Writing in the English-language China Daily, Xu Guangyu, a council member of the China Arms Control and Disarmament Association, offers his "point of view in the hope of clearing away misunderstanding" about the massive spike in China's declared defense budget.
Says Xu,
The growth is primarily caused by the sharp increase in the wages, living expenses and pensions of 2.3 million People's Liberation Army officers, civilian personnel, soldiers and army retirees. The pay rise came in the latter half of 2006.
Large numbers of officers from battalion level down and non-commissioned officers received the sharpest pay rise 100 percent. . . .
The pay of the officers from the regimental level up, civilian personnel and army retirees has also been increased by 80 percent.
At the same time, all rank-and-file soldiers' living allowances and board expenses have also been increased. . . .
The US military's per capita budget in 2007, for instance, is $383,000, the highest in the world. Next comes Britain ($324,000), followed by Japan ($175,000), Germany ($148,000) and France ($146,000).
In contrast, China's per capita spending on its soldiers is only US$19,540.
I spoke with John Tkacik of the Heritage Foundation to get a better sense of this issue, and Tkacik says he has "no doubt" about the veracity of Xu's claim that this latest budget has seen pay raises ranging from 80 to 100 percent for officers and NCOs. He says "there's no question they are trying their best to keep personnel" from leaving the army to seek higher paying jobs in the booming private sector. Still, Tkacik says that "virtually the only things in the public budget are related to personnel and pay." Further, the "increases in the public defense budget are pretty much mirrored in overall defense spending." Meaning that weapons procurement likely benefited from a similar jump in spending.
All of this obscures the fact that a dollar goes a lot further in China than it does in the United States. A significant portion of the $383,000 that the United States spends per soldier goes to things like health care, which is vastly more expensive in this country, but also of a vastly superior quality. If one assumes that the Chinese "black budget" is similar in size to the published budget--which is a big assumption, it may be much larger--one still needs to take into account purchasing power parity, which Tkacik says is likely on the order of 4 to 1. That is, for every $4 the United States spends on defense, the Chinese need spend only $1 to get the same return on personnel or equipment.
So when you double the $19,540 the Chinese are spending to account for the unpublished "black budget" and multiply by four to account for purchasing power parity, you get a number closer to $156,000, putting China very near Japan in terms of per capita spending. Tkacik says the best guess from the CIA is that the Chinese are spending close to 4.5 percent of GDP on defense spending. China's GDP in 2006 was estimated at $2.5 trillion, which is really more like $10 trillion when one accounts for purchasing power. Do the math, and you get a number that is much closer to the U.S. defense budget, approximately $450 billion compared to the Pentagon's FY 2008 budget of $647 billion. Considering China's force levels are easily twice those of this country, $156,000 looks like a pretty solid guess on per capita defense spending--nearly half what the U.S. spends for each active duty soldier, sailor, Marine, and airmen.
The Chinese are catching up.
