How is the People's Liberation Army financed
The big guesswork: what is China spending on its defense?
The Stockholm International Peace Research Institute (Sipri) is adjusting the assumptions on which its estimates for the Chinese defense budget are based.
For years, China has been investing billions in building its armed forces. But the exact amounts are a state secret. Officially, the 2019 defense budget was 1.2 trillion yuan, around 165 billion Swiss francs. Only the United States is paying more for its military: In the same year Washington spent a good 650 billion Swiss francs on it.
China's military spending has been rising significantly for many years. Only the US is spending more money on it. The specific calculations and estimates of China's actual spending by different organizations and governments vary widely. This is also due to different assumptions about what is classified as military expenditure.
But the official Chinese budget - experts agree - only reflects part of what Beijing really spends on its defense. Research and development for weapon systems, paramilitary units, military buildings and weapons imports are not or only partially recorded.
In order to get a better picture, various experts try to estimate the effective expenses. The range is wide: for 2019, the American Department of Defense calculated 178 billion francs, the International Institute for Strategic Studies (IISS) came to 200 billion francs and the Stockholm International Peace Research Institute (Sipri) came to 233 billion francs.
The Chinese military is changing rapidly
The differences can be explained by the fact that different experts make different assumptions. In doing so, they are faced with a dilemma. In order to enable the years to be compared, the experts try to keep the assumptions the same as possible. But the Chinese military is changing as China is changing as a whole. Over time, the assumptions can differ greatly from reality.
Sipri has now decided to check its assumptions in detail - because some of them go back to a study from the 1990s. The aim of Sipri is to record all expenditures in a country for military purposes, preferably in such a way that different countries can be compared with one another.
In the case of China there are various changes: According to the experts, the proportion of imported weapons (mainly from Russia) has fallen so far that no additional amount has to be included in the estimates. China is almost completely self-sufficient when it comes to weapons, write the experts. Sipri also comes to the conclusion that, unlike in the past, the People's Liberation Army is hardly any more commercially active. Therefore, this component is also removed from the estimates.
The Coast Guard also operates civilly
The Sipri also counts the expenditures for paramilitary units in the defense budget, although these are subordinate to different ministries depending on the country and are therefore financed differently. An example: In the case of the coast guard - the Chinese have ships that are larger and more heavily armed than warships of other nations - the question arises as to which activities are of a military nature and which are not. On the one hand, the coast guard is taking action against illegal fishing - clearly a civilian action. On the other hand, the Chinese coast guard ships regularly cruise aggressively in the waters around the Japanese Senkaku Islands (which China claims). According to the definition of Sipri, this falls under military activity.
The Sipri experts have made a number of other delimitations. The bottom line is that Sipri has revised its estimate for the Chinese defense budget by 8.5 percent down to CHF 213 billion for 2019.
All of this may have the appearance of academic mind games. And the new estimates are also based on assumptions that are fraught with uncertainties. Nevertheless, estimates that are as precise as possible are important: China's neighbors and opponents are closely monitoring Beijing's spending and align their own defense accordingly.
Despite the new assumptions (which were also applied to figures from previous years for comparability), two findings remain the same: China is the country with the second highest military spending in the world. And: These expenditures have risen constantly and massively over the years.
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