Cold War Lessons for Estimating the Chinese Defense Budget

Overview:

This report by Wilson Beaver at The Heritage Foundation discusses the challenges in estimating the Chinese defense budget and draws parallels with the difficulties faced during the Cold War in assessing the Soviet defense budget. The report emphasizes the importance of accurate, data-informed estimates of the Chinese defense budget for assessing the U.S. defense budget and suggests that lessons from the Cold War can inform current analysis of China's military spending.

Key Quotes:

1. "Accurate, data-informed estimates of the size and composition of the Chinese defense budget are critical to the assessment of the U.S. defense budget."
2. "If policymakers want a data-informed official estimate of the true size of the Chinese defense budget, the U.S. government must re-establish the economic analysis offices at the Department of Defense and in the Intelligence Community that did this work on the Soviet defense budget during the Cold War."

What They Discuss:

• The report examines the ongoing attempts to estimate China's defense budget and compares it with the U.S. defense budget, highlighting the similarities with Cold War-era debates over the Soviet defense budget.
• It critiques the reliance on Soviet self-reporting and purchasing power parity (PPP) calculations in estimating Soviet expenditures, noting similar challenges with China.
• The report argues for the importance of understanding the nuances in defense budget estimates and their impact on U.S. defense spending decisions.
• It advocates for the U.S. government to publish its defense analysis estimates to inform public debate and suggests re-establishing economic analysis offices for more accurate assessments.
• The report details the methodologies used during the Cold War for estimating Soviet defense spending and suggests applying similar approaches to China.​

What They Recommend:

• The U.S. government should re-establish specialized economic analysis offices to provide more accurate estimates of the Chinese defense budget.
• Policymakers should consider lessons from the Cold War in analyzing China's defense expenditures, including the use of PPP and direct costing methods.
• The U.S. should publish its defense budget analysis to inform public debate and policy decisions.

Key Takeaways:

• Estimating the Chinese defense budget is complex and requires sophisticated economic analysis, similar to the challenges faced during the Cold War with the Soviet Union.
• Accurate estimates are crucial for understanding the U.S. defense budget in the context of strategic competition with China.
• Lessons from the Cold War can provide valuable insights into developing more effective methods for analyzing China's military spending.​

This is a brief overview of Wilson Beaver's report from The Heritage Foundation. For complete insights, we recommend reading the full report.