

'Permissible' Chinese military spending, AUKUS, and the security dilemma
October 17, 2021
The view that AUKUS is a justified response to Chinas actions ignores Chinas achievements and future ambitions. It also ignores Chinas legitimate security fears.
When Scott Morrison, Boris Johnson, and Joe Biden jointly announced the creation of the AUKUS alignment nearly a month ago, China wasnt mentioned. But the Australian high commissioner to New Delhi, Barry OFarrell, told the Indian media that the decision to acquire nuclear-powered submarines, a central element of the AUKUS deal, was the result of an unprecedented military build-up by China. Many commentators agree, arguing thatBeijing has only itself to blame for AUKUS.
Yet in a recentepisodeof theAustralia in the Worldpodcast, Allan Gyngell asks a sharp question that demands a plain response from such AUKUS advocates: what level of Chinese military spending would they consider permissible?
The fact is that the absolute value of Chinas military spending only stands out because its economy has become much bigger than any other in the region. SIPRIestimates that Chinas military spending now stands at 1.7 per cent of GDP. This is slightly down from 1.9 per cent in 2009, much less than the US (3.7 per cent), and significantly less than Korea (2.8 per cent), Vietnam (2.4 per cent), and India (2.9 per cent). In Australia, the figure is 2.1 per cent.
Of course, threat assessments in Canberra, Washington, and London are not only informed by Chinas aggregate spending. Specific capabilities being pursued by Beijing matter, such as its expanding inventory of aircraft carriers, ballistic missile submarines, and other area denial assets. Specific behaviours matter too, such as its widely reported ramping up of sabre-rattling towards Taiwan. Still, the fundamental build-up or expansion that China had engaged in is an audacity to successfully grow its economy, which until recently has been hailed largely as an opportunity.
One way of bringing Chinas military spending to a permissible level would be to contain its economy and, as US Commerce Secretary Gina Raimondo put it, to slow down Chinas rate of innovation. Yet presumably all but the most extreme commentators would accept that the Chinese people have a right to aspire to the same living standards as those in high-income, liberal democracies.
Of course, Beijing could have capped the absolute value of military spending to allay any regional fears that its expanding economic stature was not being translated into military power. But putting this into context, if the level of military spending in 2012 was maintained the year President Xi Jinping came to power data from SIPRI and Chinas national income accounts imply that it would now be worth just one percent of GDP, and soon head even further south. This is the same proportion that Japan spends with its US-imposed pacifist constitution and an explicit US security guarantee.
Is it reasonable to expect that Chinas population would see this as acceptable given the external environment it faces?After all, the 2017 USStrategic Framework for the Indo-Pacific began by listing the first national security challenge as being how to maintain US strategic primacy in the region. It finished with a desired end state as being one where the US maintains diplomatic, economic, and military pre-eminence.
Prominent Australian national security commentators, such as the ANUs Rory Medcalf, remarked that the documentbroughtauthoritative clarity to the public record.The clarity it brought was a stated US intention to keep China subordinate in its own region. If the US hasnt sought other countries permission to spend more than thenext 11 countries combined, then should anyone expect China to stay within a permissible limit set by the US and its allies, who have never shied away from pursuing a balance of power in the regionin their favour?
Some might argue that the US and its allies were compelled to respond to Chinas own muscular behaviour, such as its island building in the South China Sea from 2014.But the chronology is more jumbled.
Even leaving aside the Obama administrations pivot to Asia announced in Canberra almost 10 years ago, following the AUKUS announcement columnist Peter Hartcher explainedto readers that, for many years, a critical element of American war planning has been to defeat Chinas navy by bottling it up in the shallow waters of the South China Sea.Or in more florid prose, Its easier to shoot fish in a barrel than in a pond.
For the US, the submarines that Australia was proposing to buy would block choke-points that allow [China] passage in and out. This articulation of US plans to keep China hemmed in was backed by Medcalf. Hartcher then conceded that this was why China has put so much effort into expanding its capacity to assert control over its near seas. To borrow Tony Abbotts phrase at a recent forum in Taiwan, no self-respecting country could accept such a prospect without putting up a fight.
So, when many accept at face value that AUKUS is a justified response to Chinas massive military build-up and aggressive behaviour, they fail to acknowledge Chinas legitimate economic achievements and future hopes, let alone its legitimate security fears (such as Beijings longstanding concern about itsMalacca dilemma). That failure may well come home to roost in short order, long before Australias nuclear-power submarine fleet sees the light of day or starts shooting fish in a barrel in the South China Sea.
If feeling cornered with no other options, China could quickly ramp up its military spending. The value of its economy in 2020 was US$14.7 trillion. Going from spending 1.7 per cent of GDP to Australias middling 2.1 per cent implies an annual increase of $60 billion. This is more than double the total value of Australias annual military spending, according to SIPRI.
Worryingly but perhaps not surprisingly, the answer to the potentially escalating arms race offered by Scott Morrison and Peter Dutton is evenmore Australian military spending. If this comes to pass, the result will not be a region in which Taiwan, Australia, or anyone else is safer or more prosperous, with the possible exception of weapons makers well-represented at arecent defence sector roundtablein Washington.
This article was first published by Australian Outlook and is reproduced under a Creative Commons licence.

James Laurenceson
James Laurenceson is Director of the Australia-China Relations Institute with the University of Technology, Sydney.