Don't be deceived by China spending less on defense | Opinion

Former Secretary of the NavyJ. William Middendorf is the author of "On My Watch: Tyrants and Patriots," to be published in 2024.

The American public is too often put at ease believing that the U.S. military remains far ahead of any of its competitors since U.S. spending dwarfs the Chinese budget. But U.S. Sen. Dan Sullivan recently revealed that U.S. government estimates put the Chinese annual defense budget at around $700 billion. That is far higher than previous estimates and almost on par with the United States’ 2024 defense budget of $886 billion.

Sullivan is not the only prominent figure in Washington to suggest that China spends much more than anyone thought. Recently retired U.S. Army Gen. Mark Milley, former chairman of the Joint Chiefs of Staff, testified before the U.S. Senate that the Chinese military budget is misleading because it doesn’t take into account China’s far lower domestic costs for wages, weapons, facilities and other budget items. Because of these lower costs, China literally gets more bang for the buck. So how much does China spend on its military? And why is there so much confusion?

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Put simply, China’s budget buys a lot more in China than the equivalent amount of dollars in the United States. This is because wages and other costs are far lower in China. Although the gap varies for different occupations, average wage incomes across the whole Chinese economy are about one-fifth of those in the United States. Based on China’s official personnel budget, the gap in military wages is slightly less — with Chinese military personnel earning about one-quarter of their U.S. counterparts’ salaries. In other words, China’s military personnel budget goes four times further.

A price gap also applies to other domestic inputs, from many weapons and supplies to services and facilities. Comparing each country’s defense inputs suggests that the purchasing power of China’s overall defense budget is 60 percent higher than the dollar equivalent suggests. But there is even more Chinese military spending that the adjusted figure fails to account for. China’s official defense budget excludes its paramilitary forces that can be deployed in a conflict and foreign weapons purchases.

The most glaring difference is in research, development, testing and evaluation, for which the U.S. military budgeted roughly $100 billion in 2024. China claims its costs are included in its equipment budget, but this is unlikely given the massive investment needed for Chinese advances in aircraft, warships and other capabilities over the last several decades. In China, most of these items come out of other budgets. China also leads the world in stealing military research, especially from the United States.

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China’s rapid advances and buildup suggest that the off-budget items are much higher, resulting in a purchasing power of around $700 billion — the figure quoted by Sullivan. So, even allowing for purchasing power differences, Sullivan’s figure suggests that there a massive amount of hidden spending. China’s equipment procurement has been catching up to that of the United States at an average annual rate of 8.6% since 2010. China has been steadily decreasing the share of its military budget spent on personnel, while increasing the amount spent on equipment, such as missiles, aircraft and warships. Beijing’s shift from a military that overspends on personnel to a military focused on modern weapons systems will require a change in Washington’s strategic thinking. What’s more, China’s military spending is almost entirely concentrated in a single theater of operations, whereas the U.S. military has a global footprint.

While the 2024 defense budget is the highest in history, when taken as a portion of gross domestic product, this budget will be among the slimmest for the Pentagon since before World War II. When accounting for inflation, this military budget is declining by 3%. Meanwhile Secretary of the Navy Carlos Del Toro warns that the Chinese Navy now has about 340 ships and the number is increasing, while the U.S. has fewer than 300.

This article originally appeared on The Providence Journal: China’s budget buys a lot more for its military because wages and other costs are far lower in China.