15 Februari 2012

China's Defence Budget to Double to $238bn by 2015

15 Februari 2012

China J-10 aircraft (photo : worldaffairboard)

CHINA'S booming economy means its defence budget will double by 2015 to $238.2 billion, about four times the size of its nearest rival, Japan, according to a report released yesterday by global defence information provider IHS Janes.

The economies of Japan and India, whose defence budgets are the second- and third-largest in the Asia-Pacific region, have both been flagged "at risk", a grading carrying serious implications for their respective defence requirements, the report warned.

It tracked the economies of the Asia-Pacific's 13 biggest defence spenders, including Australia and its Anzac partner New Zealand's whose economy was also graded "at risk".

The report reinforces regional concerns about China's military build-up.

But it also raises questions about other states in the region keen to modernise ageing arsenals.

"This isn't a three-horse race (China, India and Japan). Taiwan's rate of investment means it has overtaken Singapore in terms of defence spend by 2015, while Vietnam and Indonesia are also forecast to increase defence spending at a rate that exceeds GDP growth.

"China's rise is not the only motivator. There are a number of lingering security issues, driven by competition for untapped natural resources, that are prompting many states to increase their defence to GDP (gross domestic product) ratio," said IHS Janes senior analyst, Paul Burton.

Both Japan and India are likely to rein in defence spending due to economic challenges.

Japan's government debt and investment needed after Fukushima (earthquake) will impact on defenece spending, the report forecast.

While firm economic growth is predicted in Australia from 2012-15, the federal government's promise to set real defence growth at 3 per cent raises doubts as to whether the defence budget will be large enough to meet demands for an ambitious equipment program.

Australia, the region's fifth-biggest military purchaser, spent $23.6 billion on defence last year, a figure expected to rise to $27.5 billion by 2015.

On New Zealand, IHS-Janes warned a significant deterioration in medium-term public finances since 2009 combined with post-disaster reconstruction following the Christchurch earthquake would constrain the government's ability to deliver on its 2011 defence capability plan.

The economy of New Zealand, the Asia-Pacific's 13th-biggest defence spender's remains "at risk".

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