Getting Our Money’s Worth in the Indo-Pacific

Getting Our Money’s Worth in the Indo-Pacific

By Eli Kravinsky '24

War is expensive, and no other nation knows this like the United States does, which devotes more than three quarters of a trillion dollars annually to defense spending. Despite this astonishing sum, the U.S. is being outbuilt by its most serious rival in the most crucial future theatre – the Indo-Pacific. The U.S. Navy has long been far and away the most powerful navy on the planet, but its advantage is being rapidly eroded by the explosive growth of the Chinese navy, known as the People’s Liberation Army Navy. To put this in perspective, in 2012 to 2014 the USN and PLAN built roughly the same quantity of ships (measured in their displacements, by tonnes). Shockingly, from 2015 to 2017 the PLAN launched twice as many tonnes of warships as the USN did. And that doesn’t even take into account the similarly spectacular growth of China’s air, missile, and cyber forces, all crucial in a conflict in the Pacific. Likewise, that figure doesn’t incorporate China’s ‘other’ navy; its auxiliary, it’s Coast Guard and Maritime Militia. China’s naval expansion is even more considerable when one compares it to other naval powers. For example, from 2014 to 2018, the Chinese Navy has launched approximately as many warships (in tonnes of displacement) as the entire navy of Japan or the UK.

How is the U.S. outspending China but being outbuilt by it? Although Chinese defense spending is opaque, we can say with certainty that it is lower than America’s. Obviously, the equivalent of a dollar goes further in China than a dollar does in the United States. Additionally, the more established American military has a lot of legacy costs – expensive, older equipment that requires frequent maintenance as well as considerable pension costs for retired service members. China’s newer and younger force thus has a financial advantage, though this will decrease over time as China’s equipment and members age. Another answer is that Chinese naval ships are built en masse in the same shipyards that build commercial ships, reducing costs to an incredible degree. American naval ships are built in small quantities in a tiny number of specialized shipyards. China uses a policy of civil-military fusion, taking advantage of off the shelf technologies and capabilities, such as civilian shipyards, in the civilian economy for the benefit of its military-industrial complex. Chinese naval planners can rest assured that their gigantic shipbuilding industry (some 43% of global production by displacement), while the tiny U.S. shipbuilding industry (less than 1% of global tonnage) is entirely unable to support the needs of the American military. For example, analysts have concluded that instead of spending untold amounts of money to build naval transports to carry an invasion force to Taiwan it has outsourced much of the task to commercial ferries, which are required to be built to military standards and can be requisitioned for military needs in the event of war.

How should America overcome this gap? Spending more is not likely an option, given that the enormous amount of resources given to defense represent an opportunity cost; every dollar spent on defense is a dollar that can’t be spent on education or healthcare. The U.S. will have to make its chronically corrupt and inefficient military acquisition network more cost-efficient but doing so will be a bureaucratic nightmare. Simply put, the US military will have to live within its means and our allies will have to accept that. America won’t be able to underwrite the defense of its allies in less crucial theatres such as Europe and the Middle East. Western Europe in particular will have to pick up its share of the burden, given increasing Russian adventurism. The US will also have to shift its funding priorities. The services that will do the most in any conflict with China – the Air Force, Navy, and Marines – should be given more resources and the Army less. The Marine Corps have proven they are a model of this sort of forward thinking by deactivating its active-duty tank battalions. Given that tanks would have little use in the Marine’s probable role in a war with China – combat on small islands in the Pacific – they have been replaced with much more relevant weapons, such as anti-ship missiles. Few military forces want to give up status weapons such as tanks, but these choices are exactly the sort of painful but necessary choices the entire US military will have to make unless it wants to lose a potential war with China. The U.S. should also take a page from China’s playbook and focus more on offense rather than defense. China’s military stretches its spending by focusing on relatively cheap assets, such as anti-ship missiles, which destroy naval ships that cost several times more. 

Any discussion of the U.S. – China military balance needs to take into account third-party countries, and none is more important than Taiwan. The Chinese Communist Party has never renounced the threat of force to invade Taiwan, which enjoys de facto sovereignty and whose population by an incredible margin wishes to continue its independent existence. However, while Taiwan’s existence is under existential threat by the PLA. The U.S. has long balanced between supporting Taiwan and not offending China, but in order to effectively deter China while keeping its defense spending in check it will have to perform another balancing act.  As Taiwan’s economic and military power is dwarfed by China, it naturally expects America to come to its aid in the event of a war with China. However, if we give too solid of an assurance to Taiwan, its people might understandably devote less spending to defense given that they believe we will defend them anyway. On the other hand, if we don’t give enough of an assurance few Taiwanese politicians could convince their public to adequately fund their defense if they will receive no outside support.

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