Reality Check: Chinese Military Spending in Context

The notion that the United States must increase its military budget and deploy a new generation of high-tech weapons to “keep up” with China is a common assertion in Washington policy making circles. One key element of this argument is the claim that China’s military budget is much higher than officially reported and is in fact rapidly catching up with the amounts spent by the United States. It is a short step from there to a series of arguments about spending more on the Pentagon overall and accelerating or
sustaining a whole array of new weapons programs.

This issue brief aims to put the arguments about China’s military budget and capabilities in context, both by exploring the available data on how much Beijing spends and by putting the issue of that spending in a larger context. The brief is organized in a series of points regarding the U.S.-China military relationship. The points are summarized as follows:

1) The U.S. Outspends China on Its Military By a Substantial Margin

Some experts have argued that China’s military expenditures are far higher than official reporting would suggest, once differences in purchasing power and the full range of China’s military-related activities are taken into account. But the most commonly used estimate of Chinese military spending, the annual analysis by the Stockholm International Peace Research Institute (SIPRI), does in fact account for a wide range of activities that are outside of official Chinese figures. The latest SIPRI estimate puts U.S. military spending at a full three times what China spends – $877 billion versus $292 billion for 2022.2.

Even figures that attempt to adjust for relative purchasing power like Peter Robertson’s analysis based on his measure of “military Purchasing Power Parity” (PPP) – which are at best rough estimates – put U.S. spending levels well over spending by China, at $806 billion versus $476 billion for 2021, the most recent year that an estimate based on the military PPP approach is available. Thus, even under Robertson’s measure, Chinese spending is 59%.

Read the full report from the Brown University Watson Institute Costs of War Project.