POLITICS: Study: US Overestimated Chinese Military Spending by Two-Thirds, page 1

It wouldn't surprise me at all. China is the new cold war enemy for the military-industrial complex. Lockheed-Martin probably throws a staff party on every anniversary of the ChiCom's take over of China.

I'm curious how they arrive at these - to use their own word - "estimations". China is notoriously protective of any and all internal workings. Regardless, you can be guaranteed that the Pentagon is going to make inflated estimations, while China is going to under-report them. In light of this, RAND is probably nearest the mark.

Speaking of the future though, RAND also forecasts that China's military spending will double over the next 20 years.

RAND - Forecasting China’s Military Spending Through 2025
PAF concluded the following:

* The growth rate of China’s large economy is unlikely to match that of the past 30 years. However, researchers assume that the economy will grow at an average annual rate of 5 percent through 2025. It will more than triple in size to be about half the projected size of the U.S. economy.
* As China’s population becomes older and more urbanized, the government will face strong pressure to spend more on needed social programs such as pensions and health care and on public infrastructure. These demands will limit the resources China has available for military spending.
* China’s defense industry is still technologically backward but is improving rapidly. Reforms such as open bidding for materials have been introduced to encourage innovation and efficiency. These trends will continue if the Chinese government continues to push reforms and increase defense spending.

These factors suggest that China will have the economic and technological wherewithal to increase its military capabilities substantially in the next two decades. PAF’s projection of the most likely level of future military spending through 2025 puts China’s military spending at the equivalent of $185 billion (in 2001 dollars) in 2025, roughly three-fifths of U.S. defense spending in 2003. Between 2003 and 2025, in dollar terms Chinese expenditures on procurement and research and development are projected to more than double.[/url]

While China may not be spending as much as the U.S., they are probably using the money more wisely and injecting it onto programs and equipment that will have real benefits. The U.S. military is notorious for pissing funds against the wall through money-pits like the NMD and through preferential contract allocation with dubious motives.