navigation freedom exercises back to back in April is B-1 bombers flights, the heaviest in the U.S. Air Force inventory, from both Guam and the US mainland.

And when spending numbers for 2020 were announced on Friday, Beijing’s priorities were immediately clear.

Military quotas in pain – its budget increase has been the lowest in recent decades – but the pain of the PLA has been less than the blows inflicted on other areas of the Chinese government.

For example, the budget fell by 13.3% for general public services, 11.8% for foreign affairs, 7.5% for education and 9.1% for science and technology .

“The proposed budget suggests that Beijing feels insecure and under siege,” said Timothy Heath, senior researcher at the RAND Corp. think tank in Washington.

“The sharp rise in spending reflects intense anxiety over deepening tensions with China’s main competitor, the United States, as well as hopes that fade away for peaceful unification with Taiwan,” said Heath.

“Beijing also has ample reasons to support defense and security spending to handle growing problems domestic turmoil in Hong Kong, western provinces or across the country with rising unemployment and slowing growth due to the effects of the Covid-19 pandemic. “

Wu Qian, a spokesman for the Chinese defense ministry, said that Beijing’s defense budget was appropriate for the times.

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“It can be said that the world is not peaceful,” Qian said on the sidelines of the National People’s Congress this week.

“China’s security and foreign interests also face some real threats …

“It is reasonable and necessary that Chinese defense spending has increased moderately and steadily,” said Wu.

Comparison with the United States

Beijing also touted the increase in the military budget as the smallest of the years and claimed that the total number was a fraction of the money spent by some foreign military.

Indeed, Zhang Yesui, spokesman for the third session of the 13th National People’s Congress, said last week in a press conference that “total defense spending for China in 2019 amounted to only a quarter of that of the largest defense spending of the world.

The largest defense spender is the United States, according to the International Institute for Strategic Studies (IISS).

IISS figures released in February shows that the United States spent $ 686 billion on defense in 2019 compared to China’s $ 181 billion, no. 2 in the IISS world rankings.
But subsequent studies by analysts to the IISS and the Washington-based Heritage Foundation says that the gap between the U.S. and Chinese military budgets could be only 13%.

And when you look at the progress made by the Chinese army since Xi became president in 2013, a large gap between the military budgets of China and America defies credulity:

– In recent years, China has put its people into service first aircraft carrier of national construction, Shandong;
– made his own J-20 stealth fighter – seen as a challenge to US F-22 and F-35 fighters – ready for combat;
– enhanced submarine fleet of ballistic missiles, both with new boats and better missiles in them;
– opened his first overseas military base in the African nation of Djibouti;
— is built a series of islands in the South China Sea that American admiral Philip Davidson, the main American commander in the Indo-Pacifc, called the “Great Wall of the SAMs”, or a series of surface-to-air missile bases could make the skies over an area extremely hostile to the air forces of any opponent.

Lack of transparency

This costs a lot of money, but in the case of Beijing it is often difficult to understand where it comes from, analysts say.

“Defense budget data available from Beijing … suffer from three distinct problems: lack of transparency, known omissions and unreliability,” wrote Frederico Bartels, a researcher at the Heritage Foundation an April article published in The Strategist, a website of the Australian Strategic Policy Institute.

Bartels discovered the 13% difference between the US and Chinese defense budgets after analyzing everything from exchange rates to labor costs across China.

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He told CNN that defense figures coming out of China should be treated with skepticism because Beijing does not focus on where the money goes or what budgets may have been allocated.

Bartels gave the example of the new aircraft carrier built in the United States against China.

In the United States, the government allegedly declared the price paid to an independent contractor to build the courier. But in China, a state-owned company builds the warship and responds only to Beijing.

The money for the new aircraft carrier could be transferred to the company with one of several accounts, not necessarily those relating to the warship.

In the end, outside observers can’t really tell how much this ship costs.

“This is the type of game that a state-owned company can play,” said Bartels.

Police and coast guard forces

Heritage researcher and IISS analysis also point out that other parts of the Chinese defense establishment, like its growing coastguard, don’t see at least part of their spending included in the military budget.

According to the IISS study, the budget for the military police (PAP) of the army, in charge of law enforcement, border defense and internal security, actually decreased when the large coast guard fleet passed under the control of the PAP in 2018.

“This would suggest that the expenditure (Chinese coast guard) remains an extra-budget cost related to defense and should be added to the total Chinese defense expenditure,” said the IISS study.

Meanwhile, the Center for Strategic and International Studies China Power Project emphasizes this The annual expenditure figures made public by the Chinese ministries of finance and defense can be a whopping $ 3 billion.

To put that number in hardware terms, it’s about three Beijing’s pioneering Type 55 destroyers, key keystones in the naval accumulation of the country.

That buildup was part of Xi Jinping’s military modernization which aims to make the PLA at least equal to the U.S. military in Asia.

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And with the progress since Xi came to power in 2013 – and especially since he reorganized the country’s Central Military Commission and targeted corruption in 2017 – it is clear that Beijing will not support any weakening of the PLA.

Bartels says the budget sends a strong message from Xi to the PLA that “we really appreciate what the People’s Liberation Army is doing and want to be able to protect them even in less positive economic times.”

Steven Jiang and Laura from CNN contributed to this report.

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