China's Military Spending Slows

Interesting reports out of China on projected defense spending: only a 7.5 percent increase, the smallest in two decades, according to Chinese officials. The NYT reports that Chinese budget documents peg 2010 defense spending at $78 billion, an increase of $5.4 billion over last year’s defense budget.

Now, there has always been much debate over the veracity of Chinese defense spending claims and various sources put the annual amounts considerably higher than Beijing’s official figures. That same NYT article says this year is the first time in 21 years that the rate of defense spending has fallen below double digits. Spending had risen an average of 12.9 percent annually from 1996 to 2008.

China is investing mightily in its own domestic stimulus package that has so far gotten the country through the recent economic turmoil in amazingly good shape. China’s economy grew at around 10 percent last year. Like most centrally planned economies, when the Chinese want to stimulate demand they do it through massive infrastructure projects, the colossal Three Gorges Dam on the Yangtze River being a good example.

China is spending billions on its high speed rail network, highways, airports, housing, etc. All of which is to say that the slowed rate of defense spending increase, may be a one-off phenomenon.

-- Greg

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