In this draft paper I discuss China’s real defence budget over 20 years in constant RMB to look at real growth over time, the changing composition over time, as well as in US dollars (military PPP) terms to compare the gap with the USA.
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I find that: (i) China’s has dramatically closed the gap and defense purchasing power is 59% of the USA; (ii) real personnel inputs have declined over time, but; (iii) real equipment spending has grown at a massive 10% per year since 2000.
China’s defense forces are still relatively labour intensive, but there has been a massive shift in its composition with rapidly growth in equipment per person. The results reconcile the increasing disparate accounts of China’s military rise, and particularly the divide between defense budget data and descriptive narratives of China’s military modernization.
militaryppp.com 
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