Chinese Defense Spending Is Bigger Than America's

November 2, 2023 Topic: Defense Spending Region: Asia Blog Brand: The Buzz Tags: Defense SpendingChinaBig Mac IndexMilitary

Chinese Defense Spending Is Bigger Than America's

The Chinese military budget comes to $1.07 trillion in comparative value: $253 billion more in value than the U.S. defense budget.


In June, Senator Sullivan (R-AL) discussed an unclassified intelligence estimate on the House Floor suggesting the Chinese defense budget is roughly $700 billion, over three times China’s official 2023 military budget of $224.8 billion (¥1.55 trillion).  Applying the Economist’s Big Mac Index, which compresses the loose protein slurry of economic factors down to the single variable of the McDonald’s Big Mac, the Chinese military budget comes to $1.07 trillion in comparative value: $253 billion more in value than the U.S. defense budget.

To be clear, the Big Mac Index does not suggest $1.07 trillion in CCP military spending; it describes received value. Though a nominal budget of 4% China’s GDP may seem unbelievable, let alone a PPP valuation of $1.07 trillion, the results suggest fair valuation. While the U.S. Navy fights to maintain a fleet smaller than requirements, the PLAN raised the world’s largest fleet backed by a shipbuilding capacity 2000% America’s. Additionally, the PLAN fields over 80,000 sea mines of increasing quality and various methods of deployment while American minelaying and mine countermeasure projects struggle. While American air forces face material readiness and recruitment troubles, the PLAF pushes its boundaries and the PLA Rocket Force (PLARF) fields the largest and most diverse missile force in the world – alongside 3200+ acres of reclaimed seabed bases patrolled by maritime militias. While American ground force sealift capacity struggles, China weaponizes their world class civilian maritime industry. China may be short on reliable friends and field systems of debatably lesser quality - but their 20 year military realignment shows value-for-money.


This record also demonstrates why comparing value is as appropriate as comparing capability. $1.07 trillion in value received may not be $1.07 trillion in valuable effect. Unfortunately, China’s military realignment and reforms demand dispensing with the hubris of rounding peer down to “near,” when broadly comparing. In 2015, the Navy’s “Distributed Lethality” reforms showed portions of the U.S. military establishment realizing objects in the mirror were closer than they appeared. In 2017, the U.S. recognized a state of Great Power Competition with China. In 2020, OSD publicly stated that “China has already achieved parity with—or even exceeded—the United States in several military modernization areas, including: shipbuilding, Land-based conventional ballistic and cruise missiles, integrated air defense systems.” The U.S. may field many comparative advantages, but not to such extent those differences delegitimize PPP comparisons of military spending. China has achieved “good enough” in numerous categories, and a significant advantage in the ability to churn out those “good enough” products.

That productive capacity is a capability itself. While PPP focuses on the relative value of a currency – a PPP appreciation of Chinese military spending must recognize the benefits of their economies of scale & duel use industries. If half the $253 billion difference in value was applied towards U.S. naval shipbuilding, the U.S. would lack the capacity to spend it. The money must first support expansion of yards and associated industries – if the nation could even meaningfully approve and expend $126.5 billion’s worth of maritime industry expansion in a year. Thanks to de-industrialization, “there is no more arsenal of democracy,” which could ramp up in a time of war let alone to be tapped in a time of peace. Meanwhile, in 2020 the PLAN commissioned 21 new surface combatants followed by 28 in 2022. Mass-produced Chinese consumer electronics like the DJI become standards from Baseball games to the Battlefield – demonstrating industries rapidly transferable towards wartime ends. This relevant productive capacity also highlights a significant reserve of personnel with the ability to maintain and repair systems of wartime relevance.

Unlike In-n-Out, no secret sauce exists to instantly fix the cardboard-like unpleasantness of America’s comparative value conundrum. We require, “increased industrial capacity, capability, resilience, and a demonstrated commitment to fight the long war.” That will require time, and in the less-than-satisfying intervening years, a greater budget to pay for the mundane industry that underpins the capability and capacity we need. While innovation and wise expenditure of the public dollar remain important, sometimes the simple weight of “more” is necessary if not sufficient. Additionally, we may need to franchise – lean on the productive capacity of our allies from Japanese & Korean shipyards to Spanish sea mine development and production. While a, “Buy American,” policy prevents compromising purchases from the CCP and invigorates some portions of the U.S. defense industrial base, we undermine our flexibility and lose the potential industrial advantages of our global alliance network when time is at a premium.  We will never surpass a weaponized industrialized nation of 1.4 billion on military production, but with work developing our domestic production, integrating with the productive capacity of our allies, and demonstrating credible commitment and demand – we can beat the adversary on value.

LCDR Matthew Hipple is active duty SWO with a focus on LCS and Mine Warfare serving at LCSRON THREE. He is a frequent writer and a former president of CIMSEC.

The views expressed in this article are the author's own and not the U.S. Navy or Department of Defense.

Image Credit: Creative Commons.