Do U.S. Cuts Threaten its Allies?

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In 2010, China supplanted Japan as the world’s second-largest economy, a headline-grabbing event that underscored an increasingly apparent reality – the gap in economic power between the United States and China is narrowing rapidly.

When he first took office, President Barack Obama emphasized policies aimed at improving ties with China. But the U.S. announcement in January 2010 that it was providing Taiwan with a massive military aid package prompted an angry response from China. Yet while Washington finds itself increasingly at odds with a rising and more militarily capable China, its deteriorating fiscal situation means Washington has little choice but to reconsider its military posture. The fact is that the United States may have to live with a much narrower military focus than has marked its policies in recent decades.

U.S. defense capabilities are critical to its foreign policy strategy, but they are at the mercy of budgetary realities. With costly domestic programs taking a greater share of the U.S. federal budget as baby boomers retire, the country’s budgetary troubles have emerged as a major issue in this year’s presidential election.

Responding to charges of profligacy, the White House has tried to craft compromises with Republican lawmakers to reduce the size of the deficit. In last year’s Budget Control Act, both parties agreed to tight spending caps that reduce discretionary spending by $1 trillion over 10 years. More cuts could be coming. Yet even before the latest proposals, the Pentagon was faced with some tough choices. Under then-Defense Secretary Robert Gates, the U.S. Defense Department in January 2011 announced cuts of $78 billion to the U.S. military.

One could argue current and proposed U.S. defense cuts have already impacted U.S. defense strategies and posture while reducing necessary emphasis on equipment research, development, and procurement in preparation for long-term threats such as an emerging China and a resurging Russia. According to the Quadrennial Defense Review Report published in February 2010, the United States has taken a number of important decisions, including “ending production of the F-22 fighter, restructuring the procurement of the DDG-1000 destroyer and the Future Combat Systems programs, deferring production of new maritime prepositioning ships, and stretching out procurement of a new class of aircraft carrier.”

The problem is that many of the items being hit by budget cuts are indispensable to the large-scale deployment of U.S. military forces, meaning the United States risks a decline in its ability to strategically deploy forces in support of its allies.

And, while the United States is being forced to tighten its purse strings, China is increasing its military spending at a pace that outstrips its impressive economic growth rate. Between 2000 and 2009, China’s annual average GDP growth rate was 9.6 percent, while its official defense budget grew 11.8 percent on average, after adjusting for inflation.

This rapid increase in the military budget is underpinned by the powerful political influence wielded by the People’s Liberation Army. The role of the PLA was no clearer than surrounding the test flight of China’s new J-20 stealth bomber, which took place during the visit of Gates in January 2011 and, according to many reports, without the prior knowledge of Chinese President Hu Jintao.

But what should be of particular interest for the U.S. and its allies is what isn’t known about China’s defense budget. The figures announced each year by Beijing are widely believed to significantly underreport spending. Recently, China announced that its military spending was to rise 11.2 percent in 2012 to $106.4 billion. The U.S. Defense Department, though, has suggested that China’s total military spending had actually topped $150 billion in fiscal 2009.

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