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Know Thine Enemy: China And Obama's Defense Cuts

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Image by AFP/Getty Images via @daylife

The Cold War taught us that inefficient planned economies can execute priority projects well. Think Sputnik, the Moscow Olympics, and Russian nuclear physics. Although its output never reached half that of the U.S., the Soviet Union held us to rough military parity until the end of the Cold War.

China will choose a new leadership in 2012, culminating a power struggle between reformists and those who favor a return to neo-Maoism. If the latter group prevails, the level of hostilities with China will intensify beyond their current uneasy status quo.

China enjoys huge advantages over the former USSR that render it a more formidable military competitor than the USSR was:

The Chinese economy has been growing rapidly, while the Soviet economy suffered a lengthy “period of stagnation,” as Gorbachev called it. China is integrated into the world economy and, as such, has access to advanced technology. The Soviet Union remained isolated, was subject to restrictions on technology purchases, and had to rely on espionage to obtain military technology. During the Cold War, we thought twice about selling electric ranges or IBM computers to Russia. In 2012, we share GPS technology and assemble Dell Computers in China.

The list of countries potentially hostile to the United States – Iran, North Korea, Venezuela, Syria, and Russia -- is frighteningly long and could increase on moment’s notice to include Pakistan or any number of Arab Islamist states. We already compete with China for controlling military presence in the Pacific. China could decide to take Taiwan by force, or China’s fragile peace with India could break.

Future military conflict with China is likely to be of a conventional sort, rather than the hit-and-run terrorist engagement the Pentagon is preparing for. To counter China, we need substantial conventional forces and a large defense budget.

Just how large is the Chinese military, and how will we stack up once the Obama Pentagon cuts kick in? The facts suggest that China’s military power will equal our own in a relatively brief period of time thanks to Obama’s downgrading of U.S. military power.

The facts are simple arithmetic, although they are somewhat complicated by the fact that China’s official defense budget reports only a portion of its military outlays. We really do not know what China spends on defense, despite government efforts to penetrate its secrets.

Officially, China’s defense budget currently stands at 1.4 percent of GDP. Even dovish independent analysts place it at 2.2 percent of GDP. Given that China’s armed forces are already two and a half times ours (soon to be more than three times), its defense budget does not include R&D, and as its tanks and submarines are roughly equal to ours, I would guestimate China’s current defense spending at almost three percent of GDP.

In 2011, U.S. defense spending stood at 3.6 percent of GDP. According to preliminary analysis of the new Pentagon cuts, it will fall to 2.8 percent already by 2013, and will shrink even more after that. These figures assume that we dodge the automatic cuts in defense spending resulting from the failure of recent budget negotiations. If not, our defense figure would fall to two percent. Therefore:

By 2015, the United States and China will be spending roughly equal percentages of their annual output on defense. Given the uncertainties surrounding China’s defense budget, China will likely be spending a higher percentage.

If China and the U.S. spend the same percentages of GDP on defense, the relative magnitudes of defense outlays depend on relative GDPs. Currently, China produces an annual output about three quarters of the U.S. If China continues to grow the next few years between eight and nine percent (and the U.S. at three percent), it will produce some 90 percent of US GDP by 2015. Therefore:

By 2015, the U.S. and China will be spending, for all practical purposes, equivalent amounts on the military. China remains a poor country, despite its rapid growth, but its huge size makes it a major world player.

How much countries spend on defense is not the same as how much military power they have. Countries will have different mixes of military spending depending on resource endowments and relative costs. Military spending in dollars is only a rough approximation, but it will not be that far from the truth.

Within less than five years, the United States will no longer be the world’s dominant military power. China will be our equal. In U.S. politics, some may welcome the loss of military dominance. Others will fear that we will inhabit a more dangerous new world in which we are less able to protect ourselves.

Paul Roderick Gregory's latest book,  "Politics, Murder, and Love in Stalin’s Kremlin: The Story of Nikolai Bukharin and Anna Larina, " can be found at amazon.com.