China's defense spending growing, but U.S. still on top

Date : Sep 04, 2008

LONDON -- China is among the world's fastest-growing military spenders and will become an even bigger player in coming years, analyst Jane's Information Group said Wednesday. But no country is poised to challenge the United States as the world's biggest defense market.

The U.S. defense budget of almost US$700 billion a year is almost nine times that of the next-biggest spender, Britain.

"In Western Europe we're all pretty flat in terms of our spending," said Matt Smith, a defense economics analyst at Jane's. "It would take a long, long time to even come close to what the U.S. is spending."

A report for compiled last month for Jane's Industry Quarterly said China currently ranks fourth in the world in defense spending, with a budget of US$58 billion in 2008 -- a figure that will rise to US$360 billion by 2020, if current growth continues.

The report identifies Russia and India as other fast-growing defense spenders. Their combined spending doubled to almost US$100 billion between 2003 and 2007, and is predicted to rise by a further 62 percent to US$161 billion by 2010.

Russia is eighth in the world spending table with a budget of almost US$36 billion a year. India is 11th at just over US$27 billion.

Of the three countries, China's growth is "the longest and most sustained," Smith said.

The report says China is likely to become a major exporter of military equipment, as a combination of rapidly improving technology, low costs and geopolitical factors make it more attractive to buyers, especially in Africa.

"China has a well-documented interest in Africa's resource wealth and has been vigorous in its cultivation of economic ties," the report said. "Recent shipments of arms to Sudan and Zimbabwe have also demonstrated China's clear willingness to conduct business with regimes other suppliers will not."

Smith said Russia's military budget "took an enormous hit in the 1990s," but has been built back up thanks to revenues from the country's booming oil and gas industries.

The report predicts a fall in Russia military exports by 2010 as its traditional markets, China and India, try to become more self-sufficient. But it says Russia may find growth in countries -- largely in Africa, Southeast Asia and Latin America -- that bought its tanks and armored vehicles in Soviet times.

The United States has the world's biggest defense budget by far, at US$696.30 billion. The rest of the top five is Britain, US$79.27 billion; France, US$65.74 billion; China, US$58.07 billion; and Japan, US$48.1 billion.

By: Jill Lawless, AP

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