The U.S. Is Playing the Wrong Game in the Competition with China

The Pentagon has defined China as the “pacing threat” driving U.S. military spending and strategy. Hawks on Capitol Hill have come together in a virtual Greek chorus sounding the alarm about how Beijing is outstripping the U.S. militarily—or will soon do so unless U.S. taxpayers spend far more on national security. These claims are both misleading and misguided. When it comes to competing with China for global influence, Washington is playing the wrong game.

One preoccupation of the “confront China” lobby is the assertion that Beijing spends far more on its military than meets the eye for two reasons.

First, China’s official defense budgets don’t cover all defense-related expenditures. Second, China supposedly gets more bang for its buck, spending less than the United States to achieve an equal increment of military power, be it ships or aircraft or numbers of uniformed personnel. To compensate for the latter problem, some analysts rely on purchasing power parity (PPP) to obtain a figure for comparison.

Even accounting for these differences, however, U.S. military spending continues to dwarf that of the PRC. The U.S. defense budget was at least four times larger than China’s official number ($905.5 billion vs. $219.5 billion) and more than twice as large as the International Institute for Strategic Studies (IISS) estimate for China’s spending, adjusting for differences in purchasing power ($407.9 billion). The just-released edition of IISS’s Military Balance notes that China’s “official defense budgets have fallen as a percentage of GDP to an average of 1.23 percent between 2019 and 2023, from 1.28 percent between 2014 and 2018. The small increase in national-defense burden in 2023 to 1.24 percent of GDP mainly stems from the relative slowdown in economic growth.” By contrast, U.S. defense spending as a share of GDP has risen in the last three years, from 3.26 percent in 2021 to 3.36 percent in 2023.