The different degrees of transparency exhibited by Beijing complicate external attempts to calculate China's defense spending. Eleven defense white papers have been published since 1995; nonetheless, their specificity varies, and they have offered some insight into the nature of Chinese military spending. Comparative budget breakdowns between China and nations like Japan and Russia were presented in white papers released between 1998 and 2008. After 2008, these comparisons were taken out of white papers; however, they were added again in the most recent version, which was published in July 2019.
With the exception of those published in 2013 and 2015, the majority of defense white papers similarly list three areas of spending: equipment, personnel, and training and maintenance.3. Beijing claims that China provides the UN with yearly reports on categorized military spending; however, the UN only makes these data available in brief form for the fiscal years 2006, 2007, 2008, 2017, and 2020.4 The mid-2000s reports indicate that expenditure was distributed about equally among these three groups. A discernible departure from this even ratio can be seen in the 2019 white paper, which provides spending breakdowns from 2010 to 2017. In 2017, equipment accounted for slightly more than 41% of all spending. The most recent UN statistics, however, indicate a little reversal of tendency, with equipment accounting for 37% in 2020.
There are differences between official data and outside assessments in China because of the country's opaqueness. Many military-related expenses are not included in official figures, such as some military R&D, parts of China's space program, defense mobilization funds, approved sales of land or surplus food produced by some units, college student recruitment bonuses, and operating costs for provincial military bases.
Public security budget, which includes funding for the People's Armed Police (PAP), is likewise not included in official military spending. China's armed forces include the PAP, a paramilitary police unit tasked with maintaining law and order, safeguarding maritime rights, and maintaining internal security. The PAP is directly under the jurisdiction of the Central Military Commission. Official PAP expenditures at the central level was reported to be RMB 132 billion ($20.5 billion) in 2021; however, it is generally accepted that this amount greatly underestimates total PAP spending.
China is hardly the only country that leaves out portions of its official defense budget that are linked to defense. The Central Armed Police Forces of India are paramilitary groups that are under the jurisdiction of the Ministry of Home Affairs rather than the Ministry of Defense. India is likewise reticent about spending on nuclear and space weapons. The Department of Energy receives funding for US nuclear weapons; this information is not included in the defense budget. Nonetheless, the US government keeps its budgetary transparency high, making it easy for analysts to explain disparities.
China's military spending estimates are made more difficult by the disclosure of expenses that are generally left out of many other nations' defense budgets. For example, the defense budget provides funding for disaster relief in China, with reimbursement from non-defense departments. Similarly, China's defense budget pays for retired senior officer perks like offices, personal aides, and preferred access to medical facilities. These tasks and related expenses are usually performed by nonmilitary groups in many other nations.
The lack of pricing information exacerbates the inconsistencies in the estimates. Because Beijing withholds precise pricing information for military supplies and services, purchasing power parity (PPP) estimates are challenging to perform. Uncertainty on what products to include in China's defense budget and what products to compare China's spending to that of other nations are some of the main obstacles. PPP estimates from independent organizations like the IISS are qualified by the fact that no particular PPP rate applies to the Chinese military sector and that there is no standard method by which components of military spending may be computed using PPP rates.
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