China: The Strategic Planning Of Defence Expenditure

China’s declaration (March 5) raising its military budget for 2014 by 12.2% to almost $132 billion should not be surprising. In fact, it would have been surprising if China had cut its defence budget or made a small increase.

Instead, what should be catching the eye would be Premier Li Keqiang’s assertion in his report to the National People’s Congress’ (NPC) annual session on March 5 “We will safeguard the victory of Second World War and the post-war international order, and will not allow anyone to reverse the course of history”. According to some senior experts of Chinese institutions this was, perhaps the first time that such words were mentioned in the government’s work report and they were a strong warning to Japan.

Premier Li’s report went on to make the following three points (i) China will work for peace but would resolutely safeguard its sovereignty and the post war international order, (ii) The country will resolutely safeguard its sovereignty, security and development interests, and fully protect the legitimate rights and interests of Chinese citizens and business overseas, and (iii) China will play a constructive role in resolving global and hotspot issues and work to make the international order more just and equitable.

This is a new, assertive and daring official position taken by the People’s Republic of China, and it is obvious that this position is quite openly backed by its growing military power. Enough signals have been received from China that late senior leader Deng Xiaoping’s theory of “building strength while keeping a low profile” is no longer in vogue among China’s leadership. But it is very difficult to say with certainty whether Deng’s advice has been cast overboard or kept aside.

The NPC report makes it clear that the Chinese government is no longer satisfied playing a regional role, but demands a global role commensurate with its clout as the second largest economy in the world after the United States. Li Keqiang’s government report was accompanied by a barrage of articles from the official media, especially the Xinhua, justifying the continuous rise of defence expenditure. It was argued that every country needs a military budget that meets its defence needs; the size of the country and its roles as a key cornerstone of regional and global peace, as well as the largest contributor to UN peace keeping missions demand that its defence outlays increase relatively. In the same breath it was said that the expenditure is both in proportion to GDP and per capita terms. Worries of China’s neighbours including Japan were dismissed as “unfounded and misplaced”.

The Xinhua propaganda barrage reiterated that military power (of China) ensured peace, China faced several challenges, and the real threats to regional security were mainly the “mounting assertiveness” of some of the South China Sea claimants, the US re-balancing to the Asia Pacific region and resurgence of Japanese radical nationalism.

Part of President Xi Jinping’s repeated emphasis on the People’s Liberation Army (PLA) for combat readiness and to win a war and his “China dream” vision to return the country to its “central kingdom” status could be felt in this new discourse on defence in the government report. But there appears to be some difference on the speed and ambit of the process. It is understood that the process should begin from its neighbourhood. Pledging to safeguard the post war international order is a clear reference to Japan over the Senkaku (Diaoyu in Chinese) chain of islands. China claims the Diaoyu as both historical and post-war settlement, while Japan controls them. The US-Japan security treaty covers the Diaoyu, but the US is also against Japan provoking a situation. The matter was precipitated when the Japanese government purchased the islands from a private Japanese owner, with Beijing fearing Tokyo was closing any scope for negotiations. One of Tokyo’s apprehensions was that a rising powerful China may in a sudden sweep take over these uninhabited islands, as it did with the Paracels from Vietnam in the South China Sea.

Beijing’s sudden declaration of Air Defence Identification Zone (ADIZ) in the East China Sea raised concerns, though both Japan and South Korea had denoted theirs much earlier. But the claimed air space clash, with those of Japan and South Korea through rhetorics over the issue appears to have subsided.

Equally volatile is the situation in South China Sea over the sovereignty of the Spratly group of islands. China, Taiwan and Vietnam claim the entire group of islands, while the Philippines, Malaysia and Brunei claim small parts. China’s nine-dashed lines claim 80 percent of the South China Sea. The nine-dashed lines do not have any legal or historical basis, but Beijing continues to emphasize that its claims are non-negotiable. The only discussion it is willing to enter is on the basis that the other party acknowledges Beijing’s sovereignty. China has categorically rejected international laws in South China Sea because its claims do not stand. The South China Sea issue is a major question of security and stability in this part of the world. Not is only the water around the Spratly Islands are estimated to have huge hydrocarbon deposits and is rich in marine life, the South China Sea is the waterway for almost 50% of the world trade.

For some years now China has been trying to persuade the US to agree that South China Sea is China’s “core interest”, that is, China can use its military to establish control over these waters. The US (read Secretary of State Hillary Clinton) refused. The US has too many interests in the region to hand over the Asia-Pacific region to China even under a G-2 (US-China supreme) condition to manage the world. Nevertheless, US President Barack Obama had offered China a G-2 position during his first visit to China in his first term as president, but the Chinese leadership declined.

The main Chinese leadership still remains cautious and prefers a step by step approach even in their ‘China dream’ pursuit. First to deal with it is what can be called its main adversary, the Japanese led by Prime Minister Shinzo Abe. Japan must be contained first, but how is the question. Simultaneous is the question of the South China Sea. China’s main conflict at the moment is now with the Philippines over maritime territory. Declaration of the controversial fishing zone in the Sea under China’s Hainan province followed by more aggressive naval patrols have added to the tension. Manila taking the case to the UN Commission of the Law of the Seas (UNCLOS) has also irritated Beijing. Compounding the issue is the fact that the US has a defence security agreement with the Philippines.

Vietnam is working with China for better relations and economic development, but has a keen eye on its own interests. It is building its navy, especially the submarine arm with Russian transfers, and has virtually offered berthing facility to the US Navy. US- Vietnam military contacts have ensued. China also intends to secure its overseas interests including its businesses and people. It demonstrated its ability, evacuating Chinese workers in Libya during the Libyan civil war. The Chinese navy has done some commendable job in anti-piracy work off Somalia.

As China’s interests spread across the globe, so does its scouting for energy resources, raw material, and business opportunities. Beijing expects not to rely on others but to do the job of protection themselves. At the moment the area envisioned by Beijing is the first island chain in the Pacific Ocean, the Indian Ocean region, Africa, Gulf and West Asia. This envisages not only a huge naval force of competing modernization, but also bases in friendly foreign countries.

Similarly, to resolve global issues and hotspots, as stated by Li Keqiang, China has to acquire the status and military strength of a super power.

To that end, China’s military expenditure has to increase and rapidly. Experts assess the current $ 132 billion budget announced for 2014 does not show the real expenditure in critical military area. At least another 50 to 60 billion dollars would have to be added. In fact, the 12.2% increase in the budget appears to have been a little cautious to address international reactions especially from its maritime neighbours. During the Jiang Zemin and Hu Jintao leaderships the budget grew at an average of 15% to 16%.

There have been harsh and threatening rhetorics from a section of Chinese strategic experts mainly connected to the military-statements like China is entitled to use all means at its disposal to settle disputes to its satisfaction in the South China Sea, including “employing its full capacities to assert sovereignty”.

The ever predictable Maj. Gen (Rtd) Luo Gan’s recipe for Japan is to teach Tokyo a lesson. Maj Gen (Rtd) Qian Lihua, a member of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC) was of the opinion that China was not what it was in 1894-5 or 1930s and 1940s and can contain the development of Japan’s militarism.

Yet, the official Chinese line on Japan though strong, does not cross the red line. The aggressiveness is reserved for Shinzo Abe and his supporters, calling them right wing militarists. Abe’s quest to alter the post-war peace constitution and pledge to build an independently strong military has disturbed China. His resumption of talks with India in the peaceful nuclear field is read by China with strong apprehension. A militarily strong Japan capable of independently defending itself against China could get out of US control under a proud Japanese leader wanting to erase the shame of World War II.

Therefore, the official Chinese line encourages peace and stability and a win-win economic cooperation. If Japan starts moving its investment away from China, it can find other destinations including India, and Beijing can be a net loser. But no such signs are visible.

Whether China is ready for a quick strike local war is the question. The countries of the region are tied in a cobweb of alliances and agreements mainly with the US. Russia has returned its focus of interest in the region and is unlikely to encourage Chinese military adventurism.

China’s modern war record is not encouraging. Except for winning the 1962 border conflict with India, it has lost twice to Japan (1894-5, and 1930s and 40s). In trying to teach Vietnam a lesson in 1979, it got a bloody nose.

China is currently trying to bolster its access denial armament like DF-26C and DF-21D missiles, stealth fighters and information warfare capabilities.

China’s internal situation is under considerable stress and challenges. Minority issues are rising. Global attention is returning to the Tibet issue and the Dalai Lama. Pro-independence Uighur militants have taken to a more desperate path which is nearing suicide attacks. Last year 13 Uighur related incidents took place. This year, already two have happened.

On the other hand, the Chinese leaders have to control ultra-nationalism which they have fomented. Within the tight system freedom of speech has gained a new momentum, and the authorities do not appear to be winning. The budget for internal security has reached the level of the defence budget.

Hence, there are balances and counter-balances ensuring stability unless something goes wrong drastically. Nevertheless, China will continue with its defence modernization and accumulation. The old Ukranian aircraft carrier the “Varyag” has been refurbished and inducted in the navy as the “Liaoning”. A second carrier is under construction. After that, another three are expected. The stress on the navy is followed by the air force.

In the next five to ten years, Chinese task forces can be expected firmly placed in both ends of the Indian Ocean. The coming scenario makes for an interesting study for Indian defence planners and managers.

By Bhaskar Roy

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