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China has consistently stressed rationally scaled expenditure
on defence. The costs of defence are appropriately allocated based
on the nation's financial capacities, while retaining the premise
of overall balance. Key areas are guaranteed attention, funds are
rationally used and strict economy practised so as to ensure maximum
benefit and be sure that the minimum requirements for national defence
work are met within the limited budget. Since the initiation of
the reform and opening policy, China has placed work in defence
in a position subordinate to and in service of overall national
economic construction. Relatively major reapportionments and reductions
have been made so as to strictly control defence spending.
China has consistently adopted a serious-minded attitude towards
the management of spending on defence. A complete administrative
and regulatory system tightly geared to the principles of strict
control, strict management and strict supervision has been established
and fine tuned. China's defence budget and final accounts are examined
and approved by the National People's Congress and must be strictly
implemented once approved. The state and military auditing departments
examine and supervise defence appropriations and the results thereby
produced so as to ensure that defence expenditure is strictly implemented
and rationally used.
In 1994, China's expenditure on national defence totalled 55.071
billion RMB yuan; 34.09 percent (18.774 billion yuan) was spent
on living expenses, principally on salaries, food and uniforms;
34.22 percent (18.845 billion yuan) was spent on maintenance of
activities, principally military training, construction and maintenance
of facilities, water, electricity and heating; 31.69 percent (17.452
billion yuan) was spent on equipment, including research, test,
purchase, maintenance, transportation and storage. Thus, maintenance-type
activities absorb the largest portion of the defence budget. Moreover,
of this expenditure, in addition to that spent to ensure the personnel's
living and normal activities a considerable sum, nearly 3.7 billion
yuan, is spent to fund activities associated with social welfare,
such as pensions for retired officers and schools and kindergartens
for children of military personnel.
Plain living and hard working is the people's army's fine tradition.
The PLA economizes by frequently inventorying warehouses to make
the best use of stored goods and repairing rather than replacing
old facilities and equipment. In addition, in so far as is within
its capacity it joins in agricultural, sideline and industrial production
and engages in business. These activities are primarily undertaken
to provide employment for the families of military personnel, to
improve life culturally and materially in grass-roots units and
to support the nation's overall economic construction.
China's expenditure on national defence has consistently been
kept at a low level necessary to ensure that the requirements for
national security are met. Between 1979 and 1994 defence spending
increased 6.22 percent annually in absolute terms. Over that same
period, the general retail price index of commodities increased
7.7 percent annually. During these sixteen years an expenditure
of 581.294 billion yuan would have been needed to maintain the 1979
level of defence spending. However, only 71.65 percent of this figure,
416.499 billion yuan, was appropriated. Expenditure on personnel's
living expenses was increased by a large margin to keep up with
the spiralling costs of living. In recent years, increases in annual
defence spending have for the most part simply matched price increases
or gone to ensure the standard of living of personnel.
China has a fairly low level of defence spending compared with
that announced by other countries. It spent only US$ 6.39 billion
on defence in 1994 (calculated at the average annual exchange rate
of the RMB yuan to the US dollar), 2.3 percent that spent by the
United States, 18.3 percent that by Britain, 18.6 percent that by
France and 13.9 percent that by Japan. Per capita defence spending
by that year was only US$ 5.36.
China's spending on defence is low in relative terms as well as
absolute terms. In 1979, defence expenditure in China accounted
for 5.6 percent of the gross domestic product (GDP); in 1994, 1.3
percent. This may be compared with 4.2 percent in the United States,
3.6 percent in Britain and 3.18 percent in France. Again, in 1979,
defence accounted for 18.5 percent of total expenditure by the Chinese
government; in 1994, 9.5 percent. In the United States this figure
stood at 18.9 percent, in Britain 9.64 percent and in France 13.6
percent.
As these facts make clear, China has a pattern of low expenditure
on defence. As long as there is no serious threat to the nation's
sovereignty or security, China will not increase its defence spending
substantially or by a large margin. It will never threaten or invade
any other country.
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