The Buzz

China's Great Military Spending Slowdown: Big Deal or Big Nothing?

Over the next few days and weeks, Asia hands here in Washington and around the world will spill no-doubt countless terabytes of digital ink over the somewhat surprising news that the People’s Republic of China will only grow its military budget by single digits this year—the first time since 2010.

Indeed, China’s military spending increases have been a big concern globally for the last five to ten years with the reason being quite obvious: Beijing has been on a crash course to develop military capabilities that are on par with its newly arrived status as the world’s second largest economy—tipping the military scales more and more in its favor in East Asia. Analysis of overall spending levels gives researchers good indicators concerning Chinese military capabilities, intentions and future directions.

But why should we care if China’s military spending is not growing at the same super levels as years past? Does it matter?

Below, I offer four explanations which, together or individually, offer plausible reasons why China has decided to slow spending—demonstrating clearly why such a downtick does indeed matter.

First, the Chinese economy is slowingand quite possibly much more than what Beijing’s bean counters are willing to admit to. Stock markets in China have taken a beating. Beijing is spending billions of dollars to keep its currency stable. At the same time, China is trying to restructure its economy to focus on domestic consumption and service industries while developing global brands as opposed to simply being the world’s factory—something it won’t be able to do thanks to a smaller and smaller pool of workers who are growing older and demanding higher wages. You can’t attempt a large-scale restructuring of a massive, ten-trillion-dollar economy while building more and more military hardware—history shows that simply doesn’t end very well.

Second, China, for the most part, has achieved one of its major military modernization goals: being able to contest a U.S. or allied intervention in anyone of its core territorial interests (think broadly Taiwan, the South and East China Seas). Chinese military planners feel very comfortable when pressed that they would be able to do great harm to any military force on the water or in the air if hostilities were to occur over these areas of great importance to Beijing. Thanks to China’s great investments in anti-access/area-denial weapons (A2/AD) and larger battle networks, American aircraft carriers, surface ships and air assets would likely take great losses in a contest in the waters around China’s near-seas. Considering the large numbers of mines, missiles, submarines, and anti-aircraft batteries already in place, as well as the island-building binge Beijing has been on over the last few years, how much more capability does China really need looking out all the way to the first and even second island chains?

Furthermore, when factoring in that all these new pieces of military hardware take years to become proficient in—you just don’t fire a so-called “carrier-killer” missiles or put to sea advanced submarines without significant training—a Chinese pause in spending clearly makes sense. Beijing might simply need to catch its breath and become proficient with what it already has. Remember, China has not fought a major war since in 1979.