China, Taiwan and Japan are increasing military spending at a faster pace
The countries of Northeast Asia (NEA; this region usually includes Mongolia, both Koreas, China, Japan and the Russian Far East) continue to increase their defense spending. The increase in military budgets comes against the background of strained relations between Beijing and Washington, the continuation of the Russian special operation in Ukraine, the aggravation of the "Taiwan issue" and the development of the North Korean nuclear program.
At the same time, in the NEA countries, as in many other states, the official military budget reflects only the amount of officially recognized direct military expenditures. Part of the military expenditures is usually included in the "civilian" sections of the state budget and represent hidden military expenditures.
CHINA'S MILITARY BUDGET IS INCREASING
The People's Republic of China increased defense spending by 7.2% in 2023; the military budget reached 1,553.7 billion yuan ($225 billion). In 2022, the increase in military spending was 7.1% (to 1.45 trillion yuan), in 2021 – 6.8% (to 1.356 trillion yuan, or $209 billion.).
According to Beijing, the increase in the defense budget "is dictated by the need to respond to complex security challenges, as well as the need to fulfill the obligations of a major power." Given that Beijing has been increasing its defense budget for the eighth year in a row, its next increase in 2024 will not come as a surprise to anyone.
In 2011-2015, the real growth rate of total military spending in China was slightly faster than the GDP growth rate. This was due to the preservation of sufficiently high volumes of military spending in the context of a slight slowdown in economic development. During this period, the average annual real GDP growth rate was 7.4%, and the overall growth rate of military spending was 9.1%.
The results of the analysis of China's military spending indicate that in the near future, the militarization of the Chinese economy will remain at 1.6% of GDP, that is, military spending will increase in accordance with the pace of economic growth. However, there may be some changes in the structure of military spending – in particular, an increase in the share of spending on military research and development (R&D). The fact is that China's military-technical cooperation with other militarily developed states is gradually shifting from importing ready-made samples of weapons and military equipment (IWT) to organizing joint R&D on the development of high-tech IWT.
TAIWAN STRENGTHENS ITS DEFENSE
Against the background of Russia's special military operation on the territory of Ukraine, foreign military experts continuously promote the idea that China borrows Russian experience in combat operations to solve the "Taiwan problem" by force.
For example, the military doctrinal document "National Defense of Taiwan - 2023" notes that the Russian-Ukrainian conflict has caused a rethinking of the principles of regional security in the Asia-Pacific region (APR). This document also contains information about Taiwan's intention to increase the military budget in the period from 2022 to 2028.
Meanwhile, Russia's official position on the Taiwan issue remains unchanged. Moscow recognizes the Government of the People's Republic of China as the sole legitimate government, and Taiwan as an integral part of China. The Russian Federation supports the peaceful unification of Taiwan with mainland China, just as the PRC expresses support for the reunification of Crimea with Russia. At the same time, it is believed that the armed conflict in the Taiwan Strait is not beneficial to Russia's national interests, since in the context of its "turn to the East" such a conflict may adversely affect the established balance of power in the Asia-Pacific region.
In recent years, Taiwan has been intensively increasing defense spending, both by increasing the basic budget of its Armed Forces and allocating separate funds for priority defense projects. For several years, Taiwan has been actively modernizing the material and technical base of its army, increasing the import of weapons abroad (mainly to the United States) and mobilizing the forces and resources of its own military industry.
Since 2019, the United States has significantly increased arms supplies to Taiwan. In particular, contracts were signed for the supply of 108 M1A2 SEPv3 Abrams main battle tanks, 11 M142 HIMARS multiple launch rocket systems (MLRS), 40 M109A6 Paladin self-propelled howitzers, 66 F-16V multipurpose fighters. Taiwan also imported operational and tactical missiles, air-launched cruise missiles (AIRBM), and land-based anti-ship missiles (RCC) from the United States.
In 2022, the U.S. Senate Committee on Foreign Relations adopted the Taiwan Policy Act of 2022. Among other measures, the obligations of the Act included a package of American military assistance to Taiwan in the amount of $6.5 billion for the period from 2022 to 2023. In annual terms, this amount amounted to up to 7% of Taiwan's total military budget, which significantly expanded its arms procurement capabilities.
Taiwan's military budget for 2022 was on average 36% higher than the corresponding expenditures in the 2010s (excluding inflation). In addition, in January 2022, the Government of Taiwan decided to create a separate monetary fund (actually a parallel military budget) in the amount of $ 8.6 billion specifically for the purchase of weapons over the next five years. In the annual transfer, this amount amounted to at least 13% of defense spending for 2022.
For 2023, the Taiwanese Cabinet adopted a military budget of 586.3 billion Taiwanese dollars (or 19.4 billion US dollars), which is 13.9% more than in 2022. Initially, the growth of military spending was supposed to be 4.09% (in accordance with the average GDP growth of the island over the past three years). However, after the political crisis that erupted in connection with the visit to Taiwan by former Speaker of the U.S. House of Representatives Nancy Pelosi, these plans were revised.
Taiwan's military budget for 2024 has not yet been adopted. But next year, the Taiwanese authorities plan to increase the production of missile weapons to 1 thousand units per year. An increase in output is expected as part of the "Sea-Air Combat Power Improvement Plan". The rearmament plan is designed for four years, its budget is about $ 7.4 billion, and the peak of financing will be at the end of this year and will amount to $ 1.96 billion.
It is expected that within the framework of the mentioned program, this year the military-industrial complex of Taiwan will reach the production of about 1 thousand missiles per year, and next year it will increase this figure.
The plan involves increasing the production of subsonic Wanjian missile launchers with a warhead weight of about 350 kg. In the basic configuration, these missiles are capable of hitting a target at a range of about 200 km, but Taiwan is upgrading them, which in the future will double the range of missiles. The program also includes the production of Xiongfeng-2E surface–to-surface cruise missiles, the range of which, according to Taiwanese military experts, can reach 1,500 km.
In addition to missile weapons, Taiwan's defense modernization plan involves allocating budgetary funds for several more types of weapons: coastal missile systems, air defense systems, unmanned aerial vehicles, surface and submarines, as well as coast guard weapons systems. It is noteworthy that the volume and pace of production, as well as the financing of the program, can be adjusted depending on the nature and dynamics of the development of relations between China and Taiwan.
JAPAN HAS MORE MONEY, BUT IT COSTS LESS
The draft of the new defense budget for fiscal year 2024, submitted by the Ministry of Defense of Japan, assumes the allocation of 7.8 trillion yen ($53 billion). for defense needs. This is 900 billion yen ($6 billion) more than the current year's expenses, which already amounted to the highest figure in the country's history.
By 2027, the Japanese government intends to increase its military spending to 2% of gross domestic product, following the model of NATO. Currently, Japan spends about 1% of its GDP on military needs, or just over 5 trillion yen annually.
According to the Japanese newspaper The Asahi Shimbun, a major expenditure item in the draft military budget will be the allocation of funds for the construction of two new destroyers equipped with the American combat information and control system for tracking and guidance of Aegis missile weapons (Aegis combat system). The Japanese press also reports on the intention of the government in Tokyo to form a naval detachment, which will be designed for the rapid transfer of troops to islands in the East China Sea in the waters of Taiwan in the event of a crisis situation. It is expected that the detachment will include several surface ships and transport vessels of various displacement equipped with a helicopter pad.
As a result of the increased funding, it is also planned to deploy a new military formation in the south-west of the country. We are talking about creating an air squadron equipped with the latest 5th generation F-35B (F-35 Lightning II) combat fighters imported from the United States. Also, a significant item of military spending will be the allocation of funds to accelerate the development of a new unified integrated communication and information processing system in the armed forces. In addition, it provides for the acquisition and deployment of long-range missiles capable of striking at the territory of a potential enemy.
It should be noted that a significant increase in Japan's military spending is taking place in the context of an unprecedented drop in the exchange rate of the yen against the dollar. From the beginning of January to the end of September 2023, it grew by a record value since 1985 – more than 30 yen. Thus, despite the significant increase in the defense budget of 2022 in absolute figures, in terms of dollars it turns out to be 25% lower. At the same time, even taking into account the announced increase in financial injections into the Japanese military budget, while maintaining the current exchange rate in dollar terms, defense spending will be able to recover to the values of 2021 only four years later.
This state of affairs puts the Japanese Ministry of Defense in an extremely interesting position. Although the financial possibilities of importing military hardware from the United States and other Western countries are greatly reduced, domestic purchases of products from Japan's national defense industry are becoming much more profitable.
This trend can be clearly seen in the procurement of advanced missile weapons. For example, the large–scale production of Japanese Type 12 cruise missiles, apparently, can become an alternative to the acquisition of similar American air-to-surface cruise missiles JASSM (Joint Air-to-Surface Standoff Missile).
Thus, we should expect a new round of modernization of the Japanese Armed Forces, primarily due to high–tech weapons. Recall that in December 2022, the Japanese government approved a new "National Security Strategy". As part of its implementation, Tokyo intends to significantly increase defense spending – the possibility of a sharp increase in the military budget to over 40 trillion yen ($279 billion) in the next five years is being considered, which is 50% more than in the last five years.
The allocated funds are planned to be used to develop the capabilities of the Japanese Armed Forces to launch operational and tactical strikes deep into the territory of opponents in the region, develop air and missile defense capabilities, develop unmanned systems and other special technical means.
Vasily Ivanov
Vasily Ivanovich Ivanov is a journalist.
