China and Russia combined now at military spending parity with US

Each year about this time, as the Stockholm International Peace Research Institute (SIPRI) releases its global military spending database, we hear the same refrain: the United States spends more than the next [insert your favorite large number here] countries combined.

How wrong these analyses are, and those who advocate for greater American defense expenditures should know better.

Comparing military spending among major powers using a common U.S. dollar metric is simply economic nonsense.  Given that adversaries such as China and Russia, among others, have massive in-house arms manufacturing capabilities as well as expend great resources on indigenous operations and maintenance requirements, the correct means of comparison is on a purchasing power parity (PPP) basis.

On this datum, and using military spending data from SIPRI and economic data from the IMF, the results should give pause to those in the West who believe we hold a major spending advantage.  In 2015, the U.S. spent $596 billion in international dollars (the PPP currency) on defense, while China spent $374 billion and Russia spent a further $187 billion.

Add these latter two together, and you get $561 billion, effectively equivalent to that of the United States.  Throw in Iran, another $34 billion, and the sum does equal American spending.

Saudi Arabia is at $229 billion and climbing exponentially.  In 2012, this country spent 7.7% of its GDP on the military.  As of 2015, it reached 13.7%.

If the IMF's GDP projections hold, and even if China and Russia do not increase their share of the economy spent on the military, by 2020 these two nations will be spending $555 billion and $215 billion, respectively, compared to just $739 billion for the U.S.

Of course, this assumes that China in particular is not grossly under-reporting its military spending, which many analysts believe it is.  Actual expenditures could be 25% higher, or more, in the Middle Kingdom.  In other words, American military spending could already be well behind the sum of its Chinese and Russian counterparts.

NATO isn't helping the West out that much, either.  The U.S. still shoulders the vast majority of total NATO spending, essentially subsidizing the rest of the alliance to the tune of about US$180 billion per year. One can add to that an additional US$121-billion trade deficit that the U.S. suffers under against the rest of NATO.

Massive arms races are ongoing worldwide, and especially in hot spots such as the Asia-Pacific and the Middle East.  The collective member-states of the Organization of Islamic Cooperation – clearly no friend of the West – have seen an explosion of military expenditures over the past two decades.

Even with China's slowing economy, its growth rate remains much higher than that of the U.S., meaning that keeping its defense spending relatively constant as a percentage of GDP will allow it to rapidly close the gap over the coming 10 to 15 years unless the U.S. dramatically increases its share of the economy devoted to defense.

As numerous conservative politicians have noted, the greatest national security threat to the United States – and the West – is anemic economic performance.  The rest of the world has a far more rapidly growing economy, and many nations are militarizing fast.  At least 27 nations, many of them unfriendly, already spend greater proportions of their GDP on defense than does the U.S.  Add to that the more rapid economic growth outside the West, and the conclusions are simple math.

Consider that when Reagan left office in 1989, the so-called "advanced economies" made up more than 64% of the world's economy.  Now that is less than 42% and falling fast, projected to be only 39% by 2020.  On the other hand, the emerging market and developing economies (i.e., the ones most rapidly growing their military spending) now constitute more than 58% of global GDP.  This is on target to hit 61% within four years.

Toto, I've got a feeling we're not in Kansas anymore.

Last year, China ranked 14th among all nations worldwide in terms of GDP growth.  The U.S. came in 103rd, with the U.K. in 107th, Australia in 114th, Germany in 140th, France in 148th, Canada in 150th, Italy in 162nd, and Japan in 164th.

Even if the West had the willpower to keep up in the global arms race, it cannot without first achieving rejuvenated economic growth.  The rest of the world will soon be passing us by on the road of military spending, and where goes spending, superiority soon follows technological superiority.

The sooner we look honestly at where we stand in terms of real military spending, the earlier we can come to terms with the difficult challenges that lie ahead.  And a first step down this road will be to shift the analyses into purchasing power parity rather than U.S. dollars.

Kaya Forest is a program head of engineering technologies in the School of Natural Resources and Built Environment at Saskatchewan Polytechnic.  Sierra Rayne, Ph.D., is an independent scientist.

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