New Delhi: China’s defence spending is set to rise by 7.1 per cent in 2022 to a whopping $230.16 billion, the highest budgetary increase in three years, the country’s Ministry of Finance Saturday announced. This is thrice the size of India’s spending in 2022-23 fiscal.
The move came even as forecasts peg China’s GDP growth at 5.5 per cent for 2022 — lowest in nearly three decades.
Even though China’s economy rebounded after the initial impact of Covid-19, high debt levels in the real estate sector, which accounts for nearly 25 per cent of GDP, led to a loss of momentum for the economy towards the end of 2021.
This is China’s seventh consecutive defence spending hike. The Xi Jinping-led country has been increasing fiscal outlays on defence for decades now. However, this year’s outlay is above the 6.8 and 6.6 per cent increases of 2021 and 2020, respectively.
The proposed high spending comes in the middle of a massive military modernisation programme under which China is building number of submarines to aircraft carrier and stealth aircraft.
This aggressive modernisation, which has startled several countries, coincides with China‘s muscle flexing over Taiwan and also with India, where a standoff at the Line of Actual Control (LAC) is nearing the two-year landmark.
Priorities for 2022 defence spending
The fiscal outlay of 1.45 trillion yuan or roughly $229.7 billion has come with a set of priorities to modernise China’s military. In his address to the parliament, Premier Li Keqiang declared that the focus would be on strengthening combat preparedness through enhanced military training.
The focus would also be on developing a modern system for military assets, logistics and equipment management. Further, the country will build state-of-the-art weaponry, including weapons to assist combat such as stealth fighters and aircraft carriers.
China’s defence spending has traditionally been linked with its economic growth rate and assessment of its security environment.
While this is not the first time defence spending has outstripped growth projections in China — this took place in 2019 as well — the scale of difference is significant. In 2019, growth projections were between 6 to 6.5 per cent, and defence spending had been increased by 7.5 per cent.
In contrast, economic growth projections lag far behind defence expenditure this year.
This hints that China aims to prepare its military for possible scenarios in Taiwan, Hong Kong, the South China Sea, and the western and eastern sectors of the Line of Actual Control (LAC) with India.
Further, studies indicate that China undercounts military spending by not accounting for several expenses like research and development, space programs and defence mobilisation funds, among others. So, the gap between defence spending and economic growth rates could be even higher this year.
China’s military spending compared to India’s
In the Union Budget 2022-23, India announced a 9.8 per cent hike in its defence spending to $70 billion, which is less than one-third the size of China’s defence budget for this year.
In 2021, China’s spending on defence crossed $200 billion for the first time, and was four times over India’s.
Further, India spends about 60 per cent of its budget on personnel expenses; China spends about only 30 per cent, enabling China to spend much more on modernisation and combat readiness of the military.
Since the start of Xi Jinping’s tenure as General Secretary of China’s Communist Party in 2013, structural changes have been undertaken in the organisation of the military, and funds have been spent to modernise so that China’s military remains combat ready.
In India’s 2022 defence budget, funds for modernisation for the Army have been decreased, while those for the Navy and Air Force have been raised.
As the stalemate continues in India’s standoff with China in the Ladakh sector of the LAC, with 14 rounds of talks already over, it is to be seen how these spending disparities will affect military posturing on the ground.