China’s military spending has hit US$700 billion

Beijing has underreported the true cost of its rapid build-up in the East and South China Seas

Fudging figures have become an art form in China. It is embedded inside the ruling Communist Party and a crucial component of the policy of secrecy and subterfuge. 

Official economic numbers tend to be doctored especially during this current cycle of stagnation as bad news chips away at the Party’s competency. But perhaps the biggest con trick involves the country’s military spending. 

Earlier this year, the National People’s Congress announced an annual budget of roughly 1.55 trillion yuan or US$224.79 billion. Yet the true figure is likely to be more than triple that as tensions rise in the East and South China Seas.

“They [Pentagon intelligence officials] came out and said the real Chinese budget, in terms of [the] military, is probably close to about $700 billion,” Republican lawmaker Dan Sullivan said in the US Senate before tweeting the number on June 1.

State of play:

  • Officially, China still lags behind the United States in military spending.
  • Washington allocated a budget of $876.9 billion for 2023.
  • Yet Beijing has funded a massive modernization program and now boasts the largest navy in the world.
  • It has also developed advanced fighter jets and hypersonic missiles that could decimate American carrier groups.

The goal is to reinvigorate China’s project of ‘military-civil fusion’.


Delve deeper: China is trying to turn the South China Sea into its own private waterway. It has threatened near neighbors such as Taiwan and challenged the US and its allies during freedom of navigation exercises. 

Between the lines: To do this, Beijing is pumping hundreds of billions of dollars into its military-industrial complex. The goal is to reinvigorate China’s long-running project of “military-civil fusion,” the Financial Times reported in June.

Big picture: The Party further blurs “the lines” [in spending] when it comes to defense by harnessing “new technologies from the private sector” for the benefit of the military. 

What was said:  “Funding [in] shipbuilding, information technology, and the aerospace industry [are] all areas where China is rapidly modernizing its military capability,” Mackenzie Eaglen, of the American Enterprise Institute, said earlier this month.

Bottom line: “This is to say nothing of China’s hard power investments counted off the defense budget books, [such as] the Coast Guard and People’s Armed Forces Maritime Militia, [which] support military goals,” Eaglen wrote in a commentary.

China Factor comment: Last week, we highlighted how President Xi Jinping’s regime has covered up the real cost of the nation’s “economic crisis.” So, why should military spending be any different?