The Limits of Growth: Economic Headwinds Inform China’s Latest Military Budget – China Real Time Report – WSJ

With an official defense budget increase of 7.6% to 954 billion yuan ($147 billion) announced today, Beijing’s quest to restore China’s historic “greatness” and to attain international status as a military power commensurate with its economic standing continues.

Yet with GDP growth slowing and social and demographic headwinds mounting, Chinese leaders face increasingly difficult tradeoffs concerning how to allocate government largesse.

With Beijing’s 2016 official defense budget, it is clear that even military spending is not immune to China’s economic and fiscal realities. Advance reports that this year’s official budget would entail an increase of as much as 20% proved significantly off-the-mark. So, what’s in a number? Nothing short of this: Beijing’s latest defense spending figure provides further evidence that it is determined to avoid succumbing to Soviet-style military overextension – yet it remains committed to enhancing capabilities to further its priorities, especially vis-à-vis contested island and maritime claims in the East and South China Seas.

Make no mistake: drawing on the world’s second-largest (and growing) economy, the People’s Liberation Army (PLA) is increasingly well-endowed and capable of asserting China’s regional interests. Even as GDP growth continues to slow, President Xi Jinping appears determined to order, and fund, ambitious military modernization and PLA reforms. The PLA is now far-and-away the world’s second best-resourced military and, unlike the globally-distributed and -deployed U.S. military, is focused overwhelmingly on its immediate neighborhood.

Source: The Limits of Growth: Economic Headwinds Inform China’s Latest Military Budget – China Real Time Report – WSJ

 

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