By Dr Dan Steinbock
When China recently launched its first domestically built aircraft carrier, New York Times saw it as a milestone in President Xi Jinpings drive to extend Chinas military reach far beyond its shores. Initial reports on Chinas prowess began surfacing in early 2016 Washington Post carried the headline: By 2030, South China Sea will be virtually a Chinese lake.
The US Navy commissioned its first aircraft carrier in 1922. Today it has 19 of the 36 such ships plying waters around the world. A similar situation prevails for the overseas military bases. While Chinas first overseas military base in Djibouti has been portrayed as a world threat, the US has almost 40 named bases around the world, military deployments in more than 150 countries, and over 300,000 of its personnel abroad.
The conventional narrative
The conventional narrative is that China has become assertive while the West is ignoring its defence needs. This view is backed by the newly-released Stockholm International Peace Research Institute (SIPRI) report. It suggests that in the past decade, the military spending in China and Russia increased 118% and 87% respectively. The US remains the biggest military spender, but its spending plunged almost 5% during the same period.
Yet, the reality is more nuanced. When the Cold War ended, many observers expected a peace premium and a significant plunge in military expenditures. In reality, defence spending increased from the mid-1990s to the early 2010s. Expenditures then plateaued due to secular stagnation in advanced economies and the fall of oil prices in oil-exporting countries many of which are major military spenders.
The new list of top 10 military spenders includes the US ($611 billion), China ($215 billion), Russia ($69 billion), Saudi Arabia, India, the core EU economies, Japan, and South Korea. Together, they account for three-fourths of the total. However, Washington spends more dollars a year on its military than the next seven biggest spenders combined. This penalises living standards in America.
Moreover, the US defence system is still the most innovative in the world. Nevertheless, this leadership is in danger of failing due to erosion as argued in a major US report The Challenges for Americas Defense Innovation (Information Technology and Innovation Foundation, November 2014).
Inconvenient truths
The biggest aggregate military spenders are either the most populous or the largest economies, or both. Consequently, the intensity of military spending should also be assessed in per capita terms. In this narrative, Saudi Arabia and the US lead, with $2,000 and $1,900 per person, respectively, for the fiscal year 2017. The two are followed by some European nations, South Korea, Russia, and Japan. In contrast, China and India come last (with just 8% and 2% of the US level, respectively).
Even while considering a long-term view, the crux doesnt change. If the past decades increases in military budgets are viewed in per capita terms, the biggest spender is Saudi Arabia (40%). In contrast, defence expenditures have climbed slowly in China and India (less than 15% each) and even slower in Russia (6%).
These relative increases of the military expenditures should be compared to the gains in per capita incomes. If per capita incomes rise fast, then relative increases in military budgets are to be expected, and vice versa. In the past decade, per capita incomes in China and India increased strongly (10.8% and 8%, respectively). In both the countries, military spending has increased even faster, however, it started very low. In the Middle East, however, the gap between military spending and per capita income is steep. In the past decade, Saudi defence spending has risen almost 40 times faster than the growth in per capita incomes.
Gap between fact and fiction
Usually, military assertiveness as a national priority is reflected by the share of defence spending as a percentage of the GDP. In these terms, the greatest spender is Saudi Arabia (10% of the GDP), which invests 5 times more than China in defence. In the past decade, Chinese defence spending as a share of GDP has been 1.9% lower than in India (2.3-2.5%), Australia (2%); and at par with the UK. Historically, it is about the same as Americas in the 1920s before the US rearmament and World War II.
In contrast, Russias relative defence spending as a share of the GDP has risen by almost half. The US neoconservatives consider this as evidence of assertive expansionism, viewing it along with Moscows conduct in Georgia and Ukraine. Nevertheless, Russias defence spending can also be seen as belated modernisation, and as a logical result of US-led NATO expansion to Russias regional neighbourhood.
In the past decade, the US defence spending as a share of GDP decreased to 3.3% (-0.5%), due to the Great Recession, and the Obama defence sequestration. In the postwar era, this is an exception, not a rule. In fact, the Trump administration is planning a massive Reagan-style rearmament and requesting $54 billion for the next year almost a 10% increase in a single year.
To summarise, there is a deep gap between realities and perceptions of current military spending. If the first casualty of war is ‘truth’, then the first victim of peacetime rearmament are flawed narratives that support entrenched military interests. Perhaps thats why, when China launches a new carrier, it is typically reported as the latest display of Beijings growing naval power, but when the US carriers dominate regional waters and exercise their hegemony internationally, it doesn’t qualify as news.
Featured Image Credits: The National Interest
Dr Steinbock is the founder of the Difference Group and has served as the research director at the India, China, and America Institute (USA) and a visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more information, see http://www.differencegroup.net/
The article was first published in South China Morning Post on May 1, 2017