China’s budget buys much more for its military because wages and other costs are much lower in China.

Former Secretary of the Navy J. William Middendorf is the author of “On My Watch: Tyrants and Patriots,” due out in 2024.

Too often, the American public is lulled into thinking that the U.S. military is far ahead of its competitors because U.S. spending dwarfs China’s budget. But US Senator Dan Sullivan recently revealed that China’s annual defense budget is estimated by the US government to be around $700 billion. That is much higher than previous estimates and almost equal to the US defense budget of $886 billion for 2024.

Sullivan isn’t the only prominent figure in Washington to suggest that China is spending a lot more than anyone thought. Recently retired US Army General Mark Milley, former chairman of the Joint Chiefs of Staff, testified before the US Senate that China’s military budget is misleading because it does not take into account China’s much lower domestic costs for wages, weapons, facilities and utilities . other budget items. These lower costs literally give China more value for its money. How much does China spend on its military? And why is there so much confusion?

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Simply put, China’s budget buys far more in China than the equivalent amount of dollars in the United States. This is because wages and other costs are much lower in China. Although the gap varies for different occupations, average wage incomes across the Chinese economy are about one-fifth of those in the United States. Based on China’s official personnel budget, the difference in military wages is slightly smaller: Chinese military personnel earn about a quarter of the salaries of their American counterparts. In other words, China’s budget for military personnel goes four times as far.

A price difference also applies to other domestic inputs, from many weapons and supplies to services and facilities. A comparison of each country’s defense inputs shows that the purchasing power of China’s total defense budget is 60 percent higher than the dollar equivalent would suggest. But there are other Chinese military expenditures that the adjusted figure does not take into account. China’s official defense budget excludes its paramilitary forces that could be deployed in a conflict and the purchase of foreign weapons.

The most glaring difference is in the areas of research, development, testing and evaluation, for which the US military has budgeted approximately $100 billion by 2024. China claims that its costs are included in its equipment budget, but this is unlikely given the huge investments required for Chinese progress in development cooperation. aircraft, warships and other capabilities in recent decades. In China, most of these items come from other budgets. China also leads the world in stealing military research, especially from the United States.

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China’s rapid progress and build-up indicate that its off-budget items are much higher, resulting in a purchasing power of about $700 billion – the figure cited by Sullivan. So even when differences in purchasing power are taken into account, Sullivan’s figure suggests there is a huge amount of hidden spending. China’s equipment purchases have caught up with those of the United States since 2010, at an average annual rate of 8.6%. China has steadily reduced the share of its military budget spent on personnel, while the amount spent on equipment such as missiles has increased. , aircraft and warships. Beijing’s shift from a military that spends too much on personnel to one that focuses on modern weapons systems will require a change in Washington’s strategic thinking. Furthermore, China’s military spending is almost entirely concentrated in one area of ​​operations, while the US military has a global footprint.

Although the 2024 defense budget is the largest in history, as a share of gross domestic product, this budget will be one of the smallest for the Pentagon since before World War II. If we take inflation into account, this military budget will decrease by 3%. Meanwhile, Navy Secretary Carlos Del Toro warns that China’s navy now has about 340 ships and that number is increasing, while the US has fewer than 300.