China’s communist regime spent $710.6 billion on its military in 2022, more than three times Beijing’s publicly stated totals, according to a report from the Washington-based American Enterprise Institute (AEI).
Mackenzie Eaglen, a senior fellow at the AEI and the author of the report, explained that she came up with the figure based on her calculation after accounting for economic adjustments, including cheaper labor costs in China, and estimating “reasonable but uncounted expenditures.”
Beijing’s self-reported military spending should also include the money that it spent on its paramilitary organizations, Ms. Eaglen wrote, since these groups “are increasingly used in tandem with” the regime’s military, which is officially called the People’s Liberation Army.
She estimated that Beijing spent $45.2 billion on its People’s Armed Police Force and $2.1 billion on its China Coast Guard in 2022.
China doesn’t include other relevant expenditures related to its space forces, military satellites, or counter-space capabilities in its defense budget, according to the report.
“Given many satellites’ inherent dual-use capability and Beijing’s general adherence to a strategy of military-civil fusion in space policy, AEI’s model counted this entire budget as a military expenditure,” the report reads.
Ms. Eaglen estimated that China’s space budget in 2022 could have been $21 billion.
Other hidden expenditures included spending on military demobilization, retirement, and pensions, which the author estimated to total $46.1 billion. China likely spent more than $1.8 billion on continued construction of military facilities in the South China Sea and arms imports, according to the report.
A portion of the $711 billion spending also included military research and development expenditures, which Ms. Eaglen estimated to be $45.8 billion. However, she noted that the estimated military research and development spending could be much higher, considering the regime’s military-civil fusion (MCF) strategy, cyberespionage operations, and reliance on state-owned companies.
‘Pacing Challenge’
The Chinese Communist Party (CCP) is using the MCF strategy to acquire cutting-edge technologies, such as semiconductors and artificial intelligence.“In just the past decade, however, China has managed to rapidly build sophisticated missile forces, surpass the United States by building the largest navy in the world, and catch up to and even exceed the United States in many other key national security areas,” the report reads.
“By calculating the true buying power behind the Chinese military budget, it’s easy to understand how Beijing can continue this unprecedented military buildup while, on paper, appearing to spend much less.”
In comparison, the United States spent $742.2 billion on its military in 2022, excluding supplemental spending, according to the report.
However, Ms. Eaglen noted that the approximately equal spending level between the two countries “plays to Beijing’s benefit.”
“As a global power, the United States must balance competing priorities in the Indo-Pacific and elsewhere, which spreads Washington’s budget thinly across multiple theaters,” the report reads. “Meanwhile, each yuan China invests in its military directly builds its regional combat power in Asia.”
“Getting to the bottom of how much China spends on its military should be paramount for the U.S. government if the Pentagon is serious about China being a ‘pacing challenge,’” Ms. Eaglen said. “The U.S. military cannot expect to keep up if it does not know how fast China’s military is moving.”
