Chinese President Xi Jinping is applauded as he waves to senior members of the government upon arrival at the Opening Ceremony of the 20th National Congress of the Communist Party of China at The Great Hall of People on October 16, 2022 in Beijing. (Kevin Frayer/Getty Images)
For the second year in a row, China is poised to increase its defense budget at a higher rate than its national economy is expected to grow. That is an obvious reason for concern if you are one of the many nations worried about China’s global footprint, but it also raises important questions about the strategic thinking in Beijing. In a new analysis below, Dean Cheng, an expert on the Chinese military, picks apart just what is happening in Beijing and what it might mean for China’s many neighbors.
Why has China’s supreme leader Xi Jinping appeared to be increasingly bellicose? Some believe this reflects an increasing sense of vulnerability, whether due to the COVID-19 protests or a slowing Chinese economy. But what if it’s deeper? What if China’s fundamental strategic outlook has shifted? This has happened before, with significant impact on Chinese strategy and policy.
When the People’s Republic of China (PRC) was led by the “Great Helmsman” Mao Zedong in the 1960s and 1970s, the PRC was on a constant war footing. Mao believed in “early war, major war, nuclear war,” that the struggle between socialism and capitalism would lead to a global war involving nuclear weapons. Not surprisingly, Mao’s China was also cripplingly poor.
When Deng Xiaoping took over leadership of the PRC in the late 1970s, he fundamentally altered the Chinese perception of the world. Deng declared that the tenor of the times was not that of imminent war, but of “Peace and Development,” using that to justify the vast economic reforms that ensued. If the nation did not face the likelihood of imminent, global thermonuclear war, then the PRC could afford to redirect its economic efforts from manufacturing tanks and combat aircraft to consumer goods and light industry. If the PRC was not about to go to war with the West, then it could afford to trade with the West, even become an integral supplier as well as customer.
In 2002, Jiang Zemin, Deng’s designated successor, observed that China was in a “period of strategic opportunity (zhanlue jiyu qi; 战略机遇期).” The PRC was still not confronting fundamental threats to its national survival and was benefiting mightily from joining the World Trade Organization (WTO). At the same time, the 9/11 attacks on the United States meant that Washington’s focus was on countering global terrorism, rather than great power competition. Consequently, the PRC could improve all the facets of comprehensive national power (which includes not only military and economic power but diplomatic standing, level of science and technology, and cultural security) at relatively low risk.
This view that China was in a “period of strategic opportunity” was sustained during the reign of Hu Jintao, the designated successor to Jiang Zemin. This is not to say that the Chinese did not modernize the People’s Liberation Army (PLA). Indeed, throughout Hu’s leadership, the PLA steadily gained resources, fielding ever more modern naval combatants, fighter jets, and main battle tanks. Moreover, beginning in Hu’s second term (2008-2012), the PRC began to become increasingly assertive. Incidents involving the USNS Impeccable and the USNS Victorious, as well as increasingly strident claims to the South China Sea began to emerge. In 2010, after an incident involving a Chinese fishing vessel and a Japanese Coast Guard cutter, China suspended the sale of rare earth minerals to Japan, demonstrating its strong position as a major supplier.
But, having observed the USSR’s collapse under the weight of excessive military spending, and given the assessment of reduced risk, the PLA did not get priority for economic resources as it had under Mao. And Hu continued to adhere to Deng’s admonishment on foreign policy: “Observe calmly, secure our position, cope with affairs calmly, hide our capacities and bide our time, be good at maintaining a low profile, and never claim leadership.”
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Then came the accession of Xi Jinping to the Chinese Communist Party (CCP) general secretaryship and national presidency in 2012. The Chinese approach fundamentally shifted. Under Xi, the PRC increasingly prepared to assume a higher profile, as befitted the world’s second largest economy. Just as important, Xi cast off the strictures about avoiding attention. China began to build artificial islands in the South China Sea to support its claims under the “Nine-Dash Line,” ran down Vietnamese fishing boats and laid claim to the disputed Scarborough Shoal.
In his second term (2017-2022), having elevated Yang Jiechi of the PRC foreign policy establishment to the CCP Politburo, China’s diplomats became “wolf warriors,” openly rebutting criticism by other countries and lashing out at any country deemed “unfriendly” to China. At one notable Davos speech, Xi repeatedly cast himself in direct opposition to then US President Donald Trump, arguing for sustaining a globalized economy in the face of Trump’s isolationist approach.
Xi’s shift might be attributed to a range of factors. He owed little to Deng for his rise. Deng had designated both Jiang Zemin and Hu Jintao as his successors so neither could fundamentally diverge from Deng’s positions without undermining their own legitimacy. Xi’s rise, while occurring during Deng, Jiang, and Hu’s reigns, was much more through his own efforts, allowing him to alter, or even reject, Deng’s precepts.
As important, by the time Xi rose to the top leadership position, the PRC was the world’s second largest economy, with many predicting that it would eclipse the United States in sheer economic capacity by the 2020s. This is in sharp contrast to China’s position when Deng enunciated his admonition to bide one’s time. It should not be surprising if various elements of the Chinese power structure were chafing at maintaining a low profile, when the PRC had made such great strides.
Xi’s speeches and policies also suggest that he has a fundamentally different view of the state of international relations than did Deng and his successors. Upon taking power, Xi apparently undertook a “southern tour.” The phrase refers to Deng’s tour of the southern provinces in 1992 to build support for sustaining economic reform in the face of a conservative backlash within the CCP. In Xi’s case, however, far from embracing renewed reform, he signaled a commitment to renewing CCP ideology. His 2012 “southern tour” included speeches where he decried the collapse of the USSR, and criticized Mikhail Gorbachev for failing to do what was necessary to keep the Communist Party of the Soviet Union in power. In the intervening decade, Xi has placed far more public emphasis on ideological training and justification.
This combination of Chinese trends has led to growing blowback, both from Western nations and in China’s backyard. Xi’s policies, including “Made in China 2025,” essentially propounding mercantilism with Chinese characteristics, military-civil fusion, and pursuit of the military aspect of his “China dream” have all led, in turn, to economic and military steps against Beijing by most of its neighbors.
Under President Barack Obama, the United States began to undertake an “Asian pivot,” shifting more national security resources to the Asia-Pacific region, all of it clearly aimed at Beijing. It was also during the Obama administration that substantially more resources were devoted to space security, countering advances in Chinese (and Russian) counter-space capabilities. Similarly, even before Trump imposed a variety of tariffs on Chinese goods and services, there were efforts to limit Chinese access to cutting edge technologies in such areas as microchips and aerospace. These efforts were redoubled during the Trump administration, including open threats to Huawei and ZTE, China’s flagship companies in the information and communications technology realm.
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From Beijing’s perspective, such efforts are a clear challenge to Chinese “core interests.” In particular, efforts at economic and technological isolation of the PRC strike at China’s ability to sustain economic development.
In short, the conditions underpinning the belief that the PRC was enjoying a “period of strategic opportunity” have eroded. Beijing may well believe that the period of strategic cooperation with the West, when there was little likelihood of war and resources could be focused on broad national development, is coming to an end.
PRC Defense Budget Grows Faster Than The Economy
This shift in view may explain the recently announced increase in the Chinese defense budget, even as the country’s economy slows down. At the recent National People’s Congress, China’s leadership announced that for 2023, the PLA would enjoy a 7.2% increase from their 2022 expenditures, tied to a GDP growth target of 5.5% for the year. This is the second time under Xi that the defense budget has increased at a faster rate than the general economy. The first was in 2022, when Beijing announced a GDP growth rate of 5%, while approving a defense budget increase of 7.1%.
| Year | PLA Percent Increase |
| 2023 | 7.2 |
| 2022 | 7.1 |
| 2021 | 6.8 |
| 2020 | 6.6 |
| 2019 | 7.5 |
From CSIS, Reuters news reports
A drop in nation spending in 2020 is widely assessed as reflecting the nation’s reduced economic activity in the face of COVID and the associated lockdowns. Yet, China maintained a policy of COVID lockdowns for the next two years, and steadily increased its defense budget.
A defense budget that outpaces national economic growth suggests a potentially worrisome trend in PLA and broader CCP thinking. The “period of strategic opportunity” meant military spending could be safely constrained, relative to broader economic development. Beginning with Deng;s “Four Modernizations,” military spending was tempered by the need to improve China’s overall economic and technological state. Under Deng, Jiang Zemin, and Hu Jintao, military demands were secondary to these latter demands.
As the West, from Beijing’s perspective, becomes ever more hostile, and increasingly challenges all of China’s core interests, the “period of strategic opportunity” would appear to be coming to a close. Far from a generally benign atmosphere, Beijing may well see the future as increasingly challenging. This is exacerbated by broader trends, such as China’s demographic situation (with fewer working age people joining the work force, China’s competitive advantage in labor costs is evaporating), and offshoring of various companies as supply chains are reexamined.
Moreover, the PLA’s needs are becoming more expensive. As the PLA has continued to focus on securing information dominance in preparation for future wars, it has emphasized the development of information warfare forces. There are now more electronic warfare and intelligence gathering platforms in the PLA than ever before. China’s expanding space capabilities make it a true peer of the United States in outer space, able to seriously challenge American dominance in event of a conflict. But such systems are typically extremely expensive; the PLA long ago shifted its emphasis from focusing on quantity to achieving technological parity with advanced western militaries.
In such an environment, PLA spending may continue to be accorded higher priority than in the past, especially if Beijing feels the need to coerce its neighbors into not cooperating with American efforts at containment. What should be sobering is that, if China can develop two stealth fighter programs (and field so many that there are now more J-20s than there are F-22s), undertake its own carrier development program, and field a peer-level space program while limiting its defense expenditures, what could a more militarized China field in three, five or 10 years?
Dean Cheng, a member of the Breaking Defense Board of Contributors, is a senior advisor on China at the United States Institute of Peace.
