The Takshashila PLA Insight: Issue 5

The Big Story: Trade war & Chinese military

The escalating trade war has taken a toll on China’s military modernisation, says a recent report in the South China Morning Post. The report is titled ‘PLAN being forced to rethink its spending as cost of trade war rises.’ Previously, a report by the US Department of Defence on China’s military modernisation had cautioned about the scale and scope the modernisation of the Chinese armed forces. However, the SCMP report by Minnie Chan states that the escalating trade war has a bearing on the military modernisation process, and military leaders are worried about its impact on resource allocation.

“The escalating tension between China and the United States has reminded Beijing’s leaders that they need to be careful how much they spend on new warships,” a military source, who asked not to be named, told the South China Morning Post. 

Beijing has repeatedly said that the impact of the trade war with the United States is bearable. However, PLA observers are of the opinion that navy is under pressure to alter its plans due to uncertainty over the economic outlook. If reports are to be believed, the PLAN is aiming to build eight Type 055 destroyers. Construction of one such ship costs around 6 billion Yuan, which is twice as expensive as Type 052 D- the current main warship of PLAN. Reportedly, PLAN is also aiming to get three aircraft carriers operational in next five years and mastering the technology of multipurpose take off from Type 075, its helicopter carrier.

According to PLA observers, besides construction costs, the maintenance cost of these vessels puts immense strain on the PLA’s budget.  In past three decades, PLA defence spending has risen at a double digit rate. According to a report by Centre of Strategic and International Studies, PLAN had more than 300 ships compared to 287 of the US navy. However, recent Reuters special report  claimed that the PLA had almost 400 warships and vessels.

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