Politics and Process in China’s Military Resource Management 

Evan A. Feigenbaum 

John F. Kennedy School of Government
Harvard University 

October 24, 2000  

I.            Introduction 

Defense budgeting and resource management have always been among the most contentious areas of debate among Western analysts of the PLA.  But in the absence of data beyond the official state budget and general breakdown of defense expenditures, it is necessary to ask whether any assessment of China’s military resource management will ever offer real and substantive insights into the full range of expenditure on the PLA.  As so many analysts have pointed out, much is missing from the data.  Thus, until we have harder data—and better cooperation from Chinese statisticians—one might legitimately ask whether we are not chasing a Trojan horse in seeking to capture the range of expenditures with military implications, drawing analytically dubious insights on the basis of incomplete or flawed data. 

This is a terrifically hard set of issues to face up to, in part because defense budgeting is so important.  How can we simply walk away from whole areas of inquiry that are so substantively significant?  But budgeting need not simply be about the formulation of a number.  It is a process.  In this brief essay, I wish to suggest that the process aspects of China’s military resource management would be well worth our focus in parallel to what I view as an increasingly futile and analytically empty search for harder numbers.  

Above all, this is because what makes resource management so fascinating is that it is one of the very small handful of Chinese political arenas in which the PLA is in regular, standardized, and sustained interaction with the rest of the Chinese bureaucracy.  Along with research and development, budgeting is one of the only arenas in which the PLA must actively fight others for its priorities; sometimes successfully co-opt others into these priorities;  work with others;  battle and occasionally steamroll others;  appeal to the top political leadership of the country;  and generally work within the full spectrum of Chinese politics.  

We may not know much about specific quantitative measures of the Chinese defense budget, then, but we have learned much during twenty-two years of Reform about Chinese politics, bureaucracy, and the ways in which agendas, alternatives, and public policies emerge, rise, fall, and evolve in the PRC.  If studying the totality of “real” Chinese defense expenditure has become an analytical exercise that we increasingly recognize to be dubious, I wish to suggest instead that studying the defense budget process can, I believe, enliven some of the questions that we hope to answer about the PLA – its role within the Chinese political system writ large;  the ways in which the military fights for its priorities within the system;  the PLA’s flexibility and adaptability as a political actor;  and so on. 

II.        Budget as Process 

Happily, a tardy paper has given me the advantage of reading Richard Bitzinger’s excellent essay on the defense budget before preparing my own for this conference.  As always, his analysis is dead on the mark.  But it is also depressing.  He cuts straight to the point:  Without “harder” data, arguments about Chinese defense budgeting will never offer anything more than ad hoc, analytically weak snapshots of the many questions that budget analysis normally sets out to answer.  These include:  quantitative measures of the priority of defense relative to other national requirements;  strategic intentions as expressed in hard numbers – the points at which concrete investment choices meet rhetorical bluster and wishful musing; and trend lines in military modernization.   

As he expresses so cogently, my own sense is that without harder data, our efforts to draw serious conclusions about the Chinese military on the basis of resource management issues will be dubious at very best, and run the risk of becoming analytically reckless at worst. 

But frustration with quantitative measures of the defense resource system need not mean that we cannot learn about some of the objects of our interest by focusing on the budget process, and thus on a variety of more qualitative measures of resource management.  

Here, it is worth distinguishing “the budget” per se from “the budget process” more broadly, which is by no means specific to the PLA and captures a broader set of interactions within the Chinese political and administrative system at large.  

While a budget is a numerical and quantitative indicator that includes the auxiliary set of indicators on which statisticians perform regression analysis to think through important trend lines, it is useful, too, to think through the political and administrative set of procedures through which the PLA, as one among many actors, pursues that budget.  In that process, the military is by no means the most powerful or important actor.  Budgets are formulated in distinctly political contexts. 

In the absence of better statistics, therefore, let me pose a parallel set of questions, more qualitative in nature and distinctly political in emphasis.  I separate these into three broad areas –  “macro-budgeting,” “micro-budgeting,” and “implementation budgeting.”  All aim to enliven a more general question:  To what extent, and in what specific and unique ways, does military budgeting reflect the same procedures, such as bargaining, that show up everywhere else in our analysis of the Chinese political system?  Is military finance merely a mirror of the broader Chinese political economy—something we know a bit more about than raw Chinese defense expenditure—or is it utterly unique?  Where is it unique?  What might it teach us about the PLA and its variegated (and evolving) roles within the Chinese system? 

This is not an exhaustive list of questions in these areas.  They are merely some examples of the kind of questions about process that might lead to new areas of research, while allowing us to draw on alternative primary sources. 

III.            “Macro-Budgeting” – Actors, Process, and Incentives 

The key issues in “macro” level budgeting concern the PLA as an actor within the national allocation process more broadly.  

1.  What role does the military play institutionally in the national budgeting process?   

Through what mechanisms does the PLA fight for its priorities when it is off its own turf and must battle in a wider political arena that has become increasingly tight-fisted under Zhu Rongji’s streamlining program?  Every agency of government seeks to fulfill its budget requests;  the PLA is not the only institution in the process.  From a research standpoint, therefore, it can be especially useful to think—and to do research—more comparatively:  

Agencies far more open than the PLA about such matters routinely describe to foreign researchers the processes and mechanisms through which they interact with the Ministry of Finance and bargain within their own xitong for budget requests.  One example comes from my own recent research experience.  In addition to my usual interaction with various elements of the PLA, I have recently done some interviewing on industrial safety outside the military system.  Budgets are a routine and critical topic of conversation.  And these discussions have taken on special urgency—and thus the conversation has intensified—as a result of the Prime Minister’s slashing downsizing efforts, which has hit hard at many agencies of government.  The allocation stakes represent a process that Chinese bureaucrats are increasingly willing to describe in detail, and with no small degree of hostility toward those that best them in the process. 

2.  Who speaks for the “military” broadly construed? 

One of the major themes in research on Chinese defense expenditure is the degree to which expenditures with military implications are not included in the official “topline” figure.  This includes research and development, of course, but also the militia, which is paid for in large part off provincial expenditure rolls, military enterprise, and the People’s Armed Police.  

Inevitably, quantitative analysis focuses heavily on how and where to factor these expenditures into our overall defense expenditure statistics.  But it also begs a series of crucial questions about process. 

If sectors and interests with military “implications” receive funds from a variety of sources, not just a direct PLA downchannel, who represents them in the budgeting process?  How do these numbers rise or fall?  

For example, militia funds are allocated off of provincial budgets.  Is this an administrative convenience, or must the provinces actually bargain at the Center for reserve budgets?  If the latter, what possible incentive can there be for a provincial finance office to bargain hard for the militia when faced with the range of challenges with which Prime Minister Zhu has imposed in recent years? 

More structurally, the literature on provincial budgeting is vast.  But unlike the literature on Chinese defense budgeting, it is informed by a great deal of substantive data about both process and content.  Excellent, older work by Michel Oksenberg and James Tong has been supplemented in recent years by the work of a younger generation of political scientists and economists. 

This is a useful source of data on a process in which military functions are paid via non-military line items.  But it also raises crucial issues:  Is the bargaining process for militias (provinces) or defense enterprises (industrial departments) as unequal and at wide variance as the “regular” budgeting process for provinces and industrial departments?  

Provincial budgets are at wide variance, in part because provinces bargain for their own fiscal arrangements with the Center.  Can we calibrate budget authority, then, with any variance in operational authority, or working relationships at the local level?  Do provincial-military relations vary with the degree to which provincial financial departments fight successfully for local reserve forces in the national allocation process? 

3.  How does the Central Military Commission function in the budgeting process vis-à-vis lower-ranking competitors? 

In the first instance, the military budget is developed through a consultative process between the staffs of the CMC, the Ministry of Finance, other ministries and commissions of the state.  This produces an annual budget that the CMC communicates downward within the military system for further formulation of detailed expenditure requirements.  

How strong an actor is the CMC institutionally in this process?  How do non-military ministries and commissions battle the military for their share of the Ministry of Finance’s initial allocation, especially since they are vastly outranked in bureaucratic terms by the CMC?  Do defense expenditures that are not on the budget the CMC formulates within its own xitong imply a coalition process?  

Again, from a research standpoint, descriptions of the process from outside the PLA may be useful here.  

IV.   “Micro-Budgeting” – Coordination and Distribution 

Once the PLA receives its budget block from the Ministry of Finance, how are we to think through the distribution process?  “Micro-level” budgeting includes such issues as distribution, patterns, and the way in which shifting priorities at the CMC level reflect themselves in the distribution process within the PLA. 

Areas of investigation at the micro level might include the process of coordination, as well as the way in which reconciliation is conducted. 

1.  The General Logistics Department as Coordinator. 

When the finance department under the General Logistic Department seeks to reconcile requests from throughout the PLA, how independent is its coordinating role?  Are finance sub-departments under the General Headquarters and services of equal rank?  Do they bargain as equals?  Are the General Headquarters and services represented solely—or even primarily—by their finance departments?  Who else fights for allocations?  What levers are available to influence this process?  When and how do higher units—most importantly, the CMC staff—become involved in specific points of budget distribution beyond setting priorities and agendas? 

2.  Reconciliation. 

How are the initial “high expectation” requests that are sent up to the GLD finance department reconciled with actual appropriations?      

V.    “Implementation Budgeting” – Thinking Comparatively and Broadly 

A third area of investigation is the implementation of the budget to units at the regimental level and below.  “Implementation” budgeting reflects the series of questions about how the PLA adapts and accommodates to broader trends within the Chinese system.  These include standardization, strict accounting, professionalization, and depoliticization. 

Do financial settlement units at the regimental level, for example, reflect the broader structural problems in operational aspects of the Chinese banking system?  

Are such centers merely an administrative device for routing “command budgets”—think, for example, of pre-Zhu Rongji Chinese banking policy—or do they exercise “real” and substantive financial supervision over subordinate units? 

VI.       Some Concluding Thoughts – Primary Sources and the PLA Within the System 

Above all, this set of broadly comparative questions suggests one reason that budget process is a promising area of research:  it allows analysts of the PLA to use a variety of sources and patterns outside a narrowly construed military sphere to appreciate the way in which the PLA can and does adapt and adjust in the face of changed conditions.  

At its best, this would offer a rather more rounded view of the PLA as an institution.  It is also an analytic theme close to my heart:  While virtually all of my published work directly concerns the PLA, none of what I have written examines the PLA abstracted out from the broader context in which it functions as an institution.  Thematically, I believe it is vitally important for analysts to think about connections – for example, the broadly economic foundations of narrower military choices, as well as the strategic foundations of what appear to be purely domestic industrial policy and investment priorities. 

Budget process is analytically useful, then, because it allows us a sustained look at the PLA’s standardized and regularized operations as part of the daily business of Chinese governance.  

It also offers the analyst a unique set of alternative primary data sources – the insights into the PLA of non-military actors who must engage on a regular basis with it as an institutional partner and/or competitor.  

Within the PLA, qualitative aspects of budgeting have been an area that I have found primary source interlocutors unusually willing to engage on.  Air force headquarters personnel have been willing to talk to me, at least, about how they battle the Navy for funds in the allocation process.  On even more micro-level issues at the implementation stage, logistics personnel have also been willing to talk in some detail. 

Finally, budget process sheds light on important questions that poor quantitative data prevent us from capturing.  To be sure, the questions in quantitative budget analysis and qualitative bureaucratic process tracing are most decidedly not the same.  But they are both important.  And the investigation of both takes resource management as the basis to analytically attack the question of the PLA’s evolving roles, strengths, weaknesses, and capacities.