“THAT’S NOT going to happen on my watch,” Joe Biden said last month, regarding China’s “goal to become...the most powerful country in the world.” In the martial realm, military-expenditure estimates released this week by the Stockholm International Peace Research Institute (SIPRI) seem to back up his prediction. America spent $778bn on defence in 2020, 39% of the global total and more than the rest of the top ten countries put together.
However, nominal spending totals may overstate America’s advantage. A dollar—or a few hundred billion of them—goes further in some places than in others. Wages in China are relatively low. Army pay there starts at $108 per month, compared with $1,733 in America. Construction and maintenance are cheaper as well.
Any fair comparison of military might needs to account for such differences. Just as The Economist calculates currencies’ purchasing-power parity (PPP) in terms of Big Macs, Peter Robertson, a professor at the University of Western Australia, has devised a “military PPP”. It adjusts defence budgets based on how they are allocated among wages, operating costs and equipment, and how local prices vary in each of these areas. The greatest differences are in countries that dedicate relatively small shares of their budgets to sophisticated weapons, since spending on missiles and fighter jets generally yields a similar military return on investment everywhere.
The PPP figures make America look far less dominant. At market exchange rates, SIPRI’s estimate of China’s spending is $252bn, just one-third of America’s; at PPP, it jumps to two-thirds. (The official Chinese figure is just $184bn in nominal dollars, but is seen as unrealistically low.) Proportionally, the effect is even greater for Russia, whose $62bn outlay buys $177bn of military value, and bigger still for India, whose $318bn-worth of spending is more than four times its $73bn budget.
Mr Biden’s generals might retort that quality is a quantity all of its own. Perhaps American grunts’ salaries are 16 times higher than their Chinese counterparts’ because they have superior skills. Similarly, America’s bases might be sturdier than Chinese ones, and its best-in-class equipment may not be available elsewhere. And even if China does close the gap on current spending, America’s past capital investments still give it an edge: aircraft-carriers can remain in service for 50 years.
Nonetheless, the PPP numbers make clear that China is catching up quickly. So far, this mostly reflects China’s faster economic growth. Since 2000 its defence spending has held steady at just under 2% of GDP, roughly half the share in America.
However, China’s military ambitions are growing and its alliances are weaker than America’s. The United States is preparing to withdraw from Afghanistan. By contrast, China has established control over much of the South China Sea, parts of which are claimed by Vietnam, Indonesia and the Philippines. It has raised tensions with Japan over a disputed group of islands. And it recently fought a border skirmish with India. Most worrying, it is increasing air and naval pressure on Taiwan. If China raises the share of its economy devoted to defence, Mr Biden might have to oversee a new arms race to maintain America’s military supremacy.■
Sources: IMF; SIPRI; Peter Robertson; The Economist
Correction (April 30th 2021): The original version of this article wrongly suggested that entry-level Chinese military pay was $10 per month. Sorry about that.