That rise is due mainly to China continuing its decades-long military ramp-up, and to the United States continuing a two-year spending hike after several years of steady decline.
U.S. military spending still falls short of its 2010 peak of nearly $800 billion during the war on terror.
The IISS annual Military Balance report, published on Feb. 14, puts U.S. military spending in 2019 at $684 billion–a 6.6 percent rise on the previous year.
China’s spending in 2019 was $181.1 billion according to their calculations–also up 6.6 percent.
Behind China and the United States comes Saudi Arabia, with an annual spend of $78.4 billion, then Russia, which spent $61.6 billion, and India close behind at $60 billion.
The next four in order of military spending are the United Kingdom, France, Japan, and Germany.
The topline spending figures come with a catch, however. They are calculated using average market exchange rates–something which some analysts believe underestimate the effective military spending of non-Western nations several-fold.
IISS notes that market-exchange fluctuations can cause “significant” effects. Other think-tanks typically also use market-exchange rates for comparison.
According to the IISS results report, defense spending also rose in Europe, as NATO members shift to tackle a revanchist Russia while being nudged by a budget-conscious United States to meet their military spending obligations.
“These increases in Europe are part of an international trend,” says the report. “Global defense spending rose by 4.0% in real terms compared to 2018 data, when measured in constant 2015 dollars.
“This was the largest increase observed in ten years. In 2019, defence spending by both China and the US rose by 6.6% over 2018. In nominal terms, the US increase alone—at [$53.4 billion]—almost equalled the UK’s entire 2019 defence budget of [$54.8 billion].”
Since the end of 2017, the U.S. military has been modernizing itself, refitting its counter-insurgency force armed with Cold War equipment with a modernized force able to counter great power competition with Russia and China.
Modernizing for Great Power Competition
That modernization has been assisted by a bump in 2018, 2019 and 2020 Pentagon budgets–as reflected in the IISS report.
However, the U.S. military is now trying to pivot within a flat 2021 budget proposal already locked in by Congress and is looking to shed maintenance-heavy Cold War-era systems.
China’s military spending has increased every year for the last two decades–at times rising by estimates of 10 percent annually.
The IISS report noted that Russia and China “continue to accelerate their military modernization.”
It highlighted the growing arsenal of missiles being developed and deployed by China and Russia, which blunt U.S. air supremacy.
For Russia, such developments include the Burevestnik nuclear-powered and nuclear-armed cruise missile, and the Avangard hypersonic missile, which according to IISS was “on the brink of service entry at the end of 2019.”
Hypersonic missiles are a new breed of ultra-fast missiles able to shift course mid-flight, evading missile defenses tuned in to more predictable flight paths.
Russia and China are currently thought to be ahead of the United States in the development of hypersonic missiles.
“China’s October 2019 military parade, marking the 70th anniversary of the People’s Republic, highlighted the breadth of its military modernization process and showcased systems designed to achieve military effect faster and at greater range than before,” said the IISS report. “The DF-17 hypersonic glide vehicle was displayed at the anniversary parade.”
Difficulties with the Data
Producing accurate estimates of China’s military spending is in general very difficult due to the deliberate obscuring of the figures.
Then there is the blurred line between military and civilian spending, Rick Fisher, Senior Fellow at the International Assessment and Strategy Center previously told The Epoch Times.
“Under Civil-Military Fusion, you now have a broader requirement for the economy to serve the military. In essence, anything under the control of the Chinese Communist Party that it deems is necessary for military power construction can be diverted to that end. So it is possible to ask: is it now essentially impossible for anyone, even Chinese, to tell you a real number for Chinese military expenditures?”
Even if the spending figures are obtained, however, the use of market exchange rates to produce comparisons can skew the comparisons, other analysts have previously told The Epoch Times.
They say that using market exchange rates misses the distorting effect of lower wages in non-western countries such as Russia and China. Analysis using purchasing power parity (PPP)—a measure of local spending power—produces better results, they argue.
For example. according to their analysis, Russia’s defense spending in 2018 was not around the $60 billion mark, but close to $160 billion. And their calculations put China’s spending at around $450 billion, equivalent to nearly 75 percent of U.S. military spending.
Chairman of the Joint Chiefs of Staff General Mark Milley told a Senate committee in 2018, “We’re the best-paid military in the world by a long shot. The cost of Russian soldiers or Chinese soldiers is a tiny fraction.”
“I think you’ll find that Chinese and Russian investments, modernization, new weapons systems, etc., their [research and development]—which is all government-owned and also is much cheaper—I think you’d find a much closer comparison,” said Milley.
But no matter what the measure, there is a broader agreement across all the data that China’s military spending has increased around tenfold in the last 20 years.
U.S. military spending almost doubled during the “war on terror” to its peak of around $800 billion in 2010 before then slowly dropping.
Deputy Secretary of Defense David Norquist told reporters at a 2021 budget proposal briefing that the Trump administration had inherited a military that had been operating under “destructive spending caps.” That left the United States with its smallest military since 1940, along with key munition shortages, low readiness levels, and an outdated nuclear deterrent, he said.
The military’s pivot away from a counter-insurgency outfit is hampered by Cold War legacy systems and old maintenance-heavy equipment. Even without the push for modernization, the military is caught between the high costs of maintaining out-of-date equipment and the high costs of buying new gear.
For example, at 28 years old, the average age of Air Force fighter planes is higher than at any point in the history of the service. The average age of U.S. bombers is around 45 years.