Estimating China’s Defense Spending: How to Get It Wrong (and Right) (Summer 2024)
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Date
2024
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Texas National Security Review
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China’s defense spending is opaque, and China spends more on defense than its official 2024 defense budget of 1.67 trillion yuan ($232 billion) indicates. Some analysts claim China’s defense spending is equivalent to $700 billion, approaching the level of the U.S. defense budget. These estimates mistakenly exaggerate China’s spending. They rely on unbalanced accounting for so-called off-budget expenditures and employ flawed purchasing power parity methods. We explain these flaws and offer a novel method for a more accurate assessment. According to our calculation, China will spend an estimated $471 billion on defense in 2024, or around 36 percent of comparable U.S. defense spending of about $1.3 trillion in 2024. A better understanding of Chinese defense spending enables U.S. policymakers and military planners to make more informed resourcing and allocation decisions while reducing the likelihood of overreaction and miscalculation.