Friday, December 1, 2023

The performance of Chinese defense companies raises questions about Beijing's military budget

Like every year, the DefenseNews site publishes the ranking of the 100 most important defense industries in the world. This year's file shows, without much surprise, a relatively stable ranking, with a very clear predominance of American companies in the sector which rank 8 of theirs in the first 20 places, and including the biggest players, Lockheed-Martin, Raytheon, Boeing, Northrop-Grumman and General Electric remain well at the top of the ranking, in the first 5 places, with a total cumulative revenue exceeding $200 billion. Beyond the variations, entries and exits from the ranking, inherent to the effects of the Covid-19 crisis in particular, and to changes in invoicing from one year to the next, a very particular case calls out when reading it, namely the cumulative amounts of revenues displayed by Chinese companies which, in many points, call into question the sincerity of the Chinese Defense budget as published on the international scene.

Indeed, China now ranks 7 companies in this ranking, all between 6th and 19th place, for a total reported defense turnover of more than $95 billion, for an announced Defense budget of $175 billion. in 2021. However, and unlike the United States or European countries, Beijing still has a relatively small export footprint today in the field of arms, of around 5.2% of global trade in this area. , moreover largely offset by its own imports, of the order of 4.7% of world trade according to the latest SIPRI barometer . Which would suggest that more than 55% of the Chinese Defense budget would be destined for only the 7 companies in this ranking, where a country like France, which exports 8% of the world market, only imports less than 0.5 %, and which displays a cumulative turnover of its large companies of $16 billion, would only invest $12 billion for an army budget of more than $42 billion (excluding pensions). These values ​​do not allow us to doubt the sincerity of the data transmitted by Beijing, even if questions are obviously legitimate on this subject. However, this invites us to reconsider the relevance of simply comparing the defense budgets of countries to assess their military power, and therefore their possible dangerousness on the international scene.

GJ 11 anniversary parade 1 Defense News | Armed Forces Budgets and Defense Efforts | Military planning and plans
Drones are one of the areas of excellence of Chinese defense industries, which export more than the United States in this area.

Thus, according to these figures, Beijing would maintain a military power of nearly 2 million men, as well as more than 7,000 battle tanks, 6,000 armored vehicles, nearly 2,500 combat planes, and 450 ships in a budget of only 80 $ billion, where France, with $30 billion, is struggling to maintain 200,000 men, 200 tanks, 2,500 armored vehicles, 350 planes and 100 buildings. In other words, from a budgetary point of view, China's budget must be at least multiplied by 2.5 to be consistent and compared with the budget of a Western country, such as France, but even more vis-à-vis -towards the United States, more than 20% of the Pentagon's budget being devoted solely to financing external operations and planned forces, which very little concern Chinese forces. Note that this coefficient exceeds the simple comparison in purchasing power parity between China and the United States by 25%.

We understand, therefore, how with such a low budget taken in absolute value, moreover it is true that it has been growing rapidly and constantly for several decades, Beijing has managed, in such a short time, to acquire a military and industrial defense as significant, to the point of undermining, in the simulations, the all-powerfulness of the United States, particularly in scenarios such as the defense of Taiwan. Above all, with annual budgetary growth of around 6%, and a multiplier coefficient considered at 250%, China's defense budget will have exceeded that of the United States in just 8 years, in other words, a very long time. short when we consider the military programming, especially since the Chinese armies are far from being as exposed, militarily but also budgetarily, outside its own borders, as the armies can be today US.

type075 Defense News | Armed Forces Budgets and Defense Efforts | Military planning and plans
The Type 075 assault helicopter carrier is one of the symbols of the efficiency of modern Chinese naval defense industry

If Sino-American competition and the Pacific theater are, literally speaking, at odds with European concerns, these data must nevertheless challenge them to the highest degree. Indeed, they indicate that within ten years at most, the United States will be forced to concentrate almost all of its defense effort solely on competition with China, otherwise Beijing could quickly take over. a decisive strategic advantage in the Western Pacific, but also in the Indian Ocean, depriving the United States and the West of potentially essential lines of communication, exchange and commerce, and threatening even Washington's strategic allies, like Taipei, Tokyo, Seoul or New Delhi. From then on, Europeans will have to take all their responsibilities to assume their own protection in a much more active manner in order to relieve the United States of this burden, but also to contain, if necessary, the excesses of certain turbulent actors in their direct environment. , like Russia, Turkey or even Iran, without having to count on the support of the United States, beyond nuclear deterrence.

Under these conditions, the objectives displayed at the NATO Summit in Cardiff, with a defense effort of 2% as a reference for the members of the Atlantic Alliance, appear poorly suited to the challenges ahead, and it now seems essential , particularly for framework nations like Great Britain and France, to together significantly increase their investments but also the format of their defense tools in order to guarantee the security status quo and the protection of European interests themselves. We will see, during the next French presidential campaign, whether defense issues will take on a determining dimension, or whether, as in the current German legislative campaign, they will remain secondary in the eyes of the candidates and their political party.

Fabrice Wolf
Fabrice Wolf
A former French naval aeronautics pilot, Fabrice is the editor and main author of the site. His areas of expertise are military aeronautics, defense economics, air and submarine warfare, and Akita inu.

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