Huge Increase in China’s defence budget – What it means for India and the World

The world needs to be prepared for the long term and when China opts for military adventurism, countries like India, the US and Taiwan need to be prepared to take counter-measures.


 ‘World-class military force’ at par with US armed forces by 2050 is the promise made by Chinese President Xi Jinping to his countrymen. To fulfil this ambitious goal, China has increased its defence budget. This is the eighth consecutive year that China has pushed its military budget to reach its ambitious goal. This time China hiked its defence budget from 1.45 trillion yuan to 1.55 trillion yuan, which is an increase of 7.2 per cent. Last year’s budget was increased by 7.1 per cent, marginally lower than this year’s hike.

However, this consecutive hike in the defence budget looks different when we see it in terms of dollars. In terms of the US dollar, the 2023 defence budget is actually not a hike but a drop from last year, thanks to the appreciation of the US dollar against the Chinese yuan. In 2022, it was USD 230 billion, which was reduced to about USD 225 billion in 2023.

For any analysis of the Chinese defence budget, it is advisable not to consider the Chinese government’s official numbers as true and reliable as they are more than what they are disclosing to the world. Stockholm International Peace research institution (SIPRI) and International Institute for Strategic Studies (IISS) diverge from Chinese official figures and estimated that last year, in 2022, Chinese true defence budget was nearly USD 300 billion and, according to IISS estimates for 2023, the defence budget crossed the line of USD 300 billion.

Now the question that arises here is, what this hike signifies? A country increases its defence budget to fulfil its strategic intent; to counter threats- internal or external; to modernise its military; and also, to show its economic might. Increasing its defence budget at a time when China is lowering its economic growth target signifies its increasing military concerns. Do the rival countries of China need to worry? Let’s find out the answer to this question.

Concerns for India

If we look at the current India-China relations, we find them in a deteriorating phase. Both are engaged in border disputes and repeated Chinese aggression on the border is leading this relationship to worse. So, any change in the Chinese military does matter to India. 

China is the second largest defence expenditure after the US and India is the third largest defence expenditure but the gap between their defence budgets is huge. India’s defence budget for 2023-24 is USD 72.6 billion against the Chinese defence budget of USD 225 billion. This gap of more than three times seems impossible to cover in the near future because China has more spending capacity than India. China’s GDP is more than five times bigger than India’s GDP. However, in terms of the increase from the previous year’s budget, India is stretching more than China. It is an increase of 13 per cent from the previous year against a 7.2 per cent increase in the Chinese defence budget. New Delhi is pushing its limits and allocates 13.18 per cent of its total budget to defence whereas, for China, it is 5.7 per cent. These statistics show how New Delhi is stretching its limits and has a strong intent to strengthen its military. However, this is not enough as New Delhi needs to increase its defence budget more sharply so that the gap between their defence budgets reduces if it cannot match.

Given the gap between their economic sizes, it is neither in the interest nor a wise step for India to match the Chinese defence budget. The option that India is left with is reaching that point which equips it to counter Chinese aggression on the border and provide credible deterrence against China. However, one more thing that needs to mention here is that Beijing’s strategic and military interests are much bigger and more complex than India’s. Therefore, New Delhi needs to be concerned about only those scenarios when the Indian and Chinese militaries may be facing each other. 

Concerns for the World

For the time being, there is less possibility of direct and large-scale conflict between China and the US. However, the possibility of indirect and small-scale conflict between them cannot be ruled out, if China attacks Taiwan and the US comes to the defence of Taiwan. Considering the defence budget, there is a huge gap between them and the US defence budget of more than USD 800 billion is more than three times the defence budget of China.

Chinese government mouthpiece, Global Times, reported that in 2023, many countries are increasing their defence budget, where the US is at the top of the list with USD 817 billion, Japan, with a record increase of 26.3 per cent from last year, reached USD 51 billion and India increased its defence budget by 13 per cent but China is not participating in this arms race with other countries. However, Beijing and the US are in a New Cold War and China is catching the US. The ways that China is employing to make its PLA (People’s Liberation Army) a world-class military at par with the US are the following:-

  • Developing new technologies and acquisition of advanced weaponry.
  •  Improving logistics and transportation capabilities, for example, the bullet train network in the Shino-India border area.
  • Cyber and space warfare are the key players in 21st-century warfare. Therefore, China is increasing its capacity in this domain.
  • China is increasing its foothold in the Indo-Pacific region and for that, it requires a strong naval force. To increase its naval capacity, Beijing is developing new aircraft carriers, submarines and other vessels for its PLAN.
  • To project its military power, China is building military bases in different locations.

Taiwan is the most concerned nation about consecutive increases in the Chinese defence budget and the modernisation of the PLA. The People’s Republic of China claims Taiwan (Republic of China) as a part of China and desires to reunify it with mainland China. Many times, China has threatened Taiwan’s reunification. In the Chinese rubber-stamp parliament, during the speech, outgoing premier Li Keqiang reiterated China’s long-held assertion of the reunification of Taiwan and opposed separatism and formal independence for the island. This sends a signal to the world and especially Taiwan that China is open to military options if Taiwan does not reunify peacefully.      

However, it seems, for the short term, there is nothing to be concerned about the increase in the Chinese defence budget as it is a part of the process of China becoming the world’s largest economy in the near future. But countries need to be prepared for the long term because China behaves like an aggressive country and when it opts for military adventurism, then countries like India, the US or Taiwan need to be prepared to take counter-measures.

(Ashish Keserwani has an MA in Political Science from Indra Gandhi National Open University. He is currently a Research Scholar Pursuing PhD from Amity University, Noida)

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