Chinese Military Spending, Ambitions Fuel Asian Arms Race, Studies Say

ROBERT WALL and DOUG CAMERON

Feb. 21, 2016

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Regional defense spending rises even as nations’ economies are tested

The rapid rise in Chinese military spending and a greater assertiveness in its territorial claims is fueling an arms race in the Asia-Pacific region even though many of the countries involved have been hit by an economic slowdown, new research reports suggest.‎

Of the 10 biggest importers of defense equipment in the past five years, six countries were in the Asia-Pacific region, the Stockholm International Peace Research Institute, or SIPRI, said in an annual report on arms transfers. India was the largest buyer of foreign equipment, with China in third position after Saudi Arabia, the think tank said.

Although a country’s spending power is often tied to its economic strength, buyers in the Asia-Pacific region aren’t slashing military budgets even as their economies have come under strain from falling commodity prices and lower growth in China. “The slight moderation in economic activity had little effect on regional military spending in 2015,” the International Institute for Strategic Studies, or IISS, said in a new report.

China, Japan, South Korea, and Indonesia last year were among the countries to announce plans for higher military spending, the IISS said.

Lower economic output has driven up Asian military spending as a percentage of gross domestic product to 1.48%, the London-based research organization said, its highest level since at least 2010. China leads the way, accounting for 41% of the region’s military spending, well ahead of No. 2 India at 13.5% and Japan with 11.5%.

IHS Jane’s forecasts annual military spending in the Asia-Pacific region will reach $533 billion by 2020 from $435 billion last year.

A big driver of regional concern has been China’s moves to build new islands in the South China Sea as part of its efforts to boost its territorial claims there.

In one of its most aggressive moves so far, China has also deployed antiaircraft missileson a disputed island in the South China Sea. The missiles were detected on Woody Island, part of the Paracel Islands chain, which is claimed also by Vietnam and Taiwan.‎

“For several of the countries, like Vietnam and the Philippines, that obviously shows that China means it when it says ‘this is ours,’” said Siemon Wezeman, a senior researcher at SIPRI.

China’s ambitions are having a wider spending effect than just among neighbors. The Pentagon is increasing spending on high-technology items to counter the perceived erosion of its military edge over China and Russia. The $582.7 billion fiscal 2017 defense budget request sent to Congress this month includes $6.7 billion for cyberdefense amid growing concern about Chinese activities.

There is no sign China’s military spending splurge is about to end. The country’s defense budget is expected to reach $225 billion in 2020 from $191 billion in 2015, after having already risen 43% in real terms since 2010, saidCraig Caffrey, principal analyst at IHS Jane’s.

A prolonged period of record Chinese military spending gradually has turned the country from a major importer of equipment to a big exporter as efforts to improve the quality of domestically produced arms pays off. China, which previously sold largely low-quality equipment, now has sold armed drones to Nigeria and Iraq. It also is marketing the JF-17 combat jet produced with Pakistan internationally.

China was the third-largest arms exporter in the period from 2011 through 2015, SIPRI said, with a 5.9% share of global exports. That still leaves it far behind the top arms exporter, the U.S., with its 33% of the global market, and Russia at 25%. Beijing has supplanted France, German, and the United Kingdom though, which historically had larger shares of weapons sales overseas.

Mr. Wezeman said China also may drop from the list of top three arms importers in the near future as it becomes more self-sufficient. The country still relies largely on imports for some of the most sophisticated items, such as combat jet engines. Engines account for about 30% of Chinese weapons-related imports, SIPRI estimates.