Why China's military is a threat to its neighbors, but shouldn't concern the United States on its home turf.
On March 5, at the opening of the National People's Congress, Beijing announced its official 2013 defense budget: roughly $114.3 billion, a 10.7 percent increase over the previous year and, in nominal terms, nearly four times the official budget a decade ago. This level of spending is enough to make China a force in its neighborhood, but not one to engage in combat overseas.
Beijing has long faced a much more problematic geostrategic position than Washington has. The United States borders two friendly neighbors and is buffered by massive oceans to its east and west. It enjoys abundant natural resources and the most allies in the world. China, by contrast, borders 14 countries (including four states with nuclear weapons) and has ongoing disputes with all its maritime neighbors, including its powerful rival, Japan.
Since the early 1990s, China has been surprisingly forthright about the reasons it is strengthening its military: to catch up with other powers, to construct a more capable and modern military force in order to assert its outstanding territorial and maritime claims, and to secure its development on its own terms. It also wants to acquire prestige as a full-fledged "military great power" -- a status its leaders appear to increasingly see as necessary to enhance China's international standing. Despite technological inferiority through most of the last two decades, the People's Liberation Army (PLA) utilized its geographical proximity to potential hot spots in what it calls the "Near Seas" (the Yellow, East China, and South China seas) to develop deterrents based on asymmetric technologies aimed at exploiting the vulnerabilities in potential adversaries' expensive military technologies. China's ballistic and cruise missiles, for example, are cheaper to produce, deploy, and use to attack enemy surface ships than the defensive systems necessary to protect would-be targets. In short, China is increasing the potential cost for the United States to intervene in the Near Seas.
Beijing is still spending well within its means. Its defense budget is the world's second-largest, but so is its economy. China's military-spending growth is roughly consistent with its rising GDP and is actually outpaced by Beijing's rapid increase in state financial expenditures. China is no Soviet Union, whose military spending ultimately stunted its economy, reaching unsustainable levels -- far higher proportionally than that of China today, even when compared with high-end estimates of Beijing's actual spending.
China's official defense budget still doesn't capture all defense-related spending, but no country's does. U.S. spending on nuclear weapons, as well as the hundreds of billions of dollars in supplemental appropriations that George W. Bush's administration used to fund operations in Iraq, doesn't appear in the official Pentagon budget. U.S. defense-related spending appears clearly in other official documents, but the same is true for at least one major item China excludes from its defense budget: spending on its paramilitary force, the People's Armed Police, which is published in annual statistical yearbooks -- albeit without significant details -- under "Public Security." Although China's official budget figure remains far less transparent than Pentagon spending, it appears increasingly accurate. The U.S. Defense Department estimates that China's "total military-related spending" in relation to Beijing's official defense-budget figure has fallen from approximately 325 to 400 percent of official figures for 2002, to 143 to 214 percent for 2008, to 113 to 170 percent for 2011 -- a significant trend in Chinese budget transparency.
Meanwhile, the United States is convulsed by debate over whether it can afford to maintain current defense-spending levels. In China, however, rapid economic and tax-revenue growth has provided a rising budgetary tide, allowing Chinese leaders the luxury of avoiding many tough decisions about spending priorities. And there's no end in sight: The U.S. National Intelligence Council predicts that China's GDP will surpass that of the United States in purchasing-power-parity terms in 2022, and near 2030 at market exchange rates, suggesting that high defense spending may be sustainable for a long time.
Even with this surging investment, there are several major obstacles to China's developing military capabilities potent far beyond the Near Seas. Inefficiencies still weaken the PLA, which has an estimated 2.285 million active-duty personnel, and dilute the impact of spending increases. Some commentaries in influential Chinese military journals have charged that the PLA's procurement strategy increasingly focuses on mimicking overseas developments in arms and equipment technology, even though more basic strategic goals, like Beijing's island and maritime claims in the Near Seas, remain unresolved. The PLA lacks robust internal mechanisms for analyzing or evaluating its equipment procurement needs, and a growing percentage of the defense budget appears to be earmarked toward prestige-driven, highly publicized, and extremely expensive programs that don't yield top-end military capabilities. China's aircraft "starter carrier," for example, is not only extremely vulnerable to missiles and submarines, but is also years away from reaching the capabilities that the United States possesses today. And the reconnaissance options that China's manned space program offers could be provided more cheaply via unmanned satellites.
Corruption remains a serious problem in the military. "No country can defeat China," PLA Gen. Liu Yuan said in meeting with roughly 600 officers in December 2011. "Only our own corruption can destroy us and cause our armed forces to be defeated without fighting." In February, Xi Jinping, China's soon-to-be president, launched a campaign to impose stricter discipline and oversight in the military.
Yet it will take more than limiting military banquets to "four dishes and a soup," a policy Xi has called for, to solve the PLA's problems and enable it to become one of the world's most sophisticated militaries. China scholar Minxin Pei has warned that by pursuing gradualist, incomplete reforms, Beijing risks a "trapped transition" instead of transformation into a full-fledged market economy. Signs of an analogous trap are also apparent in the military, as it strives to transition from a domestic, Near Seas-focused, personnel-intensive force to one characterized by a broader geographical mandate, advanced technology, and innovation. A slowdown in enhancement of military capabilities looms: The PLA's rapid progress in recent years means that fewer easy improvements and fixes remain.
But the closer the PLA gets to possessing cutting-edge capabilities in defense technology, the more difficult it becomes to advance further -- much of the low-hanging fruit has already been plucked. Well-educated and technologically capable personnel cost significantly more to attract, train, and retain than China's erstwhile massive peasant land army, particularly when private-sector alternatives provide significantly greater compensation. Other personnel expenses -- including health care and retirement costs -- which constitute major challenges to the U.S. military budget, may hit China even more rapidly given its less-favorable demographics.
Despite its progress in modernizing and some remarkable new hardware, the PLA's war-fighting capabilities still significantly trail those of the U.S. military. They may get trapped there, even though a growing number of influential actors have called for China to expand its military horizons. The likelihood that the PLA will get trapped in its region -- with respect to high-end war-fighting capabilities -- will increase if Beijing's growing military power and assertiveness lead its neighbors to further accelerate their own counterbalancing. China's geographical, economic, and (in some cases) technological advantages do not transfer to capabilities that would allow it to engage in high-intensity combat beyond the country's immediate periphery. In other words, China can stir up the Near Seas, but can't make tsunamis beyond that.
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