To follow up on Austin Tamayo’s latest post about China’s stance on Russia’s annexation of Crimea following the toppling of Ukraine’s Kremlin-friendly President Yanukovych: it is useful to examine China’s response, both explicit and implicit. Last week China announced that its defense budget for 2014 would be USD 132 billion, an increase of 12.2% over last year—a faster growth rate than that of China’s GDP, and the Economist reports that the actual figure may be 40% higher yet. In fact, for the past 20 years, China has seen double-digit percentage increases in this figure annually. Though still just a third of the U.S.’ now stable and soon to be declining military budget, this difference is shrinking.
China claims part of this increase is inflationary, but even adjusted for inflation the rate is 8.4%. This might be due to the fact that the military sector is experiencing higher inflation than the economy as a whole due to rising personnel costs. About a third of China’s defense budget goes to personnel, compared to 45% in India and 50% in the US. As human capital in the country increases, as the population ages, and as wage growth outpaces GDP growth, the PLA must increase salaries to retain a technically-proficient cadre. In terms of capital, the PLA has focused on the U.S.’ strategic weaknesses—focusing on hardware, long-range weapons, swift-boats and submarines, and military satellites and nearby bases, while investment software infrastructure has been slower to come. This suggests aspirations for hemispherical domination and superpower status.
Yet whenever spokesmen for the central government are asked about the Ukraine crisis, they are swift to repeat China’s official doctrine of non-intervention in other nations’ internal affairs. But is annexation of Crimea a matter of Russia’s internal affairs, or is it a violation of Ukraine’s autonomy? President Xi has remained elusive, stating only that he hopes that “all parties [will resolve] their differences through communication and coordination.” Given China’s growing defense budget and its myriad controversial territorial claims and disputes, one might assume the government would be sympathetic to Mr. Putin’s ambitions, and some scholars believe Mr. Xi’s official neutrality amounts to tacit support.
Important to consider is that some of China’s autonomous regions—whose restless populations often become violent in their response to ethnic Chinese oppression, as I described in a previous post—would likely vote for independence if given the chance. One would think this would motivate China to oppose the referendum in Crimea, but competing with this political consideration is the fact that China itself would delight in annexing many disputed territories, some of which (like parts of the Russian Far East) are dominated by ethnic Han the same way ethnic Russians dominate Crimea, and would likely vote to join China. Thus China’s competing interests in both suppressing populist uprisings and expanding its territorial claims are at the heart of Mr. Xi’s oblique and measured response.
Further reading from the Economist: Non-Interference on the Line, At the Double
As Asher and Austin note in their paired posts, China faces tensions given domestic populations who at one or another time had autonomy (if not independence – hard to translate pre-“State” concepts into our own image of nation-states). At the same time, what of Hong Kong and Macao and Taiwan? Would they chose “autonomy” if given a vote? – China has been quite careful to date not to behave in a heavy-handed manner. Now a long shared border makes relations with Russia important. An alliance? – I think not. Rather, in the face of a fait accompli why antagonize a neighbor?
My sense however is that this ought not be interpreted in economic terms. When there are profits to be had, outright enemies often find ways to cooperate. In addition, there’s no quid-pro-quo, so the argument is over far-in-the-future hypotheticals. I doubt that foreign policy is conducted on such terms.
As to military budgets, the PLA has a legacy of “troops” farming large swaths of land, and running all sorts of otherwise-ordinary [military] State Owned Enterprises, many loss-making. Furthermore, the starting point was one of very little infrastructure. So interpreting the military budget is quite challenging, as even if the public budget numbers are accurate, how much goes towards building and maintaining a “modern” military? How much is used to subsidize farmers and factory workers and to provide pensions? If wages are to keep up with those in urban areas, then costs rise much more than does GDP. But it takes a long, long while and staggering amounts of money to develop a blue-water navy, including the operational experience and logistic support for it to be more than a show-piece.