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SPF China Observer

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No.32 2020/05/26

China’s Intentions from the Perspective of its Defense Budget

Bonji Ohara (Senior Fellow, The Sasakawa Peace Foundation)

Introduction

 In both Japan and the United States, the image of "China taking advantage of the gap between Japan and the US" and "China taking advantage of COVID-19 crisis" is gaining ground.[1]This is because China’s unilateral attempts to changes the status quo by the use of force appears to be prominent. Thus, Japan and the US recognized that while the other countries focused to struggle with COVD-19, China was planning to control the East China Sea, the waters surrounding Taiwan, and the South China Sea by military forces.
 However, might it be an oversimplification to think that the Chinese Navy used the COVID-19 crisis as a cover for increasing the activities of its mobile aircraft carrier force? What underlies the Japanese and US perception that China increased the activities of its military is the perception gap those countries have with China regarding what “normal” is. China perceives “normal” as being its own development and its increasing influence on the global community because of that development. As part of this, it perceives its growth in defense capabilities and the expansion of its range of activities as a way to prevent interference by the US. In accordance with plans ordered in the mid-1980s by Navy Commander Liu Huaqing, who was under the direct orders of Deng Xiaoping, the Chinese Navy increased its military capabilities and escalated its activities.
 In contrast, the Japanese and US perception is that the “status quo” is the “normal,” and then it must be maintained in order to prevent increased tensions caused by sudden changes in the security environment that they believe would result from the changing behavior of the Chinese People’s Liberation Army (PLA) in accordance with changes in its power and influence. These changes, they believe, cannot be allowed. Japan and the US believe that a stable security environment is important, while China’s priority is the governance of China by the Communist Party; thus they believe that it is important to protect it through the expansion of its geographical range through military superiority. This gap between Japan/US perceptions and Chinese perceptions can be thought of as a gap in priorities. China, which believes it is only natural that it occupies an appropriate position in the international community, also believes that it is only natural, therefore, that it would shift current circumstances to make them to its own advantage.
 The security environment in the Pacific Ocean is determined by interactions between the US and Chinese navies. The COVID-19 pandemic caused a decrease in the military presence of the US Navy in the Pacific Ocean, which led to increased activities by the Chinese Navy. The Chinese Navy is struggling to insist that it has somehow achieved its plan to expand its fleet of ships and aircraft and its range of operations despite economic and technological problems. Thus, from the perspective of its actual capabilities, it would be difficult for the Chinese Navy to rapidly increase the activities of its aircraft carrier mobile fleet even though US military presence in the region has been reduced due to the COVID-19 crisis.
 Nevertheless, China is hardly restraining its military operations. Escalation of their military operations is simply normal behavior for the Chinese. The spread of the coronavirus infection has had a negative impact on the Chinese economy. Although the rate of increase in the Chinese defense budget declined compared to the previous year because of these circumstances, it still received a major increase in contrast to other budgets, which were cut because of the pandemic. The Chinese defense budget for this year can be said to reflect the circumstances of the Chinese military during the COVID-19 crisis.

1. Conditions in the seas surrounding Japan

 On May 8, two Chinese government vessels entered Japanese territorial waters off the Senkaku Islands (in Chinese, the Diaoyu Islands) and chased Japanese fishing vessels, causing a rise in the sense of crisis in Japan. In addition, in mid-April in the South China Sea, a Chinese research vessel approached and harassed a Malaysian national oil company research vessel. And on April 3, the Vietnamese government announced that a Vietnamese fishing vessel was struck and sunk by a Chinese Coast Guard patrol vessel in the waters off the Paracel Islands (Xisha Islands) on April 2.[2]The Chinese government announced that by April 19, two new administrative divisions would be created in the city of Sansha in Hainan Province, to be known as Xisha (Paracel) District and Nansha (Spratlys) District, a move that increased the alertness of Vietnam and other countries.[3]
 The Chinese Navy’s behavior also showed increased activity. On April 10, 2020, the aircraft carrier Liaoning and a fleet of six ships, which included the newest replenishment ship, Type 901, entered the Pacific Ocean after passing by the main islands of Okinawa and Miyako-jima, after which they moved southward along the east coast of Taiwan.[4]On April 13, Chinese Navy spokesman Gao Xiucheng announced that the Liaoning fleet passed the Bashi Channel to the south of Taiwan and entered the South China Sea, where it conducted an exercise in nearby waters. At this time, Chinese Navy spokesman Gao Xiucheng stated, “Based on plans, the Chinese Navy will keep conducting this kind of exercises on a regular basis in order to accelerate the systematic strategic capabilities of this aircraft carrier group.”[5]This means that China has declared that it will continue to show its military presence in the seas to the east of Taiwan and in the South China Sea.
 These words and actions by the Chinese have even influenced the circumstances surrounding the coronavirus infection. The Chinese perception can be surmised based on reports such as the April 10, 2020, report by the official newspaper of the Chinese Communist Party, which reported that the COVID-19 pandemic “has had a major impact on the ability of the US Navy to operate on a global scale, and it has now become difficult for them to operate in the East China Sea, the Straits of Taiwan, the South China Sea, and other regions.”[6]To the Chinese, the decrease in the US Navy’s activities signifies that the obstacles to the further advancement of China's plans have been removed. Chinese media reports on this perception have influenced the perceptions of even field commanding officers, which may lead to them taking an even more high-handed approach.
 China did not necessarily take advantage of the COVID-19 crisis to increase its military operations. Even in the absence of the COVID-19 crisis, the Chinese were making attempts to expand the geographical scope of their military influence. In October 2014, the official newspaper of the Chinese Communist Party reported that statement of a Chinese military specialist, who said, “China has broken through the First Island Chain and the US has withdrawn to the Second Island Chain.”[7]This same reporter also wrote that Chinese Naval vessels are able to pass the First Island Chain freely under the protection of Chinese ballistic missiles and other weapons. What lies behind these Chinese perceptions is likely to have been the commissioning and start of operations, in September 2012, of the aircraft carrier Liaoning. Indicating Chinese presence through the use of aircraft carriers is also an idea that originated with Liu Huaqing.
 However, at the present stage, it is likely that Chinese aircraft carriers either do not have full strategic capabilities, or it may be difficult for them to increase the frequency of their voyages. Chinese aircraft carriers have difficult problems that need to be solved.

2. The problems faced by the Chinese aircraft carrier mobile fleet

 The “New Era” is the theme of the 2019 National Defense White Paper. Its use of the term “defensive national defense policy” rather than merely “national defense policy” is likely a contention aimed at the international community to indicate that the buildup of China’s military and its military activities are to defend China.
 The Chinese Navy is currently operating two aircraft carriers: the Liaoning, and the first Chinese-made aircraft carrier, the Shandong. The Liaoning was originally known as the Varyag when was being built by the Soviet Navy, but after the dissolution of the Soviet Union, construction was halted and Ukraine sold the ship hull to China, who modified and launched it as the Liaoning. According to the Chinese Ministry of National Defense, the Shandong was constructed as an improved version of the Liaoning.[8]
 The Liaoning, which has expanded its area of operations to include the region from the territorial waters off the east coast of Taiwan to the South China Sea, developed serious problems with either its power or propulsion systems after its launch. At least twice–in April 2014 and in August 2018—the Liaoning underwent major renovations to its power and electrical systems that took approximately six months each to complete. According to a researcher at China Society of Military Science, who spoke in 2014, the Liaoning developed a number of problems during sea trials and training operations, including problems with its hull construction, power system, onboard equipment, and weapons.
 Although the Liaoning is a modified version of the Varyag, Kuznetsov-class aircraft carriers—of which the Varyag is one type—have always had problems with their propulsion systems, and their rate of operation has been low since the time they were utilized by the Soviet Navy. Thus, some analyses have concluded that the Liaoning inherited the structural flaws of the Varyag. The Shandong is an improved version of the Liaoning, but it is impossible to determine if these problems have been resolved. After undergoing major renovations in 2018, the Liaoning seems to have expanded its scope of operations, but the frequency of its voyages is low, and thus the degree to which its problems have been resolved remains unknown.
 The Chinese Navy is currently constructing a Type 002 aircraft carrier at the Jiangnan Shipyard. According to an analysis conducted by the US think tank Center for Strategic and International Studies (CSIS), this ship has a displacement of between 80,000 and 85,000 tons and has a conventional power propulsion system. The launch and landing system for the carrier-based aircraft on this vessel utilizes the catapult-assisted take-off but arrested recovery (CATOBAR) system, which involves the use of a catapult.[9]Currently, the Chinese Navy has built at least four prototypes of steam-powered and electromagnetic catapults, and they are currently testing and analyzing these systems.[10]
 In addition, Chinese aircraft carriers had problems with their carrier-based aircraft. Both the Liaoning and the Shandong utilize a ski ramp in their conventional take-off and landing (CTOL) systems for the launch of their aircraft. For landings, the short take-off but arrested recovery (STOBAR) system, which stopped planes using an arresting wire, was utilized. The carrier-based aircraft on both vessels is the J-15 fighter. According to analyses conducted by the publication Military Balance and by CSIS, the Liaoning can accommodate between 18 and 24 fighter jets. It was previously thought that the Type 002 aircraft carriers were also to be equipped with J-15 fighter jets. A photograph of a J-15, publicized by the US Naval Institute (USNI) in 2016, showed that its landing gear was designed for use with a catapult.[11]
 However, according to Military Balance, the publication of the British think tank International Institute for Strategic Studies (IISS), as well as other sources, the Chinese Navy has only approximately 20 J-15 fighter jets and production of them has been halted.[12]The Chinese media has reported that the Chinese Navy has either approximately 50 or 60 J-15 fighters, but if the IISS figure is correct, then the Chinese Navy would not even be able to fill the two aircraft carriers it currently possesses with their full complement of aircraft. Since production of the J-15 fighter has been halted, the Chinese Navy is likely not thinking that they would be suitable for use as carrier-based aircraft, and thus they are probably developing a new carrier-based aircraft. There is information indicating that the Central Military Commission intends to equip Type 002 aircraft carriers with modified versions of the latest J-20 stealth fighter jet, but as this would require extensive modifications, it is thought to be both economically and technologically difficult.
 Even if the problems related to the carrier-based aircraft are resolved, there remains the problem of training pilots to fly these aircraft. The March 23, 2020, edition of the People’s Liberation Army Daily, the official publication of the Chinese People’s Liberation Army, reported that the PLA Navy Aviation University had already awarded daytime aircraft carrier take-off and landing certification to dozens of carrier-based aircraft pilots.[13]The daytime take-off and landing certification is the minimum certification for a carrier-based aircraft pilot, and further training and education is required to fly as a full mission capable pilot. As the Chinese Navy systematically began carrier-based aircraft pilot training and education classes in 2018, there too few experienced aircraft pilots—a situation that is expected to continue for the next several years.
 When considering even a single Chinese aircraft carrier, the abovementioned problems are daunting. Although it can be said that this was the result of the development and operation of equipment that exceeded the capabilities of the Chinese military, the Chinese Navy has been facing circumstances that forced it to augment its military preparedness, expand its scope of operations, and increase the geographical area within which it maintained maritime superiority according to its designated plans. PLA Navy, as same as other forces, will need to engage in a continuous struggle in order to build up a world-class military forces that is comparable to that of the US by mid of this century. And this will require an enormous budget.

3. The significance of the 2020 Chinese defense budget

 On May 22, 2020, the 13th National People’s Congress (NPC) began. The Chinese government appropriated 1,268 billion yuan (over 19 trillion Japanese yen) to the defense budget as part of the 2020 budget proposal that was debated at the NPC. This budget represented a 6.6% rate of increase over the previous year’s defense budget.[14]While the general budget was slashed because of the coronavirus pandemic, only the defense budget remained prominent. The rate of increase in the defense budget clearly demonstrates the intentions of the Chinese leadership.
 The 6.6% rate of increase in the defense budget is the smallest since 1988.[15]This figure likely led to dissatisfaction in the Chinese PLA, which requires an enormous budget to achieve its designated plans. In the first half of the 2000s, a military officer in the PLA who was an operations-related counterpart stated, “Deng Xiaoping’s mistakes were allowing the inflow of pornography and placing priority on economic development over strengthening military preparedness.” This would be an evaluation to the defense budget growth rate of less than 10 percent through 1988. This military officer also stated, “To develop the PLA, a rate of increase in the defense budget of at least 10% is required.” The issue was how much more than 10% could be achieved.
 Meanwhile, the Chinese economy has been directly affected by the COVID-19 crisis. The Government Activities Report conducted by Premier Li Keqiang indicated that the COVID-19 pandemic has yet to be sufficiently controlled, which means that he has a mission laden with responsibility. Unlike Government Activity Reports in past years, the latest report does not include a numerical target for the gross domestic product (GDP).[16]This is said to be due to the COVID-19 outbreak has caused demand to fall, both within China and throughout the world, which has increased uncertainty regarding economic trends. The Chinese Communist Party previously indicated that its target is to double the GDP over a 10-year period. That target was to be reached this year, in 2020. To reach this target, the growth rate in the GDP this year will have to be a minimum of 5.6%.[17]However, this has already become unrealistic. There are analyses that project the growth rate in the Chinese GDP for 2020 to be 1.8%.[18]
 In this context, the 2020 Chinese defense budget indicates a figure that is between the 10% desired by the PLA and the approximately 2% that is predicted to be the GDP growth rate. Despite the fact that China's GDP growth rate is projected to decline, a defense budget greatly exceeded the last year budget, and then Japanese media has reported that China's military expansion remained. However, the Chinese defense budget does not include military weaponry development and other costs, and thus some believe it does not accurately reflect actual circumstances. If this is true, then the number indicated as the defense budget may have been at least to some extent arbitrarily determined by the Chinese Communist Party for use as a message both domestically and abroad. It may be a message to the PLA that communicates to them that, despite reductions in the general budget, defense spending is increasing. To the Chinese people, it may be a message indicating that, in consideration of the economic decline, the rate of growth in the defense budget has been reduced.
 It must be kept in mind that this discussion is restricted to the growth rate in the defense budget, as the fact that the Chinese defense budget itself continues to increase remains unchanged. China must maintain the directive of Deng Xiaoping to unify and maintain its territory; to keep developing China's economy for achieving a moderately affluent lifestyle for the Chinese people. President Xi Jinping has advocated “a new era” in which China begins a new stage of development as it fulfills Deng Xiaoping’s directive. China, then, must continue to develop.
 China has learned from the experiences of Japan and the former Soviet Union that the US considers a GDP of 60% to be a “red line”—countries that exceed this know that they will be subjected to relentless rebuke.[19]In 2014, the Chinese GDP exceeded 60% of the US GDP. Since its founding as a country, China has feared the exercise of military power by both the US and Russia (and the Soviet Union), but as its GDP approached 60% of the US GDP, it began to feel a sense of crisis regarding US interference. Increases in defense spending indicate that the Chinese Communist Party, which is increasingly aware of the threat it poses by the US, cannot escape the yoke of military buildup.
 On the other hand, the US is aware that China’s military buildup is being conducted in preparation for war with the US, so the US is moving toward resistance. It will not be easy to ease the tensions between the US and China, which have fallen into the classic security dilemma.

Conclusion

 China, which believes that the US will certainly interfere with its development, has been engaged in a military buildup. To circumvent the US attacking China, China has increased its strategic nuclear weapons as a deterrent against the US, and to prevent the US from even considering military operations against China, China has developed intermediate-range nuclear forces (INF) that the US is prevented from possessing due to the INF Treaty. China is also increasing its naval power, and is attempting to expand its maritime superiority. If the US gains the ability to possess intermediate-range nuclear forces because of the revocation of the INF Treaty, China would lose its superiority in the field of INF. Because of this, some believe that China is under pressure to revise its nuclear strategy, which may lead to it requiring the creation of equivalent deterrents against the US at all levels, including strategic nuclear arms.
 For China, removing interference by the US is only natural, and they believe they are justified in changing the status quo in the East China Sea, the seas surrounding Taiwan, and the South China Sea. For its part, the US is aware of the threat that Chinese military operations pose, and the US believes that this justifies their attempts to suppress China’s operations. It would seem impossible to avoid conflict between these two nations because one each touts a different type of “justice.”
 However, neither the US nor China intend to actually engage in a military conflict, and instead are engaged in a “political warfare” in which both sides are aggressively using all available political means. These political means include the offensive use of military forces in ways that do not lead to actual military conflict, such as military exercises and patrolling in the vicinity of the other country. It depends on the perception of each country as to which one of the U.S. and China has the upper hand, since they do not want to go into a hot war. China may perceive that its navy controls an area that extends to the Second Island Chain because of the expanded operations of its aircraft carrier mobile fleet. If China, therefore, believes that US military power does not extend to the First Island Chain, then it may increase its pressure on Taiwan.
 The power balance in the western Pacific Ocean is being determined by the interactions between the US and China. The US Navy, which has had a presence in the region, halted operations due to the COVID-19 crisis, then the operations of the Chinese Navy gained in prominence in the region. In fact, the Chinese Navy has been systematically escalating its operations to expand the geographical space within which it has influence, or had, prior to the COVID-19 crisis. Since November 2008, when four ships including a destroyer passed through the waters between the main islands of Okinawa and Miyako-jima on their way to the Pacific Ocean, the Chinese naval fleet has been actively engaged in operations beyond the First Island Chain. In April 2009, Wu Shengli, then-commander of the PLA Navy, announced that the navy would be regularly engaging in long-distance training cruise. In particular, since the September 2012 commissioning into the People’s Liberation Army Navy Surface Force of China’s first aircraft carrier, the Liaoning, China has increased the number of statements showing off its self-confidence.
 On the other hand, the strategic capabilities of Chinese aircraft carriers are limited due to shortages of both carrier-based aircraft and pilots and crew. The rate of increase in defense spending is likely insufficient for the PLA to achieve its plans to continue increasing military readiness. However, until China achieves its objectives, it will not abandon its military buildup or cease the escalation of its operations. China is currently building its third aircraft carrier and it is developing a fighter jet. It is also actively developing autonomous unmanned reconnaissance and combat aerial vehicles (UAVs) using artificial intelligence (AI) partially due to their shortage in fighter pilots. China possesses a sense of values that differs from those held by the West. Specifically, China does not believe, as those countries do, that the presence of humans is required in the decision-making loop for the use of weaponry. Under the strategy of "military-civilian integration" , the development of technologies such as Information and communications technology (ICT), AI, and the Internet of Things (IoT) by private companies are involved into the development of weaponry and equipment, and the cost of these endeavors is not included in the defense budget. It is believed, therefore, that they are not hesitating in the least when it comes to the development of completely autonomous weapons.
 While it is possible that the publicly released data on the rate of increase in Chinese defense spending may be nothing more than a political message, when one considers the fact that the Chinese economy has suffered damage as a result of the COVID-19 crisis, it would seem to be difficult for the PLA to obtain the budget it desires. Nevertheless, China must show that it is continuing to increase its military preparedness and expand its operations according to plan. As a result, for the US Navy to subvert the Chinese perception that it has military control over a certain geographical space, the US Navy will likely need to impose even greater military pressure on the Chinese Navy. If this occurs, the likelihood of unforeseen military conflict may increase.
  What is important as far as Japan and the US are concerned is preventing China from misperceiving a power vacuum exists and further escalating its military operations as a result. The differences between the US and China have to do with whether each party has allies whom they trust. If the US Navy were unable to mobilize sufficiently, then its allies—such as Japan and Australia—would have to compensate for US insufficiencies. The only way to change the perceptions of a target country is to display their own stances through actions.

(Dated May 26, 2020)

1 For example, “Possibility that the objective was to take advantage of Japan’s rush to deal with the coronavirus outbreak…Chase in waters near the Senkaku Islands: In response to Japan-China criticism?” Yomiuri Newspaper, May 13, 2020 https://www.yomiuri.co.jp/politics/20200513-OYT1T50103/ (last accessed on May 12, 2020); “Watch Out in the South China Sea: As U.S.–China tensions increase, the chance of a miscalculation grows”, The Wall Street Journal, April 24, 2020https://jp.wsj.com/articles/SB12037553245584973720304586342834146563652?mod (last accessed on May 25, 2020), and others.

2 “Vietnamese fishing boat rammed and sunk by official Chinese vessel: China temporarily seized boat assisting the crew,” Yomiuri Newspaper, April 5, 2020, https://www.yomiuri.co.jp/world/20200405-OYT1T50054/(last accessed on May 25, 2020).

3 “China creates new ‘South China Sea’ administrative division, alienates Vietnam,” Nihon Keizai Shimbun, April 20, 2020, https://www.nikkei.com/article/DGXMZO58248150Q0A420C2EAF000/ (last accessed on April 20, 2020).

4 “Chinese aircraft carrier passes by Okinawa, Miyako islands, first time since last June, according to the Ministry of Defense,” April 11, 2020, https://www.jiji.com/jc/article?k=2020041100381&g=pol (last accessed on April 13, 2020).

5 “Chinese aircraft carrier enters South China Sea along Taiwan’s southern coast, claims ‘similar training voyages will be held regularly,’” Sankei Shimbun, April 13, 2020, https://www.sankei.com/world/news/200413/wor2004130013-n1.html(last accessed on April 13, 2020).

6 「美海軍全球部署能力遭疫情重撃 在東海、台海、南海部署捉襟見肘」『環球時報』, April 10, 2020, https://mil.huanqiu.com/article/3xm8tIiZpLR (last accessed on May 25, 2020).

7 「専家:中国突破第一島鏈封鎖 美国退守第二島鏈」『環球時報』, October 8, 2014, https://mil.huanqiu.com/article/9CaKrnJFE3H (last accessed on May 7, 2020).

8 「12月国防部例行記者会文字実録」『国防部網』, December 31, 2015, http://www.mod.gov.cn/affair/2015-12/31/content_4634786.htm (last accessed on April 23, 2017).

9 “Tracking China’s third aircraft carrier,” CSIS China Power, https://chinapower.csis.org/china-carrier-type-002/ (last accessed on May 25, 2020).

10 「英国専家:中国航母還不如英国、但等有了弾射器和殲20 『環球時報』, January 13, 2020, https://world.huanqiu.com/article/9CaKrnKoRc4 (last accessed on May 7, 2020).

11 《 “China Experimenting with Catapult Launched Carrier Aircraft”, USNI, September 22, 2016, https://news.usni.org/2016/09/22/china-experimenting-catapult-launched-carrier-aircraft (last accessed on May 12, 2020).

12 “Military Balance 2019,” IISS. 「英国専家:中国航母還不如英国、但等有了弾射器和殲20 , etc.

13 「“跳鯊”砺翅、為戦育人不松勁 海軍航空大学全力推進艦載戦闘機飛行人材培養」『解放軍報』, March 23, 2020, http://www.81.cn/jfjbmap/content/2020-03/23/content_257212.htm (last accessed on May 13, 2020).

14 “Chinese military expansion unchanged, defense budget increase of 6.6%, general budget slashed, criticism of Hong Kong demonstrations,” Kyodo, May 22, 2020, https://this.kiji.is/636505609182528609?c=113147194022725109 (last accessed on May 22, 2020).

15 “China’s defense budget 6.6% increase, over 19,000,000,000,000 yen, military buildup continues amidst coronavirus outbreak,” NHK News Web, May 22, 2020, https://www3.nhk.or.jp/news/html/20200522/k10012440411000.html (last accessed on May 25, 2020).

16 「政府工作報告(文字実録)-2020年5月22日在第十三届全国人民代表大会第三次会議上 『中国政府網』, May 22, 2020, http://www.gov.cn/zhuanti/2020lhzfgzbg/index.htm (last accessed on May 22, 2020).

17 “Chinese GDP doubles in 10 years, 5.6% growth in 2020 ‘achieved,’ revised figures, coronavirus causes turmoil,” Nihon Keizai Shimbun, January 23, 2020, https://www.nikkei.com/article/DGXMZO54758990T20C20A1910M00/ (last accessed on May 22, 2020).

18 “China’s 2020 Economic Growth Seen Sliding Below 2% in Survey”, Bloomberg, April 24, 2020, https://www.bloomberg.com/news/articles/2020-04-24/china-s-2020-economic-growth-seen-sliding-below-2-in-survey (last accessed on May 25, 2020).

19 “[CRI Review] US redline ‘60%’,” CRI (China Radio International), August 10, 2018, http://japanese.cri.cn/20180810/f2c0fc76-ecd4-77c3-7237-5df8d94e2461.html (last accessed on May 26, 2020).

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