Just the Facts, Ma'am: The Challenge of Analysing and Assessing Chinese Military Expenditures

Abstract

Defence budgets can be a useful, even critical, indicator of national defence priorities, policies, strategies and capabilities. Consequently, knowing better where China is spending its defence dollars can be a useful mechanism for analysing and assessing current Chinese strategic and military intents, resolve and priorities, and whether the Chinese are devoting sufficient resources to meeting these needs. The dilemma with exploiting Chinese defence budgets as an analytic tool is that it is a highly data-dependent approach forced to work with a near-absence of usable data. Consequently, Western analysis of Chinese military expenditures has been forced to rely heavily upon extrapolation, inference, conjecture and even gut instinct in order to come up with “reasonable” guesses as how large China's actual defence budget might be – an approach fraught with many pitfalls. This report argues that Chinese defence budget analysis has largely reached a methodological dead-end, and while it puts forth some suggestions for improving and refining this line of research, one should accept that, given the continued paucity of reliable data, this approach is a severely limited line of enquiry.