Strategic Cost Estimation: Understanding Resource Tradeoffs in China's Defense Modernization Efforts

Abstract

China’s military modernization efforts appear unrelenting, but China’s defense-related cost constraints remain underappreciated by Western strategists and defense planners. Understanding Chinese defense budget limitations and resource tradeoffs is necessary for accurately estimating China’s future force structure and for aiding U.S. and allied policy-makers in developing competitive strategies that exploit Chinese resource scarcity. This paper addresses methodologies for estimating the Chinese military’s platform- and unit-level defense expenditures and its future force structure. This paper, which is an overview of ongoing research, provides several insights. First, rough order of magnitude cost estimates are feasible and useful for understanding China’s potential defense modernization trajectories. Second, U.S.–based cost estimating relationships provide a basis for assessing relative cost tradeoffs among China’s defense programs, and Chinese production efficiencies and operating practices can be incorporated into those estimates over time. Finally, multiple mutually reinforcing approaches are required to bound uncertainty about future PLA force structure developments. The cost and force structure estimates developed through this research will be used to examine alternative future PLA defense modernization trajectories, which will support the development of robust and adaptable U.S. strategies, operational concepts, modernization plans, and basing and posture arrangements. Future publications will build on these initial insights and conclusions.