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China, Pakistan, Central-Asia Military Watch
[url="http://www.atimes.com/atimes/China/LC18Ad02.html"]In defense, China offers cold comfort[/url]

By Peter J Brown

For the first time in well over a decade, China has limited rising spending on defense to a less than double-digit increase. In early March, Beijing announced that the 2010 defense budget would total approximately 532 billion yuan (US$78 billion), with the 7.5% increase representing half the 14.9% rise approved in 2009.

China is accustomed to being accused of not providing accurate information. Jia Yong, a member of the National Committee of the Chinese People's Political Consultative Conference National Committee (CPPCC), recently described these allegations as "groundless". [1]

Japan has consistently expressed concerns about China's military spending. In light of Chinese President Hu Jintao's 2008 promise that China "would not spark an arms race with its neighbors or pose a military threat", Asia Times Online asked

several experts to assess the impact of the new defense budget on Japan. We put the question to them twice in somewhat different statements. [2]

An immediate response came from Michael Green, Japan Chair and a senior adviser at the Center for Strategic and International Studies in Washington, DC.

"It is the nature of Chinese deployments and operations rather than the official number that is at issue," said Green. "But the lower number doesn't hurt China's image!"

Image is everything; the softer tone of this new defense budget seems to dovetail neatly with recent talk in China about the need to recognize the importance of China's so-called "soft power" and "cultural influence" abroad.

According to the "China Modernization Report 2009: Study of Cultural Modernization" which was prepared by the Chinese Academy of Sciences (CAS), China now ranks seventh among 131 countries worldwide on the cultural influence index, behind the United States, Germany, the United Kingdom, France, Italy and Spain. China has moved up four spots globally since 1990, while its cultural influence has risen from second to first place in Asia, the CAS reported.

"The ascent of China's cultural influence reflects clearly the rise of China's soft power," He Chuanqi, director of the China Center for Modernization Research under the CAS, told the People's Daily. [3]

Green disagrees that this lower defense budget is aimed primarily at Japan. "The Chinese are cutting spending across the board, including defense. They are spinning it for external purposes in all directions including Japan, but if anything, the signal is more for [the US]."

Toshi Yoshihara, associate professor in the Strategy and Policy Department at the US Naval War College, is not convinced that the Japanese are comforted by the somewhat modest increase in China's defense budget, "which is still enviable by Japan's standards". By comparison, defense-related spending in Japan has been declining for seven consecutive years since fiscal year 2002.

"The Chinese are more transparent, but some puzzles remain unsolved. For example, the official defense budget does not include acquisition of big-ticket defense items from abroad," said Yoshihara. "It is hard to judge whether the figures are accurate or not. The budgeting process is still quite opaque to the outside world."

China's 7.5% increase, "if taken at face value, is still respectable in the region. This in part explains some of the alarm over the shifting regional power balance expressed among Japanese strategists," said Yoshihara.

Japanese proponents of engagement with China might certainly be tempted to use China's new defense budget as evidence that an opportunity exists to strengthen bilateral relations.

"But ample countervailing evidence could be used to dampen enthusiasm for more engagement," said Yoshihara, whose list of tangible signs of a rising China included the showcasing new-generation missiles at the National Day parade last October, the persistent speculation over its carrier ambitions and plans to develop overseas bases, and its more prominent position in anti-piracy operations.

"Weighed against these factors, [China's] defense budget sends a much weaker signal, if one accepts the assumption that Beijing had intended to send such a signal in the first place,'' Yoshihara said.

"China would have to do much more to ease Japanese anxieties. From the Chinese perspective, Beijing complains that no amount of transparency would allay Japanese and US fears," said Yoshihara. "Some Chinese analysts sense that allied complaints about transparency are just another tactic to keep China on the defensive on strategic affairs."

Eric Hagt, director of the China Program at the World Security Institute in Washington, DC, describes China's defense budget as probably representing a slowdown.

"However, the percentage of China's overall national budget devoted to defense did not actually change," said Hagt. "The figures and meaning of the budget this year are far less clear than a prima facie look at the 7.5% compared with higher double-digit rises in the past."

A degree of fiscal austerity is impacting everything in China, including the defense sector.

"The People's Liberation Army [PLA] does not seem to have gotten the short end of a budgetary stick," said Hagt, who added that this budget made Japan more comfortable and more willing to continue and extend the dialogue.

"Japan would likely be pleased by any reduction in China's defense budget increase," said Hagt. "But there may indeed be no actual change, so it may be just perceived."

Among other things, a concerted effort over the past several years by the government to raise the salaries of PLA officers across the board to match compensation levels in the civilian realm has to be taken into account. This process is almost complete.

Moreover, how much of the PLA budget was required to cover several special events over the past two years, including various military anniversaries in 2009 and attendant ceremonies, is unknown, but "it is likely not insignificant", said Hagt. These included a national day parade, the PLA Navy's 60th anniversary parade and the PLA Air Force's parade, along with the costs for heightened security during the 2008 Summer Olympic Games in Beijing.

"In terms of their impact on what we are most concerned about - China's military capability modernization - these general figures tell us little. Knowing the ratio changes in personnel, maintenance and weapons research and development [R&D] spending within the budget would give us more information," said Hagt.

In contrast, while Jing-dong Yuan, director of the East Asia Non-proliferation Program at the James Martin Center for Non-proliferation Studies in California, agreed - at least in part - with both the statements about Japan. He noted that Jia's response to the predictable barrage of complaints aimed at China's defense budget had some validity.

"It depends on how you define and calculate defense spending. For example, the US spends about $50 billion each year just for maintaining nuclear weapons and related activities, but of this amount only a fraction is accounted for in the DoD [Department of Defense] budget, while the US Department of Energy [accounts for most of the rest]," said Yuan. "Clearly, the money spent is for military purposes - nuclear weapons - but not necessarily included in the official defense budget."

Estimating the actual growth in Chinese purchasing power from the defense data in question is always a challenge.

"Obviously, Western analyses typically suggest that China's real defense spending is much higher, and the 2009 DoD report puts it around US$105 to 150 billion," said Yuan. "The more important point is what the extra amount of money would buy for the PLA in terms of equipment procurement, training and personnel benefits."

If the PLA continues to depend on foreign arms suppliers - especially Russia - then even the higher estimate "would not go very far", said Yuan. "In addition, if the PLA's reach extends beyond the periphery, then that could also quickly eat up whatever additional resources are committed."

There could be a number of reasons for a lower increase in defense spending, such as the economic recession and the fact that there may be competing demands from provinces and other segments of the government and society for limited resources. However, Yuan agrees that this could also be "an effort by Beijing to assure neighbors that China's defense spending is moderate and restrained".

"Lower spending helps, especially when it involves a big [over 50%] reduction over previous years," said Yuan. "Obviously, this should have a positive effect on Japan and on the Democratic Party of Japan [DPJ] government in particular."

Major General Luo Yuan, a member of the CPPCC-NC who is also a researcher at the Academy of Military Sciences, recently explained that previous double-digit increases in his nation's defense budget were prudent and necessary. And yet, starting in 2010, things have changed.

"This year's 7.5% increase signaled that China's defense development has entered a more mature, healthy and stable stage," said Luo. [4]

Whatever changes may be underway, China's budget level does not seem to have had any improvement in the relationship with Japan as an aim, according to Kazuto Suzuki, an associate professor of international political economy at Hokkaido University's School of Public Policy.

"I do not agree that China's intent here is to exert influence over Japan by military threat. My understanding is that the Chinese defense budget increase is driven by the Chinese obsession to be a global power and improve the denial capability from foreign intervention. Thus, I don't think that it is aiming at Japan," said Suzuki. "In fact, the Chinese government is trying to establish a much stronger relationship with the DPJ government through negotiation and trade."

Japan's ongoing territorial dispute with China in the East China Sea - where there is undersea oil and natural gas - is ongoing, and China's growing maritime and naval presence in this region is a source of tension. "Apart from that, there seems to be little evidence that the Chinese government is [seeking] to solve problems with Japan through military means," said Suzuki.

"Since China's [budget] is not transparent and we do not take this number at face value, it is hard to judge that this year's budget is comforting or reassuring," said Suzuki. "It is common knowledge that China's defense budget does not include R&D or missile defense. So, the number is much higher than 7.5%."

The DPJ government is being accused of disrupting Japan's ties with the US by delaying a decision on the relocation of US troops on Okinawa, and China's defense budget is not attracting much attention as a result.

"Those who are interested in China's budget are generally skeptical about the Chinese intention, so most of the discussion about China's defense spending is mostly about the lack of transparency and the further increase of China's defense capability," said Suzuki.

After adding up all of this, Hagt stated, "My intuition tells me you may be onto something and China has certainly taken note of the growing wariness of its rising power, rising defense budget in the region and beyond.

"It's an intriguing question, not only for Japan, but with all that's happened with the arms sale to Taiwan, along with the Dalai Lama's visit [to the White House], the strategic temperature doesn't seem to be cooling off," said Hagt.

And so what does the budget mean for US-China relations over Taiwan?

"Personally, I would have thought that China would go the exact opposite way if it was showing its resolve over Taiwan," said Hagt. In other words, given the circumstances, he wonders why China did not approve an even larger percentage increase in its 2010 defense budget "which it could have concealed altogether or prominently showed off".

Li Cheng, director of the John L Thornton China Center at the Washington, DC-based Brookings Institution, recently told the Chinese state-run Xinhua that "relations between nations have become much more close than ever before. The concept that we are all on the same boat is highly recognized. With the change of expectations or demands, the two sides can encounter some sort of misunderstanding or even friction which is quite normal among big nations." [5]

Hagt, on the other hand, stressed that internal - not external - variables ultimately determined the budgetary outcome in this instance.

"This once again points to a fact that many Chinese will tell you, but which makes less news in the West," said Hagt. "China's policies, its spending, its National People's Congress decisions and its overall direction are influenced far more by domestic issues than by external ones. With such major social problems, dramatically raising defense spending would likely have caused a serious backlash at home."


1. Political advisor slashes reports alleging China hiding defense budget, Xinhuanet.com, March 11, 2010.

2. First, our experts were presented with this following direct statement: In 2008, when Chinese President Hu Jintao visited Japan, he made a promise to the effect that China, "would not spark an arms race with its neighbors or pose a military threat." Japan has consistently expressed its concerns about China's military spending in the past. This year, given China's attempt to counter the influence of the US over Japan, China's announcement of a 7.5% increase in defense spending is aimed primarily at Japan.

Later, these same experts were asked if they either agreed or disagreed with this somewhat different and more subtle statement - Japan has consistently expressed its concerns about China's military spending in the past. With China's recent announcement of a 7.5% increase in defense spending which is the lowest annual increase in some time, this is likely to be seen in Japan as a positive development and as a move by China to be less threatening. As both governments strive to build stronger ties, therefore, anything China does to reduce its defense budget makes Japan more comfortable and more willing to continue and extend the dialogue.

3. How to improve China's soft power?, People's Daily, March 12, 2010.

4. China's defense budget to grow 7.5% in 2010: spokesman, Xinhuanet.com, March 4, 2010. 5. World place more focus on China's diplomacy: experts, Xinhuanet.com, March 12, 2010.

Peter J Brown is a freelance writer from Maine, USA.

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