The Agenda

China’s Military Capabilites Are Growing and We’re Not Keeping Up

In The National Interest, Rep. J. Randy Forbes (R-VA) and Elbridge Colby of the Center for a New American Security warn that the U.S. is losing its military edge over China. I believe they are correct, and that there is an urgent need to rethink the U.S. defense portfolio if we hope to meet the challenge posed by China’s military modernization.

Earlier this month, The Economist reported on China’s fast-growing defense budget. It is important to keep in mind that rising military expenditures are not in themselves the issue. If Chinese military expenditures were growing yet China’s military forces weren’t growing commensurately more effective, the U.S. would have little to worry about. That’s not quite true. Before we discuss China, however, let’s briefly discuss the way we think about U.S. military expenditures.

You’ve probably come across the argument that U.S. military expenditures ought to be cut because they dwarf the military expenditures of other states, or the combined military expenditures of various other states, etc. This argument is confused, as the defense sector, like virtually all labor-intensive service sectors, is subject to Baumol’s cost disease. To attract and retain personnel, the U.S. military must offer higher compensation than militaries in less affluent societies, as the U.S. military has to compete for capable workers with firms in sectors experiencing rapid productivity growth, which are in a position to offer more generous compensation. A similar dynamic obtains in the health and education sectors, where productivity gains have historically been more difficult to achieve than in tradable sectors, like manufacturing, agriculture, and knowledge-intensive services. This is part of why U.S. defense planners have tended to gravitate towards capital- and firepower-intensive military strategies over labor-intensive strategies, like counterinsurgency, which was embraced only reluctantly in Iraq and Afghanistan. American affluence is a great source of strength. Yet unlike conventional business enterprises, the U.S. military is unable to leverage globalization to the fullest extent. That is, the military is limited in its ability to offshore a wide range of labor-intensive tasks to non-U.S. workers, though of course the U.S. does rely on foreign contractors for various non-core functions. Fortunately, the U.S. is at the heart of a network of military alliances, and U.S. allies often specialize in military functions that complement the U.S. military. And U.S allies that host military bases do a great deal to defray the cost of the U.S. military presence, though one can debate the extent to which these transfers properly account for the value of U.S. security guarantees, which now extend to more than 50 countries. U.S. military expenditures both overstate U.S. military power, as rising personnel costs are eroding the extent to which we can turn dollars spent into capabilities, and they understate it, as the U.S. role at the center of a dense web of alliances does much to enhance U.S. military power. America’s “entangling alliances” can also be understood as “enabling alliances,” as they enable the United States to accomplish more of its goals at lower cost.

So when we consider rising Chinese military expenditures, we have to take into account the fact that Chinese wage growth has been outpacing inflation, which has meant that the military has had to spend more to retain and attract skilled workers. The International Institute for Strategic Studies finds that while personnel costs absorb half of the U.S. military budget, they absorb a third of the Chinese budget. But the gap is shrinking over time. The Chinese have done an excellent job of investing in cost-effective technologies that target the weaknesses of the U.S. and its allies. But they have yet to demonstrate that they can knit together different systems together, or that their command structure is up to the task of modern warfare, as China has not been engaged in a serious military conflict since 1979.

These challenges are why Forbes and Colby maintain that maintaining and expanding the U.S. military edge over China is not just desirable but feasible, and not just because of the very real prospect that China’s economic deceleration will continue and even intensify. They argue that the U.S. military continues to take a “fair share” approach that fails to focus resources and energy on the capabilities most central to deterring and if necessary defeating our most technologically adept competitors, and that if we abandoned this highly inefficient approach, we’d be in a much better position:

[A] core element of our defense strategy must be to counter China’s effort to deny our forces the ability to effectively project power into the Western Pacific. This is a daunting task but fortunately a plausibly achievable one. The PRC’s counterintervention strategy does not drop an impenetrable iron dome across the Western Pacific, as some allege. It is permeable. In reality, China’s A2/AD effort more closely resembles a block of Swiss cheese, with holes on its outer edges and greater density towards the center. Beijing’s investments and deployments are closing and narrowing these holes, in turn limiting our options and raising the level of risk to and uncertainty about the efficacy of our power-projection forces. Defending the huge territory China seeks to cover with its A2/AD umbrella is also a titanic challenge, however, and one that we can and must push back on. This means that our task must be to keep open some of these traditional holes through which we have been able to operate and project power, while finding innovative ways to generate new ones.

To achieve the goal of keeping these holes open, Forbes and Colby zero in on investing in the Navy’s undersea-warfare capabilities (increasing the strike power of the existing submarine fleet, stepping up our efforts to develop unmanned underwater vehicles), upgrading the Carrier Air Wing to give it more reach (which will require increased investment in unmanned aircraft), procuring the right munitions (to keep up with the threat posed by the new Chinese surface ships), and next-generation defense technologies, like robotics, directed-energy weapons, next-generation radar, electromagnetics and hypersonics.

Though I can’t speak for Forbes and Colby, I’ll just say that I’m quite comfortable with reducing personnel expenditures by, for example, reducing the size of the active-duty ground force to accommodate the spending increases that will be required to upgrade our ability to project forces in and through the global commons. Conservatives need to lead the way in making the case for making choices — for containing rising personnel expenditures, for rethinking non-core missions to redouble our efforts on core missions, etc.


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