"China’s Defense Spending: The $700 Billion Distraction" - by CWP alum M. Taylor Fravel
American political and military leaders are amplifying flawed estimates that China’s annual defense spending is much higher than it actually is. In these mistaken calculations, China’s defense spending has reached $700 billion, approaching the level of the U.S. defense budget. These exaggerated estimates have gained traction in Congress, the media, and defense circles.
However, as we show in our recent article in the Texas National Security Review (and as we also discussed on Horns of a Dilemma) these exaggerated estimates count spending categories for China without counting similar spending for the United States and apply purchasing power parity methods emphasizing low labor costs as a key military advantage. PPP exchange rate estimates address a problem familiar to many international travelers: a dollar spent in a poorer country will buy more of a domestic product like clothing, food, or housing than a dollar spent in a richer country. Higher overall price levels in richer countries are due to higher levels of technology investment, productivity, and wages. Purchasing power parity adjusts for different price levels to allow cost comparison for similar products.
China’s Defense Spending: The $700 Billion Distraction - M. Taylor Fravel, George Gilboy, and Eric Heginbotham - September 2, 2024
M. Taylor Fravel is the Arthur and Ruth Sloan Professor of Political Science and Director of the Security Studies Program at the Massachusetts Institute of Technology. Taylor studies international relations, with a focus on international security, China, and East Asia. His books include Strong Borders, Secure Nation: Cooperation and Conflict in China’s Territorial Disputes, (Princeton University Press, 2008) and Active Defense: China's Military Strategy Since 1949 (Princeton University Press, 2019). His other publications have appeared in International Security, Foreign Affairs, Security Studies, International Studies Review, The China Quarterly, The Washington Quarterly, Journal of Strategic Studies, Armed Forces & Society, Current History, Asian Survey, Asian Security, China Leadership Monitor, and Contemporary Southeast Asia.
Taylor is a graduate of Middlebury College and Stanford University, where he received his PhD. He also has graduate degrees from the London School of Economics and Oxford University, where he was a Rhodes Scholar. In 2016, he was named an Andrew Carnegie Fellow by the Carnegie Corporation. Taylor is a member of the board of directors of the National Committee on U.S.-China Relations and serves as the Principal Investigator for the Maritime Awareness Project.
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