Washington Is Exaggerating China’s Military Budgets

The U.S. Congress has just reached a tentative agreement to appropriate $886 billion for the Defense Department and related work on nuclear weapons at the Energy Department, and if all goes as planned, the Biden administration will release its new budget request in early February. The central justification for this spending—which is at one of the highest levels since World War II—is China, which the Pentagon routinely refers to as the “pacing threat” driving U.S. strategy.

The U.S. Congress has just reached a tentative agreement to appropriate $886 billion for the Defense Department and related work on nuclear weapons at the Energy Department, and if all goes as planned, the Biden administration will release its new budget request in early February. The central justification for this spending—which is at one of the highest levels since World War II—is China, which the Pentagon routinely refers to as the “pacing threat” driving U.S. strategy.

Assessing the potential military threat from China is an art, not a science. Information regarding the details—how much the Chinese are spending, how the funds are being spent, whether the technologies they are investing in will work as advertised, how long it will take to get from the research stage to workable systems, and how the military spending will trend over the next 10 to 15 years—is hard to come by due to both a lack of transparency and the inherent difficulties involved in predicting the pace of technological development.

But there is ample evidence to suggest that China hawks in the Pentagon and Congress are overstating China’s military capabilities while underplaying the value of dialogue and diplomacy in addressing the challenges that Beijing poses to the United States and its allies.

One key front in the debate on Pentagon spending is the controversy over how much China actually spends on its own military. There’s no debate that Chinese spending has substantially increased over the past two decades as its economy has skyrocketed. Yet the most recent analysis by the Stockholm International Peace Research Institute—the standard source for global comparisons of military outlays—suggests that the United States still outspends China by a healthy margin of 3-to-1.

But the Heritage Foundation and other critics argue that the standard approach understates China’s military investments by a substantial margin, for two reasons. Firstly, official Chinese reporting omits key military-related activities, including a full accounting of research and development on new weapons systems and the cost of defense capabilities in space. Secondly, Chinese currency goes further than that of the United States due to cheaper costs for key inputs, including but not limited to personnel in the armed forces and the weapons industry.

Taking these factors into account, officials such as Republican Sen. Dan Sullivan have suggested that Chinese spending is roughly comparable to the United States and rising at a higher rate.

But proponents of the view that China spends much more on its military than is commonly understood are overstating the case. Even analyses that dramatically boost Chinese figures to account for a larger range of items and the differential purchasing power put Beijing’s spending at a little more than half of Washington’s—around 59 percent, according to a study conducted by Peter Robertson, a professor of economics. Robertson has attempted to adjust purchasing power as relates to specific military items, a concept he calls military-purchasing power parity (PPP) but he acknowledges that doing so can provide only a rough estimate at best: “[c]aution is . . . required since the military-PPP values discussed here are based on very aggregate data and involve approximations.” Based on what we do know, Chinese spending figures alone are thus not a reason to increase the Pentagon budget.

But that’s not the end of the story. Spending alone is not a good measure of relative military capabilities, intentions, or likely outcomes in specific scenarios. The United States substantially outpaces China in the numbers and sophistication of traditional military platforms such as major aircraft carriers (11 in the U.S. fleet compared to 3 in China), nuclear weapons (by a ratio of 10-to-1), and advanced combat aircraft (nearly 3-to-1). Concerns about China’s larger number of ships are counterbalanced by the fact that the U.S. Navy has more than twice as much tonnage, which reflects the possession of larger ships with greater range and more firepower.

But uncertainty about the U.S. Navy’s shipbuilding plans, the vulnerability of large carriers to modern missiles, and the funds wasted on vessels such as the dysfunctional Littoral Combat Ship could combine to erode U.S. advantages in naval firepower over time. In addition, Chinese progress in anti-access/area-denial systems could complicate the U.S. ability to effectively employ offensive systems in a conflict.

But the greatest area of concern is the ability of either side to rapidly develop and deploy next-generation systems, such as hypersonic weapons, unpiloted vehicles, and advanced communications and targeting systems that incorporate artificial intelligence. Both the United States and China are investing in these technologies, but it is too early to tell if either side is likely to gain a decisive advantage.

The differences in the relative size of the U.S. and Chinese holdings of key weapons systems are just one variable in comparing their military capabilities. Importantly, they do not capture the question of relative military power in the Western Pacific, where China holds a geographical advantage and has increased its capabilities considerably compared to a few decades ago.

But a report by the Quincy Institute that proposed a new U.S. defense strategy for Asia points out that the answer is not to simply race to reestablish U.S. military superiority in the region: “Efforts by the United States to restore military dominance in the region through offensive strategies of control . . . would . . . prove financially unsustainable; they could also backfire by exacerbating the risk of crises, conflict, and rapid escalation in a war.”

In the place where the risk of a U.S.-China conflict is most likely—Taiwan—a robust diplomatic strategy needs to be developed to accompany and supplant the emphasis on how to win a war with China.

A war between the United States and China over Taiwan would be a disaster for all parties concerned. According to a series of war games conducted by the Center for Strategic and International Studies (CSIS), while the United States could “win” a war to defend Taiwan from a Chinese amphibious assault, it would be a Pyrrhic victory. As described by CSIS, “The United States and its allies lost dozens of ships, hundreds of aircraft, and tens of thousands of servicemembers. Taiwan saw its economy devastated. Further, the high losses damaged the U.S. global position for many years.” A recent analysis by Bloomberg Economics estimated that a war over Taiwan could cost the global economy $10 trillion.

CSIS did not assess the potential impacts of a nuclear confrontation between China and the United States, but it is safe to say that such an exchange at any level would have catastrophic consequences.

As for the question of the likely balance in emerging technologies, it is imperative that these systems be carefully tested, and that their usefulness be assessed realistically. A rush to deploy artificial intelligence-driven weapons would increase the risk of malfunctions that could cause unintended episodes of mass slaughter, or even trigger an accidental nuclear war. Global security expert Michael Klare has outlined these dangers in a report on the implications of emerging defense technologies that was released by the Arms Control Association last year.

However much the U.S. invests in next-generation technology, it will not be a panacea. The notion of trusting in technology as the decisive factor in warfare is a common refrain from the U.S. national security state, as evidenced by the enthusiasm for the “electronic battlefield” in Vietnam or the so-called revolution in military affairs that reached peak hype during Donald Rumsfeld’s second tenure as secretary of defense during the wars in Afghanistan and Iraq.

But even when the systems enabling networked warfighting and more accurate munitions were made to work, in a number of key conflicts, they were not able to help Washington meet its stated objectives because they were ill-suited to the nature of the wars being fought. This was true in Vietnam as well as in the decadeslong wars in Iraq and Afghanistan. Motivation, local knowledge, nationalist backlash against a foreign military presence, and the creation of cheap counter-weapons such as improvised explosive devices undermined the value of sophisticated U.S. technology.

Despite the lessons learned from the wars of this century regarding the limits of advanced technology, the Pentagon seems to be in thrall to a new wave of techno-enthusiasm, convinced that it can come up with miracle weapons that would help win a war with China, or even deter Chinese aggression by their very existence.

This attitude was displayed most clearly in an August 2023 speech by Deputy Defense Secretary Kathleen Hicks to the members of the arms industry’s largest trade group, the National Defense Industrial Association. She used the occasion to announce the launching of the replicator initiative, which entails a crash program to produce items such as “swarms of drones” that can hit up to a thousand targets in 24 hours.

Hicks made it clear that the new initiative was aimed at China:

“To stay ahead [of China], we’re going to create a new state of the art … leveraging attritable, autonomous systems in all domains—which are less expensive, put fewer people in the line of fire, and can be changed, updated or improved with substantially shorter lead times … We’ll counter the PLA’s [China’s People’s Liberation Army] mass with mass of our own, but ours will be harder to plan for, harder to hit, harder to beat.”

Later in her remarks, Hicks suggested that the approach embodied in the replicator initiative would have a profound effect on the calculations of Chinese leaders: “We must ensure the PRC leadership wakes up every day, considers the risks of aggression, and concludes, ‘today is not the day’—and not just today, but every day, between now and 2027, now and 2035, now and 2049, and beyond.”

A more likely outcome of a U.S. rush to deploy AI-driven weapons would be an accelerated, high-tech arms race with Beijing, accompanied by an increased risk of nuclear escalation due to a blurring of the lines between nuclear and conventional weapons.

Thankfully, there are signs that the Biden administration may be open to rebalancing the U.S.-China relationship to increase the emphasis on cooperation and dialogue as a way to create guardrails against the outbreak of war. Military-to-military communications between the United States and China have recently been revived, and after the summit meeting between U.S. President Joe Biden and Chinese President Xi Jinping last year, commitments were made to commence discussions on nuclear weapons and the military uses of AI. Now it’s crucial that there be substantive follow up on these pledges by both sides.

Whether the question is protecting Taiwan without resorting to war or heading off the possibility that China might outpace the United States in military power over the long term, leaning too heavily on military scenarios and arms buildups at the expense of intensive communication and diplomacy is more likely to undermine U.S. security than enhance it.

It’s time to put debates about spending levels and military holdings in perspective, and instead engage in a comprehensive assessment of the best way to build a relationship with China that is less likely to provoke a conflict and more likely to curb Beijing’s more aggressive instincts.

Ultimately, the size and shape of the Pentagon budget should be influenced by a rebalancing of U.S. security policies toward China. Whether a fresh look at that strategy is possible in the current political environment in Washington remains to be seen. But given what’s at stake, advocates of a new course need to make themselves heard, loud and clear.

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William D. Hartung