China’s Defense Budget Needs Transparency to Transcend Suspicion

By Matthew P. Funaiole

Matthew P. Funaiole is a fellow with the China Power Project at CSIS. His research focuses on power relationships and alliance structures in the Asia-Pacific. Prior to joining CSIS, Dr. Funaiole taught international relations and foreign policy at the University of Saint Andrews in Scotland.

By Alexandra Viers

Alexandra Viers is a program manager and research associate with the China Power Project at CSIS, where she focuses on Chinese foreign and security policy, U.S.-China bilateral relations, and cross-strait relations. Prior to joining CSIS, she was an international producer for The Cipher Brief, where she covered national security issues pertaining to Asia.

Two decades of an expanding defense budget coupled with a multi-dimensional modernization effort have enabled China to field one of the world’s most capable militaries. While it should come as no surprise that a modernizing power with a global economy invests significantly in its national defense, curiosity and suspicion are often directed toward China – particularly when its military is involved. In some regards, there is little China can do to abate this suspicion. In an international system dominated by Western democratic states, China is the perennial outsider. China’s lack of transparency with regard to its military spending only adds fuel to the flame.

In a region where military spending is trending upwards – expenditures for East Asia surpassed those of Western Europe in 2014 – China now boasts the second largest defense budget in the world and spends more on defense than Japan, South Korea, the Philippines, and Vietnam combined. Among China’s neighbors, countries with overlapping territorial claims have, in recent years, represented some of the largest increases in year-on-year military spending. Given the prevailing uncertainty that is in part responsible for driving these growing defense budgets, all parties have a vested interest in identifying mechanisms for improving stability.

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