06/18/07

DEFENSE NEWS

SIPRI Report on China Disputes U.S. Findings

By WENDELL MINNICK, TAIPEI

A new report throws some water on the fire started by a recent Pentagon assessment of China’s military power, which political pundits in Washington said was evidence of a “China threat.”

The annual “SIPRI Yearbook 2007,” released June 11, says the rise of China’s military expenditure is the result of long-term development, during which China has aimed to modernize its armed forces and, for that reason, has began its own revolution in military affairs.

The report from the Stockholm International Peace Research Institute (SIPRI) is a respected compendium of data and analyses of developments in security, conflicts, military spending, nonproliferation, arms control and disarmament.

Elisabeth Sköns, SIPRI project leader on military expenditure and arms production, said that the “high and rising Chinese military expenditure reflects China’s status as a major regional power and as an emerging world power.”

Sköns argued that China’s rising military expenditure is not unusual for its economic growth rate and defense responsibilities.

“While it is true that the rise in China’s military expenditure [an average annual growth rate of 12.5 percent in real terms from 1997 to 2006, according to SIPRI data] has been somewhat higher than its economic growth rate,” she said, the level of China’s military expenditure is in line with China’s economic status. Its military expenditure accounts for a lower share of GDP [gross domestic product] than for many other major spenders. While the share of military expenditure in GDP was 2 percent for China in 2005, it was 4.1 percent for both the USA and Russia, 2.7 percent for the U.K. and 2 percent for France, while two other major spenders had a lower defense burden: Germany, 1.4 percent, and Japan, 1 percent.”

She said the revolution in military affairs is particularly costly because “China is still a developing country with a relatively weak technological and industrial base compared to the major industrial countries. Thus, it is important to understand that military expenditure is an input measure indicating the costs rather than the result, or output, in terms of military capability.

“In order to assess the military significance of China’s defense budget, it is more important to look at how China is spending its defense budget, the context within which it is spent (defense policy and military doctrine) and what it gets out of the resources it spends.”

Holes in Pentagon Report

Richard Bitzinger, senior fellow at the Institute of Defence and Strategic Studies’ S. Rajaratnam School of International Studies, Singapore, slammed methodology used by the Pentagon in its annual report on China’s military power.

“The idea that the Chinese could be spending as much as $125 billion on defense according to the DIA [Defense Intelligence Agency] is totally unfounded. No methodology is ever given for coming up with its numbers,” Bitziner said. “In addition, citing nongovernment statistics, such as SIPRI’s estimate [in the 2006 report] of $141 billion, is irresponsible. The [Pentagon] report is trying to muddy the water and distract readers from its lack of concrete evidence and methodology by hiding behind totally unsubstantiated nongovernmental estimates.”

Sköns pointed out that U.S. DIA estimates have been substantially higher than the SIPRI estimates.

The DIA’s “estimate for 2002 was $80 billion, four times greater than the official Chinese figure for that year and more than double the SIPRI figure,” she explained. “In 2005, the DIA had reduced its estimate to twice the official figure. In the May 2007 DoD report to Congress on China’s military power, it presented a range for Chinas military expenditure of 85 [billion] to 125 billion dollars for 2007, again roughly twice the official figure.”

However, unlike the SIPRI report, Sköns said the problem with the Pentagon report is “presenting only dollar estimates without any reference to local currency figures.

“It is not clear what type of exchange rate is used to arrive at the dollar estimates,” she said. “Therefore, it is unclear whether these are based on a higher figure in local currency, or whether the high level is a result of the method used for translating China’s local currency expenditure into U.S. dollars.”

‘China Threat’

Regarding the “China threat,” Sköns said that “conclusions regarding whether or not China poses a military threat to other countries are not easily drawn from military expenditure data. Such assessments should be based on analyses of Chinese physical military capabilities, defense and security policy, military doctrines and objectives.”

But Richard Fisher, vice president of the Washington-based International Assessment and Strategy Center, believes the SIPRI report confuses the debate over the “China threat.”

“Which numbers? SIPRI uses a lot of numbers,” Fisher said. “Is China a threat? Well, yes, they have managed to get the Pentagon and SIPRI into a terrible argument.”

Despite the battle over numbers, Beijing maintains that China’s military posture is defensive and a number of validations have been offered for the strong growth rate in its defense budget.

These include arguments that China is playing catch-up after decades of political instability and inactivity during the Cold War, that military expenditure growth rate is in step with its economic growth rate, that China is an enormous nation with broad borders to defend, that its arms procurement and manufacturing is comparatively more expensive than in industrial countries, and that demands from the U.N. Security Council to contribute to peacekeeping are factors that critics of China’s military modernization do not consider.

Bitzinger does not buy Beijing’s defense-only arguments.

“Is Chinese defense spending simply defensive? Bull. The offensive-defensive argument is total nonsense because it’s a rhetorical argument,” he said. “The Chinese are engaged in buying large numbers of advanced weapon systems intended to improve the PLA’s [People’s Liberation Army’s] power projection, area denial, precision strike and battlespace knowledge. Such capabilities can be used in both offensive and defensive contexts.”