Can China Afford an Arms Race?

News Analysis China and the United States are in a techno-arms race, which is incredibly expensive, and extends far beyond the cost of ships, planes, and missiles. Chairman of the Joint Chiefs of Staff, Gen. Mark Milley, estimated that at its current rate of military buildup, China’s firepower capabilities will surpass the United States and Russia in just a few years. Compared to Russia, he’s concerned that China poses a bigger threat in the long term because its economy is stronger than Russia’s, and Beijing has poured a great deal of money into modernizing its military. At the 19th Party Congress in 2017, Chinese leader Xi Jinping unveiled the Chinese Communist Party’s (CCP) plan to modernize the People’s Liberation Army (PLA) by 2035, and to become a world-class military by 2049. China is focusing on building the three capabilities that would allow it to become the preeminent world power—nuclear weapons, space wars, and cyber and missile technologies—all of which are extremely costly. The People’s Liberation Army Navy (PLAN) now has the world’s largest navy, with 355 ships. While they vary dramatically in cost, the U.S. Navy estimates that the average ship costs $870 million. According to a Pentagon report, the CCP is developing anti-submarine warfare capabilities, long-range strike capabilities, and land-attack cruise missiles that can be launched from naval ships and boats. An integrated airborne or space-based cruise missile defense radar, which could also be used against surface-to-air missiles and fighter aircraft, would cost roughly $75 billion to $180 billion. Among China’s new weapons is an aerial-refuellable bomber. Advanced bombers cost roughly $2 billion. The PLA also built a guided-missile destroyer, about $12.7 billion each. In addition to improvements on conventional weapons, the PLA is drifting into the futuristic, almost sci-fi realm of electromagnetic railguns ($500 million per gun), hypersonic glide vehicles, and land-attack and anti-ship supersonic cruise missiles. The U.S. cruise missile program cost between $14 and $16 billion. The PLA recently carried out tests of hypersonic missiles, each of which costs $106 million. The U.S. Navy alone plans to spend $7 billion on these weapons. The Chinese regime has been working on killer satellites and space laser weapons. A space-based laser weapon, used for attacking targets on the ground, would cost between $128 billion and $196 billion. A space-based laser, used to defend ground targets from ballistic missiles, would cost about the same. And a space-based ballistic kinetic-energy missile defense interceptor system, used to blow up enemy missiles, could cost anywhere from $29 billion to $290 billion. A Kuaizhou-1A carrier rocket carrying two satellites takes off from Jiuquan Satellite Launch Center in Gansu province, China, on May 12, 2020. (China Daily via Reuters) In terms of defense budget, the United States outspends China, by about five to one. And spending may be the most crucial determinant of who wins the next war. Cyberwar, space war, and other high-tech aspects of modern warfare will be of paramount importance. The ability to take out a satellite may be the winning advantage in a world completely dependent on GPS, telecommunications, and digital information transfers. The loss of a satellite could make it impossible for a modern army to accurately fire its nuclear missiles, navigate its ships, operate its defenses, or communicate and coordinate attacks. China’s total defense spending of $178.2 billion is dwarfed by the U.S. budget of $740.5 billion. In 1989, the peak of the U.S.-Soviet Union Cold War, the Kremlin spent $119 billion on defense and the United States spent $321 billion. Adjusted for inflation, this would be worth $265.44 billion for the USSR and $716 billion for the United States in today’s dollars. So U.S. spending has basically kept pace with inflation, increasing slightly, whereas China’s spending has not yet hit the levels that broke the USSR. Also, China is much richer than the USSR was. These numbers, however, are only a fraction of the story. The funding for many of the high-tech weapons comes out of other budgets. The U.S. budget for space in 2020, for example, was $48 billion, while China’s was only about $8.9 billion. In 2017, Beijing spent $12 billion on artificial intelligence (AI), and it is expected to increase. China’s total AI spending is more than the United States, but this figure includes, not only military AI, but also civilian AI that used in social media and shopping applications. The United States actually outspends China on defense related AI. Cyberattack capabilities will be extremely important in the next war, because targeted hacking could disable the enemy’s offensive and defensive systems. The U.S. cybersecurity budget for 2019 was $15 billion, while China spent about $2.19 billion. Semiconductors are one of the most crucial inputs of space wars and other advanced military

Can China Afford an Arms Race?

News Analysis

China and the United States are in a techno-arms race, which is incredibly expensive, and extends far beyond the cost of ships, planes, and missiles.

Chairman of the Joint Chiefs of Staff, Gen. Mark Milley, estimated that at its current rate of military buildup, China’s firepower capabilities will surpass the United States and Russia in just a few years. Compared to Russia, he’s concerned that China poses a bigger threat in the long term because its economy is stronger than Russia’s, and Beijing has poured a great deal of money into modernizing its military.

At the 19th Party Congress in 2017, Chinese leader Xi Jinping unveiled the Chinese Communist Party’s (CCP) plan to modernize the People’s Liberation Army (PLA) by 2035, and to become a world-class military by 2049. China is focusing on building the three capabilities that would allow it to become the preeminent world power—nuclear weapons, space wars, and cyber and missile technologies—all of which are extremely costly.

The People’s Liberation Army Navy (PLAN) now has the world’s largest navy, with 355 ships. While they vary dramatically in cost, the U.S. Navy estimates that the average ship costs $870 million. According to a Pentagon report, the CCP is developing anti-submarine warfare capabilities, long-range strike capabilities, and land-attack cruise missiles that can be launched from naval ships and boats. An integrated airborne or space-based cruise missile defense radar, which could also be used against surface-to-air missiles and fighter aircraft, would cost roughly $75 billion to $180 billion.

Among China’s new weapons is an aerial-refuellable bomber. Advanced bombers cost roughly $2 billion. The PLA also built a guided-missile destroyer, about $12.7 billion each. In addition to improvements on conventional weapons, the PLA is drifting into the futuristic, almost sci-fi realm of electromagnetic railguns ($500 million per gun), hypersonic glide vehicles, and land-attack and anti-ship supersonic cruise missiles. The U.S. cruise missile program cost between $14 and $16 billion.

The PLA recently carried out tests of hypersonic missiles, each of which costs $106 million. The U.S. Navy alone plans to spend $7 billion on these weapons.

The Chinese regime has been working on killer satellites and space laser weapons. A space-based laser weapon, used for attacking targets on the ground, would cost between $128 billion and $196 billion. A space-based laser, used to defend ground targets from ballistic missiles, would cost about the same. And a space-based ballistic kinetic-energy missile defense interceptor system, used to blow up enemy missiles, could cost anywhere from $29 billion to $290 billion.

A Kuaizhou-1A carrier rocke
A Kuaizhou-1A carrier rocket carrying two satellites takes off from Jiuquan Satellite Launch Center in Gansu province, China, on May 12, 2020. (China Daily via Reuters)

In terms of defense budget, the United States outspends China, by about five to one. And spending may be the most crucial determinant of who wins the next war. Cyberwar, space war, and other high-tech aspects of modern warfare will be of paramount importance.

The ability to take out a satellite may be the winning advantage in a world completely dependent on GPS, telecommunications, and digital information transfers. The loss of a satellite could make it impossible for a modern army to accurately fire its nuclear missiles, navigate its ships, operate its defenses, or communicate and coordinate attacks.

China’s total defense spending of $178.2 billion is dwarfed by the U.S. budget of $740.5 billion. In 1989, the peak of the U.S.-Soviet Union Cold War, the Kremlin spent $119 billion on defense and the United States spent $321 billion. Adjusted for inflation, this would be worth $265.44 billion for the USSR and $716 billion for the United States in today’s dollars. So U.S. spending has basically kept pace with inflation, increasing slightly, whereas China’s spending has not yet hit the levels that broke the USSR. Also, China is much richer than the USSR was.

These numbers, however, are only a fraction of the story. The funding for many of the high-tech weapons comes out of other budgets. The U.S. budget for space in 2020, for example, was $48 billion, while China’s was only about $8.9 billion.

In 2017, Beijing spent $12 billion on artificial intelligence (AI), and it is expected to increase. China’s total AI spending is more than the United States, but this figure includes, not only military AI, but also civilian AI that used in social media and shopping applications. The United States actually outspends China on defense related AI.

Cyberattack capabilities will be extremely important in the next war, because targeted hacking could disable the enemy’s offensive and defensive systems. The U.S. cybersecurity budget for 2019 was $15 billion, while China spent about $2.19 billion.

Semiconductors are one of the most crucial inputs of space wars and other advanced military technology. The CCP has vowed to “outspend the United States by almost 50 to 1″ in developing semiconductors, according to the Center for Strategic and International Studies. President Joe Biden called for the United States to spend $50 billion on microchip technology, and Intel announced plans to spend an additional $20 billion. By contrast, Chinese semiconductor firms raised about $21 billion in 2020.

In 2020, China’s GDP was $14.7 trillion, while the United States’ GDP was $20.7 trillion, with about a quarter of the population. This means the United States can afford to spend much more than China on an arms race. On the other hand, if China tries to outspend the United States, it would be spending a much larger percentage of its GDP on defense.

China’s public debt is already more than 300 percent of GDP. Its economy took a downturn as a result of pandemic measures, and is slowing further because of Xi’s restrictions on various business sectors. China’s real estate industry is now witnessing massive defaults, which represents a significant percentage of GDP. U.S. tariffs and sanctions, the global supply chain disruption, and the food shortage and energy crises have drastically increased the vulnerability of China’s economy. Right now would not be the best time for the CCP to try to outspend the United States in building up its military.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.


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Antonio Graceffo, Ph.D., has spent over 20 years in Asia. He is a graduate of Shanghai University of Sport and holds a China-MBA from Shanghai Jiaotong University. Antonio works as an economics professor and China economic analyst, writing for various international media. Some of his books on China include "Beyond the Belt and Road: China’s Global Economic Expansion" and "A Short Course on the Chinese Economy."