Politics and Process
in China’s Military Resource Management
John F. Kennedy
School of Government
October 24, 2000
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
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
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
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
“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.
What role does the military play institutionally in the national
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
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.
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.
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
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?
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?
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?
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
– Coordination and Distribution
Once the PLA receives its budget
block from the Ministry of Finance, how are we to think through the distribution
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?
How are the initial “high
expectation” requests that are sent up to the GLD finance department
reconciled with actual appropriations?
“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,
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?
Some Concluding Thoughts – Primary Sources and the PLA Within
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
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.
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