Officials from the Pentagon and from India's RAW (Research and Analysis Wing) intelligence service agree the Chinese defense budget is now the second largest in the world after the U.S. defense budget of $450 billion.

The paradox is that China's military spending is rising sharply just as the overall numbers of military personnel are falling, as China shifts from a strategic doctrine that relied on mass armies and human wave attacks to a far more sophisticated and capital intensive military with modern and high-technology equipment.

The American and Indian commitment to a new strategic partnership, symbolized by the Bush visit to India, owes a great deal to the common concern over the rise of China and the strategic implications of China's headlong economic growth. The Goldman Sachs financial group last week issued a report suggesting that the Chinese economy will be larger than the American by 2050, and Indian security officials are concerned by the prospect of Chinese dominance over Asia.

The news of the new rise in China's military budget was released in Beijing by parliamentary spokesman Jiang Enzhu, who said the country will increase its military spending by 14.7 percent this year to 283.8 billion yuan or $35.3 billion. He noted that the United States spent a greater proportion of its wealth on defense and that China had "no intention of vigorously developing armaments," claiming that much of the new spending would be devoted to higher petrol and fuel costs and to salaries and concluded that China was a "peace-loving nation."

But much of the new defense expenditure of recent years has gone to buy advanced new weaponry, including S0-27 and su-30 warplanes, Kilo-class submarines and Sovremenny-class warships, all from Russia. China also sought to buy the Phalcon AWACS airborne early warning system from Israel, but was barred when the Bush administration pressured Israel to stop the deal. China has also sought, so far without success, to press the European Union to lift its own arms embargo against China, first imposed after the Tiananmen Square massacre 17 years ago.

American defense analysts claim that the official Chinese budget massively understates the real level of spending, which they believe to be as much as $100 billion a year, three times higher than Beijing admits. They say that the military research and development budget, the military construction and pension and medical bills and some of the procurement costs are all hidden away elsewhere in the civilian budget. They also claim that profits from private companies owned or managed by the Peoples Liberation Army also swell the real military budget.

The new Chinese budget comes after the publication last month of the Pentagon's Quadrennial Defense Review, which described the new priorities of the U.S. military as preparing to conduct a "long war" against terrorists worldwide, to improve homeland security capabilities, and to prepare for possible confrontation with China as an emerging superpower rival.

"China is likely to continue making large investments in high-end, asymmetric military capabilities," the Pentagon report said. "These capabilities, the vast distances of the Asian theater, China's continental depth, and the challenge of en route and in-theater U.S. basing place a premium on forces capable of sustained operations at great distances into denied areas."

American military concerns are matched in India, which has watched nervously the construction with Chinese funds and engineers of new ports and naval bases in Pakistan and Myanmar, as China builds a string of bases to protect the sea routs of the oil tankers from the Persian Gulf on which China's energy imports depend. But for India, this new Chinese presence on both its flanks in the Indian Ocean, along with China's central role in arming Pakistan, means that Beijing is a major security concern. India's last Defense Minister, George Fernandes, said publicly that India's new nuclear arsenal was aimed at deterring China.

India security officials told United Press International in interviews in Delhi last week that they have taken careful note of the American report, "The National Security Implications of the Economic Relationship Between the United States and China," published by the Congressional China Security Review Commission (CSRC), which argues that:

"China's leaders consistently characterize the United States as a 'hegemon', connoting a powerful protagonist and overbearing bully that is China's major competitor, but they also believe that the United States is a declining power with important military vulnerabilities that can be exploited."

The report said that "China sees the United States as a hegemonic power that is a major obstacle and competitor for influence in the world; believes the United States is a superpower in decline, losing economic political, and military influence around the world; and China aspires to be a major international power and the dominant power in Asia."

Indian officials broadly agree, which is the background to the new strategic partnership between India as the world's largest democracy, and the United States as its most powerful democracy, each of them nervous at the rise of a China where political power is still a monopoly of the Communist Party.

Indian and U.S. officials are paying particular concern to China's suspected capabilities in unconventional warfare, particularly in cyber-warfare and information warfare, attacking the computer networks on which advanced military forces increasingly depend. The U.S. concerns were first made public by U.S. Air Force General Ralph Eberhart, Commander of U.S. Space Command, who noted in 2001 that, "We see this (cyber-warfare) in terms of capabilities we know they have, we see this written in their doctrine, we see this espoused by their leadership."

Joint alarm about China has led to an unprecedented degree of cooperation between Indian and U.S. forces, with intensive joint exercises between their militaries, which include giving U.S. pilots dog-fighting experience against China's Su-30 warplanes, also operated by India. U.S. and Indian intelligence officials have operated a number of cooperation and data-sharing agreements, most notably in Afghanistan and Central Asia, where both countries share a common concern for Islamic and jihadist radicalism, as well as for China's growth and ambitions.

Related Links
-