On 29 December 2006, China released its latest white paper on national defence. Though this document is widely perceived as opaque in budgetary facts and figures, it gives policy makers and analysts enough information to analyse China's regional and global security and political roles. Two crucial aspects of the paper -- defence modernisation plan and defence budget -- have significant bearing on India, considering the political and economic rivalry between the two neighbours. From India's point of view, it is important not only to have an understanding of the Chinese defence plan but also to comprehend the significance of producing a white paper of its own.
On the issue of defence modernisation, China emphasises on the role of ultimate military modernisation through mechanisation and 'informationization' and sets a three-stage strategy ending around 2050 when it could win 'informationized war', i.e., a war which is "high-paced, high-technology and digitised" in nature. In its preparatory efforts towards an 'informationized war', China tries to ensure that its armed forces are "revolutionary in nature, modernised and regularised", and fully compatible with the Revolution in Military Affairs. For this, it has stepped up efforts to build a joint operational command system and enhancing systems integration of services and arms. The People's Liberation Army (PLA) and its training programmes are now more focussed on technology content and innovation. Also, it has taken a conscious decision to reduce the PLA's strength over the years by 1.7 million to allow more room for technology and to optimise resources.
In its efforts to plan for a long-term weaponry programme, China has been pursuing a scientific approach of balancing equipment needs and resource availability. The equipment needs are made to go through feasibility studies and developmental strategies based on the goals, directions and priorities. Besides, China is looking for an improved mechanism for defence-related science and technology to support high-tech military needs. The PLA has established mechanisms for civil-military equipment support systems. It has also strengthened equipment support force building, equipment support training, pre-field training of qualified equipment personnel, to promote the "organic and systematic development of operational and support capabilities of equipment". Besides, China has taken measures to eliminate the bottlenecks in its arms procurement policies in the last two years and has doubled the percentage of funds from 10 per cent to 20 per cent for arms procurements, highlighting its intention to beef up its military build-up.
On the aspect of defence budget, China categorically links growth of defence expenditures with the pace of economic development. The linkages between economic growth and the size of the defence budget assumes added importance considering the economic growth rates that China has achieved in the past decade and a half. In 2004 and 2005, the Chinese economy grew by 10.1 per cent and 10.2 per cent respectively, and according to IMF estimates, it is set to grow by 10 per cent each in 2006 and 2007. The White Paper mentions that from 1990 to 2005 the average annual expenditure on defence has registered a 15.36 per cent growth rate, which translates into nearly 10 per cent of real annual average growth rate, after negating the inflationary pressures based on consumer price index. The defence budget for 2006 is set at US$35.6 billion, up by 12.5 per cent from $30 billion in 2005.
However, the Chinese budget figures for 2006 are far lower than the estimates of the US Defense Intelligence Agency (DIA), which puts the figure in the range of $70 - to 105 billion, up from $60 - to 75 billion in 2005. In 2005, China pegged its defence expenditure at 1.35 per cent of its GDP, against 4.03 per cent of the US, 2.71 per cent of the UK, and 2.45 per cent of Russia. But according to SIPRI estimates, China spends around 2.3 - to 2.4 per cent of GDP on it national defence. Taking 2.4 per cent as the minimum benchmark and factoring 10 per cent growth rate of China's GDP in 2006, the defence budget could be around at $60 billion in 2006 or three times higher than India's defence budget in 2006-07. Upgrading the benchmark to 3 per cent of GDP, China's defence budget stands at $74 billion in the same year. Assuming 2.4 per cent of GDP spent on defence and a minimum 10 per cent annual average growth in defence expenditure, China's defence budget will stand at $97 billion at the end of five years and at $155 billion at the end of 10 years from 2006. The figures will change to $120 billion (five-year) and 190 billion (10-year) if China spends 3 per cent of its GDP and the annual average growth of defence expenditure is kept at 10 per cent.
Unlike China, in India there is no stated policy of linking growth of defence expenditure with that of economic development. Investment in defence is looked upon as wastage of funds, and crowding out of social investments. In the last five years (2001-02 to 2004-05), annual average Indian defence expenditure has grown by 8.9 per cent at current prices. At the same rate of growth, India could afford $30 billion at the end of the next five years and around $45 billion at the end of the next ten years. This leaves a huge gap between Chinese and Indian investments on Defence. Unless India makes a huge stride in defence investment, allocates a fixed proportion of GDP on Defence, and links defence expenditure with economic growth, the country will be left far behind China in the span of 5 to 10 years, a gap that will be virtually impossible to bridge.
As regards Chinese military modernisation process based on a long-term plan, India has yet to assign a long-term vision to its Armed Forces. Unlike China, which aims to win future battles, and prepares for it through modernisation, mechanization and informationization, India is simply busy closing the capability gap. Even this is more often constrained due to various financial, technical and bureaucratic problems. Besides, the modernisation process in various areas like troop optimisation, technology development and collaboration, efficient arms procurement measures, integrated planning process, joint training programmes, etc. are either met with political indecisiveness or defeated by vested interests, leading to a further widening of the gap.
While China has a white paper on its national defence, India has so far failed to come out with a national security policy paper. At present the National Security Council (NSC) and its support structures like the Strategic Policy Group (SPG) and the National Security Advisory Board (NSAB) make periodic reviews of the country's internal and external security concerns. But the absence of an institutionalised and Constitution-validated structure undermines the present mechanism, and the Council's failure to publish a comprehensive Strategic Defence Review evokes suspicion in some quarters concerning the seriousness of its deliberations. In the absence of a national security policy paper, which has been long demanded by many strategic groups, the Defence Minister of India issues Rakhsa Mantri's Operational Directives which only serves the planning purpose of the Armed Forces, not the nation as a whole.
In many ways, India can draw lessons from China's publication of its defence white paper. First, the country has to acknowledge that a white paper will act as an acceptable guiding principle at the national level, not being at loggerheads with the various Ministries, Departments or groups. In India, in the absence of an institutionalised national security policy paper, various Ministries confront the decisions of the NSC, undermining the relationship between national security and departmental priorities. Second, a defence white paper assigns some goals to the defence establishment on the basis of the current and emerging security threats, and provides sufficient time to achieve it. But till now, the role of the Indian Armed Forces has not been defined on a long-term perspective, or in relation to other countries like China. This is one reason behind the ever-widening defence capability gap vis-à-vis China. Third, once the goals and objectives of the white paper are fixed, it allows financial allocations in a scientific manner by linking it to some standard developments like economic growth or other benchmarks. As regards the Indian defence budget, allocations do not follow a scientific trend. Fourth, publishing white papers at regular intervals allows policy makers to evaluate and readjust the current programmes, which reduces risks involved.