China: Fudging of the defense budget?

By B.RAMAN See also: www.southasiaanalysis.org

At a proposed total expenditure of 532.11 billion yuan ( US Dollars 78.25 billion), the Chinese defence budget presented to the National People’s Congress (NPC), the Parliament, in session in Beijing since March 5,2010, represents a 7.5 percent increase over last year's spending. In 2009, the defence budget increased by 14.2 per cent.The defence spending during 2010 would be only 6.3 per cent of the total budgetary spending. This is the first time the annual increase has dropped below 10 per cent in almost a decade.

2.According to official spokesmen, who briefed the media on the defence budget in the margins of the NPC session, between 1979 and 1989, the defence budget increased by an average of about one to two per cent per annum. The annual rate of increase went up to 10 per cent plus after 1989. It is now proposed to bring it down to below 10 per cent

3. In his annual work report submitted to the NPC, Prime Minister Wen Jiabo (photo) said that China will concentrate on making the army better able to win informationized local wars, and will enhance its ability to respond to multiple security threats and accomplish a diverse array of military tasks

4. According to Li Zhaoxing , a former Foreign Minister, who briefed the media on the defence budget, “, "China's defense spending in recent years accounted for about 1.4 percent of its GDP. The ratio was 4 percent for the United States, and more than 2 per cent for Britain, France and Russia. Defense construction should be compatible with and serve the overall development of the country, which is still in an economic recovery. A double-digit growth in defense spending in the long-term is not always necessary as the nation's economic power rises.
Defense construction will be more mature and ordered in the future.”

5. The details of the defence budget as released to the public were greeted with the usual skepticism by foreign analysts, who have always maintained that there is a lack of transparency about China’s defence spending and that a lot of expenditure on defence-related projects such as the development of anti-satellite weapons are concealed under heads other than defence. While the continuing suspicion of the fudging of the defence budget is strong and will never go away, it is difficult to establish conclusively that there has been fudging and , if so, under what heads.

6. A question pointedly posed to the Chinese spokesmen to which they did not reply was whether China is continuing its efforts to acquire an aircraft-carrier for its Navy and, if so, under what head the estimated expenditure on its acquisition is being shown. Li himself ignored a question regarding aircraft carriers. Some Chinese spokesmen pointed out that there is a certain lack of transparency in the defence budgets of all countries in the interest of national security. According to them, while China may not give the break-up of the expenditure under certain heads such as the project for the acquisition of an aircraft-carrier, that does not mean that the total figures are fudged. Major General Luo Yuan, a political adviser and researcher with the Academy of Military Sciences, said: "No country can be absolutely transparent with their military spending, not even the United States."

7. Another issue, which aroused considerable curiosity in the scrutiny of the budget, related to recent unconfirmed reports that the Chinese Navy is looking for overseas bases from which its anti-piracy patrols in the Gulf of Aden area could operate. There is no reference in the budget to any proposed expenditure under this head. Chinese spokesmen, including three from the Navy, who spoke to the media on this subject, denied these reports. Their comments are given below:

* Zhang Deshun, who retired recently as the Deputy Chief of Staff of the PLA Navy and is now a Deputy of the NPC: “A stronger Chinese navy will not seek to build military bases overseas.The country harbors no such ambitions. A naval force with advanced armaments and enhanced capabilities will contribute more to UN-led anti-terrorism, anti-piracy and disaster-relief missions. A larger navy with a greater reach does not mean it will seek to play the role of world police.The military's overseas missions, such as the anti-piracy operation, are authorized by the UN. They aim to protect merchant ships and aid vessels as well as their crews from pirates off the Somali coast. We have no agenda to set up military establishments, or threaten establishments of other nations overseas.The PLA navy has no plans, nor is there a necessity, to establish overseas military bases".

* Senior Colonel Yan Baojian, a fleet commander in the South China Sea Fleet: “The navy is capable of operating overseas missions without any military base on foreign soil. The naval force can work extensively with China's business operations worldwide for military supplies, in addition to advanced supply ships.”

* Rear Admiral Cao Dongshen: “The Chinese navy has no secret agenda on global expansion. The strategy of our naval force is active defense. It is part of the country's development and diplomatic strategy."

8. Despite these denials, speculation that China has been looking for overseas naval bases in countries such as Myanmar (Kyaukpu), Sri Lanka (Hambantota), the Maldives and Pakistan (Gwadar) persist. In Pakistan, there has even been speculation that the Chinese want a military and intelligence presence similar to that of the US to be able to neutralize the activities of the Islamic Movement of East Turkestan (IMET) from Pakistani territory. Even if these reports are true, it would be a thankless job to look for tell-tale evidence in confirmation in the Chinese defence budget.

9. The Chinese analysts themselves have been citing the following reasons for the lower increase in the defence budget proposed for this year:

* The need for the Defence Ministry and the Armed Forces to accept cuts in expenditure at a time when the economy has been going through difficult times due to the global melt-down.

* The reduction of tension in the relations with Taiwan.

10. One of the points made in the margins of the NPC session was the inadequacy of China’s fleet of civilian helicopters. Feng Peide, a member of the Chinese Academy of Engineering, said that China should acquire 100 helicopters every year for its air emergency rescue system during the Twelfth Five-Year Plan (2011-2015).

Feng, who is a member of the Chinese People’s Political Consultative Committee, which met before the NPC session, said that helicopters have obvious advantages in rescue, transportation and detection, which played a pivotal role during the rescue work after the Sichuan earthquake. According to him, the helicopter can get to all sites, where rescue teams cannot reach very quickly, and they can assist in transportation and giving directions from the air. Meanwhile it is the best tool for rescue at sea. Whereas the U.S. has 15,000 civil helicopters, he claimed that by the end of 2008, China had only 300 helicopters. According to him, this came to some 3 helicopters per 100,000 square meters, but in the Western countries the number is 25. China has a vast land area, with a long coastline and much mountain areas. It is one of the countries in the world suffering the most natural disasters. He, therefore, pleaded for a crash programme for the acquisition of more helicopters for the civilian sector. ( 12-3-10)

The writer is Additional Secretary (retd), Cabinet Secretariat, Govt, of India, New Delhi, and, presently, Director, Institute for Topical Studies, Chennai. He is also associated with the Chennai Centre For China Studies.

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