China vs US budget

Unread postPosted: 22 Jan 2020, 09:44
by weasel1962
There have been a number of recent calls to compare China's military budget to US's military budget on a PPP (difference in country cost) basis, taking into account personnel costs.

The attached is my take on the issue (2012-2019). The breakdown of China's budget is based on the China government's single submission to the UN Milex in 2017 for which I have extrapolated for the remaining years. The calculation of the PPP is by the world bank and I find no need to recalculate for this exercise.

It is interesting to note that on a PPP basis, the personnel costs is not significantly different for both US & China (i.e. US personnel gets paid at the PPP rate over what the Chinese does). What is stark is more that the bulk of the US's military budget is spent on operations. This is logical as US has global operations whereas China is generally localised (and hence cheaper). It should also be noted that the sum of columns p to r does not equal column o, with the difference being military construction and R&D. Again, the Chinese information does not track R&D costs separately.

More worrying for the US is that the equipment procurement appears to be similar on a PPP basis (see column l vs column r). This means that China is buying roughly the same amount (at a cost equivalent to the PPP rate) as the US (of course this does not mean the plane that the Chinese buys is technologically similar to the plane the US buys).

Re: China vs US budget

Unread postPosted: 22 Jan 2020, 09:53
by weasel1962
As a simple illustration of the above, in 2019 China would have spent ~US$75.17 billion dollars on equipment. The US would need to pay US$145.83 billion for the same equipment if bought in the US (due to the difference in costs between the 2 countries). In 2019, the US defense budget for equipment procurement was US$148.96 billion.

It looks like the procurement difference was more stark before 2012 so China's procurement has caught up in the last decade.

Re: China vs US budget

Unread postPosted: 22 Jan 2020, 20:18
by sferrin
Re procurement, I'm pretty sure Chinese workers aren't being paid as much as US workers. Same with Chinese military personnel vs US.

Re: China vs US budget

Unread postPosted: 23 Jan 2020, 02:34
by weasel1962
Agreed. Per numbers, 2019 PLA personnel budget was ~$56.33 billion, compared to US' $150.73 billion. Roughly 2.3 million PLA personnel vs US personnel of 1.3 million active duty means roughly US soldiers are paid ~4.7 times (150.73/1.3 / 56.33/2.3m).

However as a proportion of budget, China personnel cost is ~30.8% of total military expenditure vs 22% for US reflecting the higher operations costs that the US incurs.

China's FY 2017 numbers ... -China.pdf

On US numbers, I have based on budget which may be different from actual outlay. Looking at US milex (which I have not compared yet), part of the US operations budget may also comprise salaries. Per Milex 2015, US salaries would comprise 35% of budget. ... -final.pdf

The key message is mainly that US defense procurement budget is not materially more than Chinese defense procurement budget after taking into account cost differences in the 2 countries, and deducting operations/personnel costs.