A BUDGET CUT THAT HAS UNSETTLED THE PLA

http://www.dailypioneer.com/columnists/edit/a-budget-cut-that-has-unsettled-the-pla.html

Thursday, 10 March 2016 | Claude Arpi | 

While India hopes that the Rafale deal will materialise, a modest hike in China’s Defence Budget is surprising. It will be difficult for Beijing to tackle unhappiness in the PLA ranks, at a time when it has undertaken reforms

One of the most unexpected news coming from China recently is the low raise in the People’s Liberation Army Defence Budget for the coming year. During the first session of the National People’s Congress, it was announced that the increment would only be 7.6 per cent compared to 10.1 per cent last year; it is the smallest military budget increase in several years; the first single-digit since 2010.

Even The Global Times, the party mouthpiece, admitted that the news came as a surprise “as some media previously predicted that the Defense Budget would increase by as high as 20 per cent”. It is also what the usually well-informed South China Morning Post had expected.

China’s 7.6 per cent increase corresponds to $146 billion, while India’s entire defence allocation is only $40 billion, the 0.96 per cent rise for India will not give the nation a chance to catch up.

Prakash Nanda, a defence analyst commented: “What is more surprising is that not only did Mr Arun Jaitley fail to mention the Defence Ministry in his speech, but his ministry also went one step further in removing the Ministry of Defence from the list of ‘important ministries’ in highlighting the budget proposals in its Press releases.” All this is quite worrying.

Defence Minister Manohar Parrikar, however, announced that the Rafale deal with Dassault of France was on, though the minister boasted to be a ‘tough negotiator’ and wanted the ‘best price’ for Rafale fighter jets from France.

It is fine to be a tough negotiator, but Mr Parrikar should not forget that Dassault too is a hard bargainer. Further, the position of the French consortium is not the same as two years ago: Their order-book is full with firm orders from Egypt and Qatar, adding to the French Air Force needs; and first order, first serve, remains the rule.

Small mercy for the Indian Air Force, Mr Parrikar announced that the next Budget takes into account the Rafale deal for which ‘adequate money’ had been kept aside. One can only hope that an agreement will soon be found. Let us return to the other side of the Himalaya, where the situation is not too bright…and transparency even worse than in India.

Watching the beginning of the deliberations of the two sessions, ie, the Chinese People’s Political Consultative Conference and the National People’s Congress, one realises that China is bound to face serious difficulties in the near future.

With the ‘modest’ rise in the defence outlay, the Communist Party of China may find it difficult to tackle ‘unhappiness’ in the PLA ranks, at a time Beijing has undertaken sweeping reforms and with renewed tensions over the South China Sea and Taiwan Strait.

Never since 1949, have reforms been so drastic; one can mention the retrenchments of 300,000 defence personnel, the re-shuffle of the theatre commands, the setting up of a PLA Rocket Force and a Strategic Support Force or the 15 new departments, offices and commissions. All these require funds. In this context, the reduction in Defence Budget appears ‘surprising’.

The South China Morning Post reported that “military officers have taken the rare step of publicly registering disappointment at the increase in China’s defence budget”.

Major General Qian Lihua, former head of the Foreign Affairs office of the Ministry of National Defence, acknowledged during a CPPCC panel discussion that this year represented a “big reduction”. This type of acknowledgement is rare in China.

Retired Rear Admiral Yin Zhuo, also a member of the CPPCC, openly said that “the growth in defence spending should be commensurate with the national economy — but it also needed to be proportional to the country’s security need”.

Mr Yin further told China National Radio, “We should not let our military’s development stall... because the security challenges at our peripherals, especially at sea, have been increasing.”

Mr Yin added that the current share of defence spending to gross domestic product (which is around 1.5 per cent) was still too low: “I think two per cent to 2.5 per cent would be optimum,” Mr Yin asserted, adding: “And we are slashing 300,000 military personnel — additional resources are needed to resettle these veterans.”

Though some Taiwanese sources claim that the retrenched troops may find their way “to form to 10 armed police tactical units and 100 armed police warfare groups, both likely to be stationed in the restive Xinjiang Uygur Autonomous Region”, the information has never been confirmed.

During the NPC, China announced that it will build a more comprehensive national security system. The draft of the new law calls for implementing national security policies in fields involving politics, territory, economy, society, resources, cyberspace and others.

These drastic measures, many China watchers believe, could trigger the ‘collapse’ the Middle Kingdom in the new future.

Already last year, David Shambaugh, a respected Chinese expert, who is director of the China Policy Programme at the George Washington University, wrote on the subject in a Saturday essay in The Wall Street Journal; His ‘The Coming Chinese Crackup’ circulated widely on social media.

He had then remarked: “The endgame of communist rule in China has begun, and President Xi Jinping’s ruthless measures are only bringing the country closer to a breaking point.”

Mr Shambaugh has now elaborated his theory in a 203-page new book, China’s Future, where he argues that “China is in a state of ‘atrophy’ and ‘decline’, which will continue if no major political reform takes place in the near future”. The professor’s main argument is the following: “Despite appearances, China’s political system is badly broken, and nobody knows it better than the Communist Party itself. China’s strongman leader, Mr Xi, is hoping that a crackdown on dissent and corruption will shore up the party’s rule.” His new book elaborates on his earlier conclusions

According to Mr Shambaugh, it is the political system which is not up to the mark; if China continues on its present track of hard authoritarian rule, the mainland will crack up. The only way out would to ‘unleash innovation and effectively reform the financial system’ but this is unlikely, as the Communist Party is too insecure; it can’t envisage any means other than control, repression and coercion.

Mr Shambaugh argues that continuing with the current policies is “a recipe for further social volatility.” Last week, when Mr Xi paid a highly-publicised visit to China’s top media organisations, journalists had to pledge ‘absolute loyalty’ to Mr Xi.

A Guardian article published an article entitled, ‘Love the party, protect the party: How Xi Jinping is bringing China’s media to heel’.

Add the instability of the so-called ‘minorities’ areas (Tibet, Xinjiang, etc). It remains an explosive issue if these regions continue to be mishandled by Beijing, as it is presently. Ultimately, authoritarianism has limits and Mr Xi seems to have entered a vicious circle. He may find it impossible to reset the Middle Kingdom to ‘normal’. India does not have these problems.