The true level of China's total defense expenditure — suggested as being two or three times higher than the official budget — is worrying news for both the United States and regional military balances in the Asia-Pacific, the International Institute for Strategic Studies said Wednesday.
In its "Military Balance 2006," the London-based think tank outlined that using "'official" publicized figures alone, China's defense budget has grown, in real terms, by 96 percent since 2000, and when taking into account missing information due to lack of transparency, as well as ambiguous exchange rates, the growth is estimated to be considerably higher.
Although the annual report acknowledges that using the Purchasing Power Parity exchange rate can be misleading, it does highlight that the Chinese Defense Budget for 2003 — calculated at the official market exchange rate to be $23 billion — would almost quadruple to $101.4 billion if PPP were to be employed.
Using a combination of PPP estimates and counting factors not included by the Chinese, notably research and development, the IISS figure for China's total military-related revenue for 2003 is $755 billion — a staggering 1.7 times the official defense budget of 190.7 billion yuan.
The discrepancy in figures serves to emphasize the sensitivity of the data, however, it does go some way to explaining the West's growing unease at China's apparently extensive defense modernization program on a scale that could potentially compete militarily with the U.S.
In contrast to the anxieties between Washington and Beijing, the report states that Japan-U.S. defense relations have been nothing but enhanced due to the signing of the Defense Policy Review Initiative in October 2005, and the subsequent joint training events that have taken place under the new agreement, including plans for the joint U.S.-Japanese Ballistic Missile Defense system due to start deployment in 2007.
The report also highlights Japan's substantial involvement in Southeast Asian maritime security and the moves by Tokyo — through deployment of sea and air elements of its coastguard — to galvanize multilateral cooperation through the Asia Maritime Security Initiative 2004, aimed primarily at boosting the anti-piracy capacity of Asian coastguards.
Looking to the next decade, the think tank predicts that maritime security issues, including importantly the need to deter seaborne terrorism will "continue to loom large" for Southeast Asian governments, becoming an area of growing global concern.
It suggests that tensions between the states, particularly a general wariness to enter into bilateral security agreements with Beijing, will limit the intensity and operational usefulness of cooperation between navies, however details that Tokyo is already realizing that fostering relations with coastguards may be "less politically sensitive and more potentially productive" in operational terms.
The report acknowledged that the key international issues of maintaining security in Iraq and Afghanistan, as well as the nuclear situation in Iran, and in particular the United States and its allies' involvement in each of the three areas, remained a main focus of attention with no immediately foreseeable ends.
Following an IISS official mission to Tehran and Isfahan, research fellows reported that, opposed to many media reports suggesting that Iranians were unwilling to negotiate over their nuclear program, there were encouraging signs within the country and this was something that they were "obviously keen to encourage."
While the think tank refrained from making a sweeping analysis that the world as a whole was a more dangerous place than a year ago, it did state that there was a surprising amount of conflict and a great deal of instability across the globe, which, even for military analysts, was "alarming and frightening."
