China has approved a draft budget proposal recently confirming that its defense budget has brushed off the economic pressures brought about by COVID-19 and is set to increase by 6.8% in 2021. This increased budget will be allocated towards emerging technologies which could shape the face of future warfare. The budget increase looks likely to accelerate the development of Chinese capabilities in emerging fields such as artificial intelligence, quantum computing, autonomous vehicles and space technology, says GlobalData, a leading data and analytics company.

Harry Boneham, Associate Aerospace and Defense Analyst at GlobalData, comments: “The budget will constitute a sixth consecutive year of budget growth, underscoring the growing stature of the People’s Liberation Army (PLA) in the Asia-Pacific (APAC).

“Despite the rise, China still trails the US in terms of defense expenditure. China’s defense budget is about one quarter of the US figure, which is US$740.5bn for the 2021 fiscal year. China is targeting the funding towards areas which will deliver the greatest strategic ‘bang for buck’ against the US. Currently, the US holds the advantage, with GlobalData reporting that two of the top three AI patent holders in China are US companies, Microsoft and Alphabet.”

The PLA has set four key areas which will benefit from this 6.8% increase in budget. First among these is the launch of major projects and key programs in accordance with the layout of the ‘14th Five-Year Plan’ which was delivered in late 2020. This plan calls for an intensification of the civil-military fusion strategy, and an acceleration of the transition from mechanisation towards informationisation and intelligentisation.

The former point refers to the policy of merging advanced civilian and military institutions to enhance Chinese research capabilities. In particular, this is intended to give China an advantage in key emerging areas such as AI. The National Security Commission on AI report, delivered in the US in early 2021, stated that if current trends continue, China will surpass the US as the world leader in AI in the next decade. This switch is due in large part to the recruitment of ‘national champions’ such as Tencent and Baidu into the military-civil fusion architecture.

This leads to the latter point, which calls for the deployment of the developments produced by this architecture. AI has transformative potential in the defense sector, from AI-powered logistics, to cyber defense, to drone swarms. Successfully developing and maintaining an edge in this sector would allow China to bypass the US’ significant advantage in traditional platforms, and challenge in new areas.