China's Massive Military Buildup
Jude Wanniski
July 9, 1998


Memo: To Jack Kemp
From: Jude Wanniski
Re:  China Military Threat

Iím happy to see it noted in the press that of all Republicans, you were the only one who called the White House before President Clinton left for China to convey your support. It was practically required that the GOP leaders throw him a bouquet after he hit Beijing, as much as they may have hated giving him any credit at all. The hard noses in the party are already trying to figure ways to stoke up propaganda against China. The Wall Street Journal got the ball rolling by accusing the President of having shaved our support of Taiwan in favor of Beijing on the issue of Taiwan independence. Trent Lott has already kicked the ball forward, echoing the Journal, but of course he has to open up some daylight between the GOP and the Democrats. Itís at the level of a hair-splitting debate. Whatís important is that Clinton shaded the Taiwan issue exactly right. Our right-wing friends had given so much encouragement to the independence forces in Taipei over the past two years that there was a real danger they would push forward on that line, which in the end leads to military confrontation with China. By putting his thumb on the other scale, Clinton has gotten the opposing forces back into equilibrium -- where they have to be,  to allow the centrists on both sides to continue knitting together.

Our old friends will of course attempt to gin up the idea that China is contemplating a grab for Taiwan and that it is engaging in a military buildup toward that end. To put this into perspective, I ran across some numbers in the Economist of June 27, which the sourced from the International Institute for Strategic Studies. A bar graph indicates that in 1996 China spent almost 6% of its GDP on the military while the United States spent less than 4%. The more relevant number is that China spent 8% of GDP in 1985 on defense, which amounted to $26 per capita, while the U.S. was spending $1473 per capita. Even with the 2-percentage point cut in defense, Chinaís economy has grown so that it can now spend $29 per capita on defense. U.S. per capita defense spending is down to $1001, but that is also because defense spending has been held constant while the economy grew fairly rapidly. By the way, the same Economist chart that shows China spending $29 per capita on defense shows South Korea spending $336, France $792, and Japan $348.

As Chinaís economy continues to expand, it can be expected to increase military spending in real terms. Thatís not hard to do going from $29 per capita. If they increase the pay of the armed forces by $1 a week, they can nudge up that number. More to the point, it should be obvious that at the moment China does not have the capability of doing more than policing its own borders. If our Cold Warrior pals can find a way to promote a hostile climate with China, Beijing will have no choice but to commit increasing shares of its resources for defense -- and we will use this as a further excuse to escalate the hostilities. For the time being, I think the positive forces of engagement and reconciliation have gained sufficient ground that we can relax a bit, but only a bit. On the whole, things have gone as well as can be expected. Just remember the forces of darkness never sleep.