Perhaps this is of interest in this context:
Chinese Military Spending
AHCFIN 21 September 2016
Estimates of Chinese Military Spending
By Anthony H. Cordesman
with the assistance of Joseph Kendall
Working Draft: September 21, 2016
https://csis-prod.s3.amazonaws.com/...8_AHC_Estimates_Chinese_Military_Spending.pdf
Center for Strategic and International Studies.
https://www.csis.org/
Anthony Cordesman
https://www.csis.org/people/anthony-h-cordesman
Article
https://www.csis.org/analysis/estimates-chinese-military-spending
Excerpt:
LIMITED TRANSPARENCY AND PROBLEMS ESTIMATING CHINESE MILITARY EXPENDITURE
Most China experts, foreign governments, and military expenditure publications question China’s official reporting. These concerns and subsequent differing conclusions regarding budgetary estimates illustrate the lack of expert consensus regarding the real level of Chinese defense spending. Indeed, experts put forth an array of complicating factors to suggest Chinese official reporting is not reliable.
Most experts concur that Chinese government statistics do not include some outlays that are standard reporting for most other countries. The 2006 Department of Defense report on China states the following aspects of China’s military spending are not accurately disclosed by Chinese officials:
- Arms imports, foreign weapon procurement, military aid for and from foreign countries;
- Expenses for paramilitary forces;
- Expenses for strategic and nuclear forces;
- Government subsidies for military production;
- Expenses for military R&D; and
- The PLA’s own fundraising.
China experts Adam P. Liff and Andrew S. Erickson have also examined the issues involved,
and their list of the items excluded from the official Chinese defense budget is a notably one:18
- The budget of the 660,000-strong People’s Armed Police (PAP);
- Some domestic procurement and research and development expenses;
- Overseas purchases of major weapons and platforms;
- Contributions from regional and local governments;
- Extra-budgetary revenues and resources from a limited number of military commercial enterprises (such as
hospitals, and strategic infrastructure);
- Militarily- relevant portions of China’s space programme;
- Central and local government defence mobilization funds;
- One-time entrance bonuses for college students;
- Authorized sales of land or excess food produced by some units;
- Personnel for motion pictures; and
- Donations of goods, services and money by local governments and enterprises to units and demobilized
personnel.
The Stockholm International Peace Research Institute (SIPRI)—considered an expert source for their vast database on military expenditure—likewise note prominent Chinese budgetary exclusions:
The items outside the official defence budget that are included in the estimates are:
(a) spending on the paramilitary People's Armed Police (PAP);
(b) soldiers' demobilization and retirement payments from the Ministry of Civil Affairs;
(c) subsidies to the arms industry;
(d) additional military research, development, testing and evaluation (RDT&E) funding outside
the national defence budget;
(e) additional military construction expenses;
(f) Chinese arms imports; and
(g) residual military-owned enterprises.
Of the experts, entities, and organizations that attempt to calculate Chinese there are noticeable differences in methods and final projections. However, there is a consensus that officially released Chinese budget numbers underreport the level of defense expenditure. Some outside experts believe that China’s officially stated appropriations are not enough to support an organization that maintains 2.3 million service personnel and an increasingly sophisticated and therefore expensive arsenal of weapons systems. The US government has at least implied that China is hiding information about military spending that should be made public. Others point out that pay increases and expenditures for social services among the armed forces have increased substantially in recent years. As previously noted, large pay raises have been authorized in 2006, 2008, and 2011. However, it is not clear whether pay increases have, in relative terms, outspent overall military expenditure growth.
One clear area of omission includes specific weapons and equipment procurement costs from domestic defense industries and defense-related R&D funds given to civilian defense contractors and PLA armament research institutions. These data are not publically released. Funding probably comes from several different parts of the government, such as the State Administration for Science, Technology, and Industry.
To this end, the 2016 Department of Defense report on China notes:20
However, it is difficult to estimate actual military expenses due to China’s poor accounting transparency and incomplete transition to a market economy. China’s published military budget omits several major categories of expenditure, such as R&D and the procurement of foreign weapons and equipment.
Although most PLA procurement is domestic, a significant percentage is imported, particularlyadvanced weapons technology and some weapons platforms. The PRC both imports completedweapons systems and promotes foreign-assisted development, licensed production, and reverseengineering. It is believed that these exports are paid for from special accounts controlled by the State Council and thus are not part of the official defense budget. It is likely that China will continue to rely on such imports for at least several more years.21
China’s defense budget does not include provincial defense-related spending like military base operating costs. It is believed that this money comes from local governments and the Ministry of Civil Affairs. The former also contributes to militia and reserve expenses, including civilians working for some PLA departments. However, a 2010 government statistic showed that only 2.94% of defense expenditures were paid for by local governments, meaning that the exclusion of this spending from the official budget does not significantly affect the real spending
numbers.22
The PAPF is sometimes cited as another major exclusion from the official Chinese military budget. However, this force’s primary focus is paramilitary and domestic – with responsibilities like firefighting, border security, and natural disaster relief. In the event of a war, the PAPF would support the PLA in local defense, but neither supports the other in domestic operations during peacetime. The PAPF’s budget is categorized under public security expenditures, not
national defense expenditures (where the PLA’s budget is located).23
As Adam P. Liff and Andrew S. Erickson note, these issues make estimating China’s defense
spending exceptionally difficult:24
China’s general lack of transparency about how its official defence budget is calculated makes judging the validity of these Western criticisms very difficult. However, the potential significance of the above exclusions for assessing the size of China’s actual defence budget is suggested in three important studies conducted by the International Institute for Strategic Studies (IISS).
In 2006, IISS estimated that including the costs of foreign weapons purchases, subsidies, R&D spending, new product expenditures, arms exports and PAP funding revealed a 72 per cent gap (in RMB terms) between China’s FY2005 official defence budget and “actual” (i.e. IISS-estimated) defence spending.
In 2010, IISS estimated a roughly 39 per cent difference between the FY2008 official defence budget and “actual” (i.e. IISS-estimated) defence spending. In 2012, the estimated gap for the FY2010 budget was 41 per cent. It should be noted that, although large, the disparity between the official budget and IISS’s estimates declined significantly over the initial three-year period before stabilizing. As argued in the next section, this shrinking gap, which is consistent with similar trends in estimates by the US Department of Defense, suggests that in recent years an increasing percentage of “actual” PLA funding has been placed “on the books”; that is, officially reported figures increasingly reflect actual spending.
…. Although the exclusion of major items from China’s official defence budget is undoubtedly an issue of concern, less widely known is that the budget also includes some items that are not included in those of its Western counterparts. For example, the PLA still engages in some infrastructure construction projects, although many are designed to be dual-use and paid for from local and national non-defence funds.
It provides some medical help to civilians in remote areas and provides some support to domestic security operations (e.g. during the 2008 Olympics). The PLA also engages in disaster relief, such as the dispatch of over 200,000 personnel in response to the 2008 Wenchuan earthquake – the largest deployment of Chinese armed forces since the 1979 war with Vietnam.
There are legal provisions for it to be reimbursed for these operations, but the processes, delays and extent of such reimbursements remain unclear. In Western countries, such tasks are assigned primarily to non-military organizations. The PLA also provides perquisites for retired senior officers (offices, assistants, cars, drivers, cooks, caregivers, and special hospital facilities) that their better-salaried Western counterparts do not receive.
The problem is compounded in some cases by the methods used by outside experts. Some
estimates by non-Chinese analysts that indicate military expenses are several times larger than PRC figures rely on PPP models. This reliance poses several problems:
- The assumed relative buying power of Chinese government funds in PPP terms refers to buying Chinese-made goods
- The market for military equipment and services in China is highly non-transparent, and transferring average PPP assumptions to the state-run military-industrial complex almost certainly will result in skewed results, even more so as China is importing military goods manufactured abroad
- Purchasing power theory loses its descriptive value when applied to goods, which are not homogenous; weapon systems and other military purchases are artificially protected by government regulation
- The return on investment in buying Chinese-made goods is unclear, and it is not unlikely that an indigenous product that meets state-of-the-art quality may actually cost more money than arrived at by PPP conversion
Other reasons include: (1) the difficulty of defining “defense spending”; (2) conversion of China’s RMB-denominated budget into US dollars, especially because of problems with the official exchange rates, application of PPP rates, and inflation and strengthening of the RMB since 2005 – meaning that conversions based on current exchange rates make recent budget increases look larger than they really are; and (3) the lack of transparency regarding the actual
costs of individual items and which specific spending categories are already included in the official budget further complicates estimates of actual PLA military expenditures, and (4) a failure to take into account the fact that military pay can differ sharply from country to country, and that conscript forces are far cheaper than an all-volunteer forces.25
Liff and Erickson note that some of these issues can have a serious impact on the quality of
outside estimates:26
…In 2009, the US Department of Defense estimated China’s “actual” FY2008 defence budget at US$105–150 billion: 1.8–2.6 times the official figure of US$57.2 billion (RMB417.8 billion) and 2.5–3.6 per cent of GDP. Meanwhile, the Stockholm International Peace Research Institute (SIPRI)’s estimate that year was much lower: US$84.9 billion – 1.48 times the officially released figure. The difference between SIPRI’s estimate and the upper bound of the Department of Defense’s estimate was US$65.1 billion, a difference larger than China’s entire official defence budget that year.
While significant defence-related spending is undoubtedly excluded from China’s official defence budget, some of the items included in foreign estimates of the “actual” figure are controversial. For example, some Western institutions include expenditures for the (domestically focused) PAP in their calculations, labeling it one of the largest extra-budgetary sources of defence spending. But they do so without offering explicit justification. This single line-item can inflate estimates of the budget by as much as one-fifth above the official figure. Take the 2010 figures as an example: adding only official PAP expenditures (RMB93.4 billion) to the official budget (RMB533.4 billion) results in an estimate of “actual” Chinese defence spending 18 per cent higher.
Finally, there are no standard rules for measuring security or “military” expenditures. Many other nations, including the US, have defense-related spending that is outside of their official defense budgets:27
For example, the US 051 (Department of Defense) budget excludes a significant amount of defence-related spending. In fact, one analysis of US “total defence-related spending” based on similar metrics to those regularly used by Western organizations to estimate China’s “actual” defence budget found a US$187 billion gap between the United States’ official FY2006 defence budget and what this group of American PLA experts calculated as “actual” US defence-related spending that year.
The parallels they draw are intriguing: China is criticized for excluding some funding for officer pensions from its official defence budget, yet the Department of Veterans Affairs’ entire budget, retirement costs paid by the Department of Treasury, and veterans’ re-employment and training programmes paid by the Department of Labor are not included in Department of Defense’s budget. China is criticized for excluding funding for its nuclear and strategic rocket programmes from its official defence budget, yet atomic energy activities related to defence are funded by the Department of Energy and fall outside the Department of Defense’s budget. Finally, China is criticized for excluding the PAP’s budget and various defence activities that are paid for by local governments from its official defence budget, yet neither the Department of Homeland Security budget nor state funding for some US National Guard functions is included in the Department of Defense’s budget… it is important to also stress that while “actual” US defence spending is larger than the official figure, most other relevant spending is relatively transparent, and can be assembled by a knowledgeable analyst. This is significantly less true of China’s defence spending.
This report relies heavily on estimates from incredibly capable sources such as the DoD, SIPRI, and IISS. However, it should not be forgotten that these estimates are, in fact, estimates. These organizations do substantial work in attempting to lift back the cover but it is impossible to know how successful they are in mitigating the opacity. Thus, it is fruitless to focus on specific data points. Instead, the defense expenditure estimates that make up this report prove most instructive in illuminating and depicting trend lines.
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It's not me speculating but some of the experts in this field saying this.
Have a nice day, y'all.
because the western propaganda told you lot so, and you buying that. and please answer with honesty, which country is 100% transparent in this world?
Sure, spoken like a true expert.
