Both the total amount and per-serviceman share of China's defense expenditure
is low compared with those of some other countries, particularly major powers.
In 2005, China's defense expenditure equaled 6.19 percent of that of the United
States, 52.95 percent of that of the United Kingdom, 71.45 percent of that of
France and 67.52 percent of that of Japan. China's defense expenses per
serviceman averaged RMB107,607, amounting to 3.74 percent of that of the United
States and 7.07 percent of that of Japan.
China practices a strict system of financial appropriation of defense funds .
The PLA's budgeting is based on the defense development strategy, military
building objectives and annual military tasks set by the state. Budgeting units
at each level carry out studies to decide on their budget items, make
calculations of their requests for funds and then report to the next-higher
authorities. The General Logistics Department, working with the relevant
departments of other general headquarters/departments, analyzes, calculates and
verifies the annual budget requests submitted by all the military area commands,
the Navy, Air Force and Second Artillery Force, and draws up the defense budget.
After being reviewed and approved by the CMC, the defense budget is submitted to
the Ministry of Finance. The latter, on the basis of medium- and long-term
fiscal plans and the estimated revenue of the year, puts forward a plan for
military expenditure appropriations after consultation with the General
Logistics Department, and then incorporates it into the annual financial budget
draft of the central government. Upon approval by the State Council, the annual
financial budget is submitted to the Budget Work Committee of the NPC Standing
Committee and the Finance and Economic Committee of the NPC for review before it
is submitted to the NPC for review. After the budget of the central government
is approved by the NPC, the Ministry of Finance informs in writing the General
Logistics Department of the approved defense budget. The defense budget is then
implemented down to troops at different levels through prescribed procedures.
Financial departments are instituted at the General Logistics Department,
military area commands, Navy, Air Force and Second Artillery Force, and units at
the levels of corps, division (brigade) and regiment. These departments are
responsible for the appropriation, management and supervision of the defense
funds. The auditing offices of the state and the PLA conduct strict supervision
of the defense budget.
Chart 4: Comparison of Defense Expenditures of Major Countries in 2005 (unit:
Chart 5: Comparison of Percentages of Defense Expenditures in GDP
of Major Countries in 2005
Chart 6: Comparison of Per Serviceman Share of Defense Expenditure
of Major Countries in 2005 (unit: US$1,000)
Source of the figures: Defense reports, budget reports or other
government reports released by these countries.
Note: One pound is equivalent
to 1.7439 US dollars.
One Euro is equivalent to 1.3029 US dollars.
dollar is equivalent to 28.5470 Russian rubles.
One US dollar is equivalent
to 106.9998 Japanese yen.
One US dollar is equivalent to RMB8.0759 yuan.
X. International Security Cooperation
China pursues a new security concept featuring mutual trust, mutual benefit,
equality and coordination, and adheres to the Five Principles of Peaceful
Coexistence. It works to promote good-neighborliness, mutual benefit and
win-win, and endeavors to advance international security cooperation and
strengthen military relations with other countries.
Regional Security Cooperation
Since its founding five years ago, the Shanghai Cooperation Organization
(SCO) has steadily deepened and expanded cooperation in security, economic and
cultural areas in practical terms. A decision-making mechanism has taken shape,
with the Council of Heads of State and the Council of Heads of Government being
its core. Two permanent bodies, namely, the Secretariat and the Regional
Anti-terrorism Structure, have also been established. A number of documents on
cooperation in fighting terrorism, separatism, extremism and drug trafficking
have been adopted. In April 2005, the SCO, ASEAN and the Commonwealth of
Independent States signed a memorandum of understanding on conducting
cooperation in counter-terrorism. In July, the Concept of Cooperation between
SCO Members on Combating Terrorism, Separatism and Extremism was adopted at the
SCO Astana Summit. In April 2006, a meeting of SCO defense ministers was held in
Beijing, and the Sixth SCO Summit was held in Shanghai in June. Ten documents,
including the Declaration on the Fifth Anniversary of the Shanghai Cooperation
Organization, were signed during the Summit.
China attaches great importance to the ASEAN Regional Forum (ARF). At the
13th ARF Ministerial Meeting in July 2006, China called for enhancing mutual
trust, respecting diversity and properly handling the ARF's relations with other
mechanisms. In the past two years, China has, within the ARF framework, hosted
the Seminar on Enhancing Cooperation in the Field of Non-traditional Security
Issues, sponsored the ARF Seminar on Non-proliferation of Weapons of Mass
Destruction with the United States and Singapore, held the Fifth and Sixth ARF
Inter-sessional Meetings on Disaster Relief with Indonesia, and held the Fourth
ARF Inter-sessional Meeting on Counter-terrorism and Transnational Crime with
China's cooperation in the non-traditional security area with ASEAN and
within the framework of ASEAN and China, Japan and the Republic of Korea has
achieved significant progress. In January 2005, China proposed a series of
initiatives on disaster prevention and reduction at the Special ASEAN Leaders'
Meeting on the Aftermath of Earthquake and Tsunamis. In August, China hosted the
Workshop on Policing Exchanges and Cooperation among the Capital Police Agencies
of ASEAN, China, Japan and the Republic of Korea, during which the Beijing
Declaration on Policing Exchanges and Cooperation among the Capital Police
Agencies of ASEAN, China, Japan and the Republic of Korea was signed. In
October, China hosted the Second International Congress of ASEAN and China on
Cooperative Operations in Response to Dangerous Drugs. The Beijing Declaration
and other documents were adopted. In November, China attended the Second ASEAN
and China, Japan and the Republic of Korea Ministerial Meeting on Transnational
Crime and the First China-ASEAN Informal Ministerial Meeting on Transnational