China military expenditure projections

China military expenditure projections

China's official military expenditure for 2025 is reported at 1.78 trillion yuan (approximately $246–249 billion), reflecting a 7.2% increase from the previous year and maintaining its status as the world's second-largest defense budget after the United States[2][3][5][7]. This growth rate has been consistent for several years and remains below 1.5% of China's GDP[3][5].

However, multiple independent assessments and Western defense departments argue that official Chinese figures likely understate true military spending, due to off-budget items and non-transparent accounting. Analyses suggest that actual expenditure could range from $330–450 billion, possibly reaching as high as $700 billion in broader estimates[1][6]. This gap arises because official budgets may not fully include spending on military R&D, strategic infrastructure, some personnel costs, or subsidies to defense-related enterprises[1][6].

Long-term projections expect China's defense spending to continue its upward trend:

- By 2030, forecasts range from $350 billion (official pace) to $550 billion (including likely hidden expenditures)[6][9].

- By 2035, projections estimate China could be spending $544 billion on defense, about half of projected U.S. spending at that date[9].

- The proportion of military spending as a share of GDP is expected to stay around or just below 2%, but actual purchasing power could rise substantially, especially when accounting for domestic price advantages and yuan appreciation[4][10].

Key drivers for China's defense spending growth include continued military modernization, geostrategic priorities (especially related to Taiwan and the South China Sea), and perceived threat environments. Investments emphasize advanced technology, naval expansion, space, cyber, and nuclear modernization[7].

In summary:

- **2025 official budget:** $246–249 billion (7.2% growth, <1.5% of GDP)[3][5][7].

- **True military outlay (estimates):** $330–450+ billion, with high-end claims up to $700 billion[1][6].

- **2035 forecast:** Approaching or just surpassing $500 billion[9].

Discrepancies between official and estimated figures are significant, and future growth is expected to continue at or above the current pace.

Citations:

[1] Estimating China's Defense Spending: How to Get It Wrong (and ... https://tnsr.org/2024/06/estimating-chinas-defense-spending-how-to-get-it-wrong-and-right/

[2] Military budget of China - Wikipedia https://en.wikipedia.org/wiki/Military_budget_of_China

[3] Chinese Defence Budget 2025: Lower Allocation, Bigger Impact https://www.orfonline.org/expert-speak/chinese-defence-budget-2025-lower-allocation-bigger-impact

[4] Military Expenditure (% Of GDP) - China - Trading Economics https://tradingeconomics.com/china/military-expenditure-percent-of-gdp-wb-data.html

[5] China to raise defense spending by 7.2% in 2025 - CNBC https://www.cnbc.com/2025/03/05/china-to-raise-defense-spending-by-7point2percent-in-2025.html

[6] China's Defense Budget Is Bigger Than You Think https://www.heritage.org/china/commentary/chinas-defense-budget-bigger-you-think

[7] How Does China's Rising Defence Budget Affect India? https://www.internationalaffairs.org.au/australianoutlook/how-does-chinas-rising-defence-budget-affect-india/

[8] China Military Expenditure - Trading Economics https://tradingeconomics.com/china/military-expenditure

[9] Military expenditure forecast 2035 data https://power.lowyinstitute.org/data/future-resources/defence-resources-2035/military-expenditure-forecast-2035/

[10] China's military rise: Comparative military spending in China and the ... https://cepr.org/voxeu/columns/chinas-military-rise-comparative-military-spending-china-and-us