US mistakes in assessing the military potential of China and Russia

Hello ATS!

Recently, the Russian analytical portal of the Institute of Economic and Political Strategies RUSSTAT published an interesting article, “US Mistakes in Assessing the Military Potential of the Russian Federation and the PRC,” which I want to share with you.

So.

“For a long period, the cornerstone of Western analytics regarding Russia and other countries that are not US satellites was a head-to-head comparison of financial indicators. By this criterion, the West declared itself a leader every time, which baffled experts: within the framework of the paradigm they adhered to , Russia and China could not prevail in certain situations - however, they emerged victorious over and over again. However, by 2024, Western analytical thought had undergone a noticeable evolution.

A fresh analytical report from the American Enterprise Institute (AEI), perhaps for the first time in the history of Western think-tanks, demonstrates a new perspective. Assessing the military budgets of the United States and China, American analysts came to the conclusion: the real military budget of the PRC is three times larger than the nominal one, and much closer to the American one than previously thought.

Officially, China's defense budget is $231 billion, which looks like a small amount compared to the US $884 billion. The Stockholm International Peace Research Center (SIPRI) and the International Institute for Strategic Studies (IISS) have developed their own methods to create a more accurate picture of China's defense spending, and, noting the extreme difficulty of assessing the true size of the PRC’s military budget due to the closeness of official data on this issue, they indicated $292 billion and $360 billion, respectively, as the starting point - taking into account unaccounted for and “dual-use” expenditure items.

However, this figure indicates a quantitative, but not a qualitative correction. Much more important is the long-term underestimation of the real purchasing power of the yuan in China - and it is amazing that such a simple thing has been out of sight of Western analysts for decades. AEI emphasizes that simply converting military spending to market exchange rates between the yuan and the dollar does not provide a full understanding of the situation, since commodity prices in China are lower, as are wage levels.

Beijing last provided the UN with a prorated breakdown of its 2022 military budget (which AEI took as its benchmark) as: personnel 29.7%, training and maintenance 33.2%, materiel 37.1%. . Taking into account the above proportions, the PLA budget for 2022, amounting to $229 billion, is distributed as follows: personnel - $68 billion, training and maintenance - $76 billion, material support - $85 billion.

AEI states that a large body of related and indirect data was analyzed - for example, AEI calculations show that the cost of maintaining personnel in China is 16 times lower than in the United States - and this allowed the necessary economic adjustments to be made for calculating purchasing power parity and costs for the workforce.

According to the World Bank, GDP estimates had a purchasing power parity-adjusted conversion rate of 3.99 yuan per US dollar in 2022—notably lower than the average market exchange rate of 6.74 yuan per dollar in the same period. In other words, the purchasing power of the yuan for military spending is almost twice that of the US dollar. Detailed data on Chinese military salaries and personnel costs does not exist, and unambiguous comparisons of military personnel costs are impossible. However, AEI believes it is possible to calculate a rough estimate by dividing the average annual salary of a U.S. government employee ($79,137) by the average salary of a Chinese government employee ($18,341) to create a labor cost adjustment factor of 4.31."

Continued below...

"AEI applies similar methods for other items of military expenditure. When taking into account purchasing power parity, the PLA equipment budget increases from $85 billion to an adjusted $135 billion, the training and maintenance budget increases from $76 billion to $121 billion. Personnel adjustments are applied to the PLA budget at $68 billion, and actual purchasing power more than quadruples to $293 billion.

These adjustments create a new PLA spending structure for 2022 of $549 billion—more than double the nominal defense budget of $229 billion, and with other adjustments, China's real defense budget rises to $742 billion based on actual purchasing power.

This is very bad news for the United States, whose plans - including for a hypothetical conflict with China in the Taiwan region - were based on an advantage, at least in funding the army. Other indicators have long been stacked against the United States, for example, estimates by the US Office of Naval Intelligence (ONI) show that China's shipbuilding industry is 232 times larger than the US shipbuilding capacity. The multiple gap remains in a number of other technical areas, directly and indirectly related to military issues, which means that due to mass production, China will be able to spend every yuan even more efficiently than the United States can spend dollars.

It is obvious that the logic of AEI with the revaluation of the Chinese defense budget fully works with Russia, whose nominal military budget is $118 billion. It is even more difficult to estimate the conversion factors in this case, but even if we take the conditional coefficients for calculating purchasing power, then the nominal Russian defense budget must be multiplied by a factor of 2.5-5. Because Russia and China maintain a significant government presence in the defense sector, without the defense budget being farmed out to the various corporations and their lobbyists that cause the US Air Force to pay $90,000 for a set of bushings that retail for $100. The factor of an uncontrolled increase in the cost of any purchases is another important point that AEI did not pay attention to.

Conclusion: military potential cannot be assessed by a primitive comparison of the defense budget in dollars. Without realizing this fact, Western analysts will never be able to understand how, for example, the DPRK can successfully develop its space program and create hypersonic weapons that are inaccessible to the United States."

Interesting conclusion. Globally, this means that, firstly, the era of global dollar dominance is ending. And secondly: the real well-being of the inhabitants of the dollar system is falling, and is already difficult to compete with the standard of living of the dollar-free part of the world.

Thank you.

a reply to: RussianTroll
So RT, are you hinting that Russia and China will maybe make a move for global dominance in the near future?
Surely we need you guys for fossil fuels, and manufacturing now more than ever, doesn't warfare sort of # up that financial arrangement?

Pretty much every tech thing I buy now is manufactured in China, and presumably using Russia's fossil fuels.
The bull# 'net zero' claims of my own country is only possible because China/Russia burn the gas and coal lol

I'd be shocked if this changed in my lifetime, it's almost as funny as seeing how many luxury yacht's were 'accidently' destroyed by fire here in the UK after the Ukraine thing started.

Britain is heavily involved in 'washing' dirty Russian cash, so why the # would you destroy a filthy little business partner like us?!

The whole world is a scam in my opinion, and I'd suggest all the people at the very top are secretly just dirty allies?

Interested in your perspective though 🤔

a reply to: AdultMaleHumanUK

Putin always talks not about “world domination,” but about a multipolar, fair world where the interests of every country and nation are taken into account.
Why would the Russians ruin Britain? The British themselves cope with this very well. The Times newspaper tells the story of a schoolteacher who asked those in class who hated Britain to raise their hands. It turned out that they hate Britain... all 30 people. (link)
Just don’t say that Putin is to blame for this too.

a reply to: RussianTroll

The link is behind a paywall.

30 school children in a class predominantly Muslim many coming from places like Afghanistan etc.
Hardly surprising.

Ask the same question in the thousands of schools which are predominantly non-Muslim I suspect you'd get a different answer.

Just highlights the insanity of our immigration policy over the last 20-30 or so years.

Strange you should be accusing the US of under-estimating Russia and China yet you yourself are guilty of the same thing regarding both the US and UK.
Pot meet kettle.

a reply to: RussianTroll
Oh gosh I'm not blaming Russia for any of Britain's problems!😂
I'm saying that Russian dirty money is heavily involved in the British economy, that the people at the top know this full well, and it is a useful business arrangement that I'd be surprised will change in my lifetime.

Seriously, the amount of Russian owned yachts that burned here, for insurance claims, told me everything about the bull# lol

You are being lied to just as much as we are here in money washing Britain!🤣😂🤣

a reply to: RussianTroll

Oh look another thread from RT saying "I hate the West and it's all failing whilst Russia dominates!" Who would have thought it??? Is it time for your comedy routine again??

Russia is China's b*tch and China has an economy based on empty buildings, ghost cities and cheap manufacturing for the west, if China causes anything more than a ripple. it will cause a down fall across the world.
What do you think will happen to Russia when that happens??? The only reason Russian has an economy that hasn't totally collopased is because of its spending on its military in it's so far failed attempt at taking Ukraine (over 2 years now)

a reply to: Kurokage
It's natural resources are the main reason I'd say, cheap energy fixes most economies!
Lol at Russia being China's bitch, if it wasn't for nuclear weapons then China would have just stolen their fossil fuels...and then they'd produce every product in the world!😂

a reply to: RussianTroll

I noticed you seem to have missed the bursting gigantic real estate bubble in China, which it used to mask the problem of inadequate consumer spending for a number of years now, or the fact that China has had to invest more than 40 percent of G.D.P. the last few years to keep it's economy growing but that doesn't matter to you, you just want to rant how evil the west is and how it's sure to fail!
China is buying up gold left and right to help fight against the dollar but it's also to help prop up it's own economy.

originally posted by: AdultMaleHumanUK
a reply to: Kurokage
It's natural resources are the main reason I'd say, cheap energy fixes most economies!
Lol at Russia being China's bitch, if it wasn't for nuclear weapons then China would have just stolen their fossil fuels...and then they'd produce every product in the world!😂

China are also buying up farm land around the world because of sending it's own population into it's factories with the country’s food self-sufficiency ratio decreasing from 93.6 percent to 65.8 percent even though they wanted total self-sufficiency.
Putin is having to become Xi Jinpings gymp to keep the military supplies coming and to keep China happy, if Putin stops bending over for Xi Russia will falter.

originally posted by: Kurokage
a reply to: RussianTroll

I noticed you seem to have missed the bursting gigantic real estate bubble in China, which it used to mask the problem of inadequate consumer spending for a number of years now, or the fact that China has had to invest more than 40 percent of G.D.P. the last few years to keep it's economy growing but that doesn't matter to you, you just want to rant how evil the west is and how it's sure to fail!
China is buying up gold left and right to help fight against the dollar but it's also to help prop up it's own economy.

There Might Not be a Complete Collapse of the Dollar.
A complete dollar collapse would be chaotic and would wipe out much of the paper wealth that exists today. So it’s perhaps unlikely “The Powers That Be” would allow this to occur.

But if things got bad enough how could they stop it?

With a “simple” overnight revaluation. We could wake up one Monday morning and the dollar might have been revalued so an ounce of gold is now priced at say $10,000. All other currencies would be affected by this move also – in relation to their value against the dollar. Holders of gold would be advantaged and all others would see a loss of purchasing power.

THE ABOVE is highly likely.

a reply to: RussianTroll

The standard of living you say?

Tell us all about what that's like for the majority of the rest of the poor Russian sods.

That exist on your permafrost.

And that dont have the luxury of residing in the likes of Moscow or St Petersburg?

Your standard of living is in the toilet and it's time to face facts.

Putin is about nothing more than a land grab.

And all this crap about western economic and political strategies failing is simply you doing what you do best and projecting.

As always freedom to Ukraine and down with the Russian scum invaders.