VIII. Defense Expenditure
China adheres to the principle of coordinated development of national defense and economy. In line with the demands of national defense and economic development, China decides on the size of defense expenditure in an appropriate way, and manages and uses its defense funds in accordance with the law.
With the development of national economy and society, the increase of China's defense expenditure has been kept at a reasonable and appropriate level. China's GDP was RMB31,404.5 billion in 2008 and RMB34,090.3 billion in 2009. State financial expenditure was RMB6,259.266 billion in 2008 and RMB7,629.993 billion in 2009, up 25.7 percent and 21.9 percent respectively over the previous year. China's defense expenditure was RMB417.876 billion in 2008 and RMB495.11 billion in 2009, up 17.5 percent and 18.5 percent respectively over the previous year. In recent years, the share of China's annual defense expenditure in its GDP has remained relatively steady, while that in overall state financial expenditure has been moderately decreased.
China's defense expenditure mainly comprises expenses for personnel, training and maintenance, and equipment, with each accounting for roughly one third of the total. Personnel expenses mainly cover salaries, allowances, housing, insurance, food, bedding and clothing for officers, non-ranking officers, enlisted men and contracted civilians. Training and maintenance expenses mainly cover troop training, institutional education, construction and maintenance of installations and facilities, and other expenses on routine consumables. Equipment expenses mainly cover R&D, experimentation, procurement, maintenance, transportation and storage of weaponry and equipment. Defense expenditure covers costs to support the active forces, reserve forces, and militia. It also covers part of the costs to support retired servicemen, servicemen's spouses, and education of servicemen's children, as well as national and local economic development and other social expenses.
In the past two years, the increase in China's defense expenditure has primarily been used for the following purposes: (1) Improving support conditions for the troops: Along with the economic and social development and the improvement of people's living standards, the PLA has adjusted servicemen's salaries and allowances, increased funding for education and training, water and electricity supplies and heating, upgraded logistics support for grass-roots units in a comprehensive and coordinated way, and improved the on-duty, training and living conditions of border and coastal defense forces and units in remote areas and harsh environments. (2) Accomplishing diversified military tasks: China has increased investment in improving MOOTW capabilities, in supporting earthquake rescue and disaster relief operations, in escort operations in the Gulf of Aden and waters off Somalia, in flood control and emergency rescue operations, and in international rescue operations. (3) Pushing forward the Revolution in Military Affairs (RMA) with Chinese characteristics. In view of the upward trend in purchasing prices and maintenance costs, China has moderately increased the funds for high-tech weaponry and equipment and their supporting facilities.
In 2010, confronted by the residual impact of the global financial crisis and other uncertainties, the tension between revenue and expenditure in China's finances persists. Giving priority to socially beneficial spending in agriculture, rural areas and farmers, as well as in education, science and technology, health, medical care and social security, China has increased its defense expenditure moderately as needed. China's defense budget for 2010 is RMB532.115 billion, up 7.5 percent over 2009. The growth rate of defense expenditure has decreased.
IX. Military Confidence-Building
Military confidence-building is an effective way to maintain national security and development, and safeguard regional peace and stability. With political mutual trust as the groundwork and common security as the goal, China is promoting the establishment of equal, mutually beneficial and effective mechanisms for military confidence-building, which should be based on the principles of holding consultations on an equal footing, mutual respect for core interests and recognition of major security concerns, not targeting at any third country, and not threatening or harming other countries' security and stability.
Strategic Consultations and Dialogues
In recent years, China has held extensive strategic consultations and dialogues with relevant countries in the field of security and defense to enhance mutual understanding and trust, and to strengthen communication and coordination. To date, China has established mechanisms for defense and security consultation and dialogue with 22 countries.
The strategic and cooperative partnership between Russia and China continues to be comprehensively and vigorously reinforced. The two militaries established a strategic consultation mechanism in 1997. The 13th round of strategic consultations between the two general staff headquarters in 2010 resulted in consensus on the international strategic situation, issues in Northeast Asia, Central Asia and South Asia, and cooperation between the two militaries.
China and the United States maintain consultations on such issues as non-proliferation, counter-terrorism, and bilateral military and security cooperation. The two countries established a mechanism of defense consultation between the two defense ministries in 1997, and held the tenth and 11th Defense Consultative Talks (DCT) on issues of common concern in June 2009 and December 2010, and the fifth and the sixth Defense Policy Coordination Talks (DPCT) in February and December 2009.
China attaches great importance to defense and security consultations with neighboring countries. It has established mechanisms for defense and security consultation and policy dialogue with neighboring countries, including Mongolia, Japan, Vietnam, the Philippines, Indonesia, Thailand, Singapore, India and Pakistan, and has held regular consultations and dialogues at different levels with its neighbors, which focus on Asia-Pacific security, bilateral military relations and regional flashpoint issues. Such consultations and dialogues play a positive role in promoting mutual understanding, consolidating good neighborliness and friendship, deepening mutual trust and cooperation, and maintaining regional peace and stability.
China has conducted extensive strategic consultations and dialogues with other countries. In September 2009, the two militaries of China and Germany held the fourth round of defense strategic consultations. In October 2009, the two militaries of China and Australia held the 12th defense strategic consultations. In March 2009 and June 2010, China and New Zealand held the second and third strategic dialogues. In February 2010, military deputies of China and the United Kingdom held defense strategic consultations. In November 2010, China and South Africa held the fourth defense commission meeting. China has also established mechanisms for defense (cooperation) commission meetings with Egypt, for high-level military cooperation dialogue with Turkey, and for defense consultations with the United Arab Emirates, all of which have broadened defense exchanges between China and Middle Eastern countries.
Border Area Confidence-Building Measures
China consistently pursues a foreign policy of building an amicable relationship and partnership with its neighbors, attaches great importance to border area confidence-building measures, strengthens friendly military exchanges in border areas, and actively prevents dangerous military activities, all of which have helped preserve peace and stability on the borders.
In September 1993, China and India signed the Agreement on the Maintenance of Peace and Tranquility Along the Line of Actual Control in the China-India Border Areas, and in November 1996, the two countries signed the Agreement on Confidence-Building Measures in the Military Field Along the Line of Actual Control in the China-India Border Areas. In April 2005, the two countries signed the Protocol on Implementation Measures for Confidence-Building Measures in the Military Field Along the Line of Actual Control in the China-India Border Areas, agreeing on specific implementation measures for certain articles in the 1996 Agreement.
In April 1996, China, Kazakhstan, Kyrgyzstan, Russia and Tajikistan signed the Agreement on Confidence-Building in the Military Field Along the Border Areas. In April 1997, China signed the Agreement on the Mutual Reduction of Military Forces in the Border Areas with the aforementioned countries, which includes clauses on mutual reduction of combat troops and weaponry within delineated limits along China' s 7,600-km borderlines with Kazakhstan, Kyrgyzstan, Russia and Tajikistan, on the organization of annual mutual inspections, and on supervision and verification of the implementation of mutual trust measures in border areas. In December 1998, China and Bhutan signed the Sino-Bhutanese Agreement on the Maintenance of Peace and Tranquility in the Border Areas.
The PLA border defense force faithfully implements all relevant border confidence-building agreements in the military field. Since the 1990s, China's Ministry of National Defense has signed Frontier Defense Cooperation Agreement respectively with relevant departments of the Democratic People's Republic of Korea (DPRK), Russia, Mongolia, Kazakhstan, Kyrgyzstan, Myanmar and Vietnam, and established a three-level meeting mechanism between China's general headquarters/departments, military area commands (provincial military commands) and border defense units and their counterparts, to communicate border information in a timely manner and handle major border affairs through consultation. The PLA border defense force has set up along the borders more than 60 stations for border talks and meetings, and every year engages in thousands of talks and meetings with neighboring countries. In recent years, in the border areas, China has conducted military training in bilateral or multilateral border blockade and control, joint counter-terrorism, and carried out joint patrols and inspections respectively with Russia, Tajikistan, Mongolia and Pakistan.
China has signed border management system agreements with a dozen of its land neighbors to specify cooperation measures for keeping order in border areas, protecting and utilizing cross-border rivers, establishing a border area liaison system, and handling border affairs through consultation. A border representative system has been established to handle border affairs that can be settled through consultation without the need for escalation to diplomatic levels. Appointed by the government and selected from leaders of border defense units, Chinese border representatives perform their duties under the guidance of local military organs and foreign affairs departments. Border representatives exchange information regularly, guard against and handle border incidents, and provide assistance in port administration, cross-border transportation, fishery cooperation, environmental protection and disaster prevention.
Dialogues and Cooperation on Maritime Security
China takes an active part in dialogue and cooperation on international maritime security. It strictly complies with the UN Charter, the United Nations Convention on Law of the Sea (UNCLOS), and other universally recognized norms of international relations. It consistently pursues common security and development, and respects the sovereignty, rights and interests of coastal states. China perseveres in dealing with traditional and non-traditional maritime threats through cooperation, and strives to maintain maritime security through multiple peaceful ways and means.
In 1998, China and the United States concluded the Military Maritime Consultative Agreement (MMCA) and began to conduct consultations on military maritime security issues. To date, eight annual meetings, 13 working group meetings and two special meetings have been held, contributing to the safety of maritime activities, the avoidance of maritime accidents and the adoption of other confidence-building measures. An MMCA special session was held in August 2009 and an annual meeting was held in October 2010.
In October 2005, China and Vietnam signed the Agreement on Joint Patrols by the Navies of China and Vietnam in the Beibu Gulf. The two navies established the Office of Joint Patrols in the Beibu Gulf, organized ten joint patrols, and held five annual meetings. In February 2009, direct telephone links were officially established between the Chinese and ROK naval and air force troops stationed in adjacent areas. Since 2008, China and Japan have held several consultations over the establishment of a maritime liaison mechanism. The Chinese Navy has taken an active part in the activities of the Western Pacific Naval Symposium (WPNS), and in seminars on maritime security sponsored by the ASEAN Regional Forum (ARF) and the Council for Security Cooperation in the Asia Pacific (CSCAP).
In the past two years, the Chinese Navy has sent more than 20 naval ships in over ten convoys to visit more than 30 countries, and received port visits from more than 30 naval ships representing over 20 countries.
Regional Security Cooperation
A multi-tiered and composite framework of Asia-Pacific regional security cooperation is taking shape, and numerous security cooperation mechanisms have been further developed. China takes an active part in establishing security dialogue and building security mechanisms in the Asia-Pacific region, strengthens mutual political trust and security cooperation with Asia-Pacific countries, promotes military confidence-building, and endeavors to maintain regional peace and stability.
Since 2009, the Shanghai Cooperation Organization (SCO) has sustained its strong development momentum in security cooperation. Its member states have signed a succession of papers, such as the SCO Counter-Terrorism Convention, the Agreement among the Governments of the SCO Member States on Cooperation in the Field of Ensuring International Information Security, and the Agreement among the Governments of the SCO Member States on Cooperation in the Field of Combating Crime, which have laid a solid legal foundation for security cooperation. Further improvements have been made in cooperation mechanisms for security work at major international events, such as those held in 2010, including the 65th Anniversary of the Victory of World Anti-fascist War held in Moscow, the Shanghai Expo and the Guangzhou Asian Games. Joint counter-terrorism exercises continue to be formalized. Joint counter-terrorism exercises, such as the "Peace Mission" series between the militaries, and the "Norak-Anti-Terror 2009" and "Saratov-Anti-Terror 2010" initiatives between law-enforcement and security departments, have provided an effective deterrence to the three regional threats of terrorism, separatism and extremism. Regular meetings have been held between security committee secretaries, procurators-general, heads of supreme courts, defense ministers, ministers of interior affairs and public security, and other leaders of law enforcement and security agencies from the SCO member states, enhancing cooperation in justice, defense, law enforcement, security and other fields.
China actively participates in multilateral security meetings within the framework of the ARF, ASEAN Plus One (China), and ASEAN Plus Three (China, Japan and the ROK). Initiated by China, the ARF Conference on Security Policies was officially staged in 2004, and has developed into a dialogue mechanism for the highest ranking senior defense officials within the ARF framework. In May 2010, at the seventh ARF Conference on Security Policies, China proposed initiatives on strengthening research on non-traditional security cooperation and on promoting practical cooperation. In October 2010, China attended the first ASEAN Defense Ministers' Meeting Plus (ADMM+) and proposed to advance regional security dialogue and cooperation. In recent years, the PLA has hosted the China-ASEAN Defense and Security Dialogue (CADSD), the ASEAN Plus Three Forum on Non-traditional Security Cooperation between Armed Forces, and the ARF workshop on formulating legal rules for armed forces' participation in international disaster relief operations.
Since 2007, China has sent senior defense officials on an annual basis to attend the Shangri-La Dialogue held in Singapore to elaborate its national defense policy and opinions on regional security cooperation.
Military Exchanges with Other Countries
China develops its military relations with foreign countries in a comprehensive manner, continues to strengthen its practical exchanges and cooperation with the armed forces of other countries, and strives to foster a military security environment featuring mutual trust and benefit. In the last two years, senior PLA delegations have visited more than 40 countries, and defense ministers and chiefs of general staff from more than 60 countries have visited China.
The strategic mutual trust and practical cooperation between the militaries of China and Russia has been steadily enhanced. The militaries of the two sides have regularly exchanged high-level visits, signed the Missile- and Space-Launch Notification Deal, conducted cooperation in training and border defense, and held exchanges between educational institutions and air defense forces. With respect to relations between the militaries of China and the United States, two sides are still maintaining effective dialogues and communications after various ups and downs, carrying out planned exchanges in respect of structural projects, such as defense consultation, maritime military security consultation, and military filing work. Military ties between China and the European countries continue to be strengthened. China continues to consolidate traditional friendly relations with Central and Eastern European countries, increase practical exchanges with Western European countries, and explore ways to develop military ties with the NATO and the EU.
China has strengthened military relations with its neighboring countries. It conducts friendly exchanges with the DPRK and the ROK militaries, attaches importance to Sino-Japanese defense exchanges, strengthens multi-dimensional Sino-Pakistani military exchanges and cooperation, works to advance the Sino-Indian military relationship, strengthens friendly exchanges with the militaries of ASEAN countries, and promotes military exchanges with countries like Australia and New Zealand.
China conducts military exchanges with developing countries in Africa, West Asia, Latin America and the South Pacific. It increases high-level visits and exchanges between junior and intermediate officers, and seeks to broaden cooperation fields with these countries. For the first time, China sent a hospital ship, the Peace Ark, to visit the Republic of Djibouti, the Republic of Kenya, the United Republic of Tanzania, the Republic of Seychelles and other African countries and provided humanitarian medical service. Also for the first time, China hosted workshops for heads of military academies from English-speaking African countries, for directors of military hospitals from French-speaking African countries, and for intermediate and senior officers from Portuguese-speaking African countries. Additionally, China continues to host workshops for senior officers from countries in Latin America, the Caribbean and the South Pacific.
Since the establishment of the Ministry of National Defense (MND) spokesperson system in 2008, seven press conferences have been held on such themes as earthquake rescue and disaster relief, maritime escort and international humanitarian rescue, and important information has been released in a timely manner. The PLA invests greater efforts in public diplomacy, and has arranged for domestic and foreign media to visit combat units and conduct interviews. The PLA provides timely information on the building of national defense and armed forces via such platforms as the MND website.
In 2009, in celebration of the 60th anniversaries of their respective foundings, the PLAN hosted a multinational naval event on the theme of "Harmonious Ocean," and the PLAAF hosted the "International Forum on Peace and Development."