Friday, March 04, 2011

China To Reduce Military Spending Relative To GDP

There is some concern over how China increases nominal military spending by 12.7%.

Yet it could be noted that since nominal GDP growth in China is over 15%, this actually means that the Chinese are reducing the proportion of its resources that goes to the military. Much of the apparent increase thus reflects inflation and higher real pay for those in the military.

One can argue that they should reduce the proportion even more, but despite technical upgrading it is misleading to talk of a massive military buildup.