China spends 70 per cent more on its military than its official budget suggests, according to the latest assessment by a prominent UK think-tank.
The new calculation means the country is the world's biggest defence spender after the US.
US defence officials have repeatedly expressed concern about Beijing's opaque but expanding military budget, most recently in an annual report on China's military sent to the USCongress on Monday.
China's published defence spending figures are widely agreed to underestimate their true level. Yesterday's publication of the annual military balance report by the International Institute for Strategic Studies provided a rare public assessment of by how much.
"As China's strategic presence continues to expand, the questions of what resources Beijing is investing in defence capabilities, and to what end, loom larger," said John Chipman, IISS director general.
Officially, China's defence budget has grown 10 per cent a year for the past 15 years, and by 300 per cent in real terms in the past decade. While this gives an indication of the trend, it significantly underestimates actual spending, the IISS said.
The IISS estimates China's total military related expenditures in 2003 were $39.6bn, at market exchange rates, about 1.7 times the official budget. This means its total spending was 2.7 per cent of gross domestic product in 2003, compared with 3.7 per cent in the US, 2.4 per cent in South Korea and the UK and 1 per cent in Japan.
Using purchasing power parity figures from the World Bank to get a truer idea of how much this spending buys, the figure expands to $75.5bn. That puts China well behind the US, which spent $456bn in that year, but ahead of Russia in third place. The report warns, however, that the PPP figures should be used with caution. According to the IISS, the official budget ignores a number of big spending items. These include overseas weapons procurement, defence industry subsidies and research and development spending.
