Sunday, March 30, 2014

March 27, 2014 4:44 pm JST Has China's military expansion peaked? HIROSHI MURAYAMA, Nikkei senior staff writer

March 27, 2014 4:44 pm JST

Has China's military expansion peaked?

HIROSHI MURAYAMA, Nikkei senior staff writer
The Liaoning, a refurbished Ukrainian ship, is China's first aircraft carrier. © Xinhua
BEIJING -- China sent four naval vessels to the South China Sea to join the international search for a missing Malaysian Airlines jet. The four ships comprise the missile frigate Mianyang and three amphibious transport ships, including the Kunlunshan and the Jinggangshan.
     Given that 153 Chinese nationals were on board the ill-fated flight, it is understandable that Beijing has sent vessels to assist with the search, but why the 20,000-ton Kunlunshan and Jinggangshan? China appears to be using the search as an opportunity to display its growing maritime power to the 10-member Association of Southeast Asian Nations.
     Although many in the region and further afield view China's growing might with alarm, the country may soon bump up against the economic and demographic limits to its military expansion.
     On March 5, during an annual session of the National People's Congress, the government announced its defense spending will rise 12.2% in 2014 to 808.2 billion yuan ($130 billion). That marks the fourth year in a row of double-digit increase and is nearly twice the size of the 2008 defense budget. China is already the world's second-largest military spender.
    Although China's official defense spending lags far behind that of the U.S., with President Barack Obama's administration proposing a budget of $495.6 billion for the fiscal year starting in October, Beijing's figure does not include money spent on weapons purchased from abroad, or research and development. Many analysts put China's actual military spending at nearly twice the official figure.
Anchors aweigh
Much of the money is going toward building up the country's naval capabilities. In addition to the Liaoning, the country's first aircraft carrier, which was purchased from Ukraine and refurbished, China is now reportedly building two home-grown aircraft carriers. The Kunlunshan, for its part, is reportedly capable of carrying an amphibious landing force of 260 troops and two helicopters.
     China seems intent on controlling the entire South China Sea, an important shipping route for energy resources from the Middle East. It is locked in territorial disputes in the area with Vietnam and other Asean members.
     Following China's announcement of its 2014 defense budget, The Wall Street Journal reported that Beijing could close the spending gap with the U.S. by around 2030. And its defense budget is rising much more quickly than its overall spending, which will rise 9.5%, according to official figures. Despite slowing tax revenues, Beijing shows no sign of curbing its military outlays.
     There are growing concerns in the U.S., which is under pressure to cut its defense budget, that China may overtake it, but when it comes to China's military capabilities, it is important to keep one obvious fact in mind: China has a big army.
     China shares land borders with 14 countries and requires a huge number of troops to defend them. Its 1.6 million soldiers still represent the world's largest standing army. Chinese and Indian troops continue to face each other across their mountainous border. And Beijing relies on the army to maintain order in its restive ethnic minority regions, including the Xinjiang Uyghur Autonomous Region.
Shark or tiger
This puts China on the horns of a dilemma. Historically speaking, few countries that started off as land powers have succeeded in becoming big maritime powers as well. France, for example, had the most powerful army in Europe between the 17th and 18th centuries. France fought Austria and Spain on the European continent, while competing with Britain for colonies overseas. The huge military budgets required to do both resulted in the collapse of the Bourbon dynasty's finances and led to the French Revolution.
     The Soviet Union also had a powerful army, but collapsed under the weight of massive military spending as it struggled to compete with the U.S. at sea.
     China will face growing budget pressure as its economic growth slows, its population ages and its birthrate declines. The country will face a heavy fiscal burden if it continues to build up its navy and air force while maintaining the world's biggest army. If it is not reined in, excessive military spending could lead to the demise of the communist government.
Brutal math
Japan has traditionally limited its defense budget to 1% of gross domestic product. China has also kept its official defense spending at around 1.3% of GDP for many years, although the Stockholm International Peace Research Institute (SIPRI) believes the actual level has hovered around 2% of GDP over the past two decades.
     This suggests that China is adjusting its defense spending in line with GDP growth, rather than fiscal conditions. If current trends continue, growth in China's defense outlays may slow to single digits.
     There is still a possibility, however, that China will pursue its dream of hegemony at sea and continue its overall military spending spree. That would put it on the same treacherous path that France took in the 18th century and the Soviet Union took in the 20th.
The Liaoning, a refurbished Ukrainian ship, is China's first aircraft carrier. © Xinhua
BEIJING -- China sent four naval vessels to the South China Sea to join the international search for a missing Malaysian Airlines jet. The four ships comprise the missile frigate Mianyang and three amphibious transport ships, including the Kunlunshan and the Jinggangshan.
     Given that 153 Chinese nationals were on board the ill-fated flight, it is understandable that Beijing has sent vessels to assist with the search, but why the 20,000-ton Kunlunshan and Jinggangshan? China appears to be using the search as an opportunity to display its growing maritime power to the 10-member Association of Southeast Asian Nations.
     Although many in the region and further afield view China's growing might with alarm, the country may soon bump up against the economic and demographic limits to its military expansion.
     On March 5, during an annual session of the National People's Congress, the government announced its defense spending will rise 12.2% in 2014 to 808.2 billion yuan ($130 billion). That marks the fourth year in a row of double-digit increase and is nearly twice the size of the 2008 defense budget. China is already the world's second-largest military spender.
    Although China's official defense spending lags far behind that of the U.S., with President Barack Obama's administration proposing a budget of $495.6 billion for the fiscal year starting in October, Beijing's figure does not include money spent on weapons purchased from abroad, or research and development. Many analysts put China's actual military spending at nearly twice the official figure.
Anchors aweigh
Much of the money is going toward building up the country's naval capabilities. In addition to the Liaoning, the country's first aircraft carrier, which was purchased from Ukraine and refurbished, China is now reportedly building two home-grown aircraft carriers. The Kunlunshan, for its part, is reportedly capable of carrying an amphibious landing force of 260 troops and two helicopters.
     China seems intent on controlling the entire South China Sea, an important shipping route for energy resources from the Middle East. It is locked in territorial disputes in the area with Vietnam and other Asean members.
     Following China's announcement of its 2014 defense budget, The Wall Street Journal reported that Beijing could close the spending gap with the U.S. by around 2030. And its defense budget is rising much more quickly than its overall spending, which will rise 9.5%, according to official figures. Despite slowing tax revenues, Beijing shows no sign of curbing its military outlays.
     There are growing concerns in the U.S., which is under pressure to cut its defense budget, that China may overtake it, but when it comes to China's military capabilities, it is important to keep one obvious fact in mind: China has a big army.
     China shares land borders with 14 countries and requires a huge number of troops to defend them. Its 1.6 million soldiers still represent the world's largest standing army. Chinese and Indian troops continue to face each other across their mountainous border. And Beijing relies on the army to maintain order in its restive ethnic minority regions, including the Xinjiang Uyghur Autonomous Region.
Shark or tiger
This puts China on the horns of a dilemma. Historically speaking, few countries that started off as land powers have succeeded in becoming big maritime powers as well. France, for example, had the most powerful army in Europe between the 17th and 18th centuries. France fought Austria and Spain on the European continent, while competing with Britain for colonies overseas. The huge military budgets required to do both resulted in the collapse of the Bourbon dynasty's finances and led to the French Revolution.
     The Soviet Union also had a powerful army, but collapsed under the weight of massive military spending as it struggled to compete with the U.S. at sea.
     China will face growing budget pressure as its economic growth slows, its population ages and its birthrate declines. The country will face a heavy fiscal burden if it continues to build up its navy and air force while maintaining the world's biggest army. If it is not reined in, excessive military spending could lead to the demise of the communist government.
Brutal math
Japan has traditionally limited its defense budget to 1% of gross domestic product. China has also kept its official defense spending at around 1.3% of GDP for many years, although the Stockholm International Peace Research Institute (SIPRI) believes the actual level has hovered around 2% of GDP over the past two decades.
     This suggests that China is adjusting its defense spending in line with GDP growth, rather than fiscal conditions. If current trends continue, growth in China's defense outlays may slow to single digits.
     There is still a possibility, however, that China will pursue its dream of hegemony at sea and continue its overall military spending spree. That would put it on the same treacherous path that France took in the 18th century and the Soviet Union took in the 20th.
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