China’s worst-kept military secret is finally out. After years of denying any intention of building one, the People’s Liberation Army has finally acknowledged that it is preparing to launch its first aircraft carrier. The 67,500-tonne vessel being upgraded at China’s Dalian naval shipyard is a defunct Soviet-era carrier formerly known as the Varyag, which was bought in 1998 from Ukraine by a Hong Kong company on the pretext that it would be used as a floating casino off the shores of Macau. Earlier this year, China declared that its official defence budget for 2011 will rise by 12.7 per cent from the previous year. Last year, there was a lot of hoopla surrounding the fact that China had announced a mere 7.5 per cent jump in its defence budget. It was the first time since the 1980s that China’s defence spending had increased by a single-digit percentage figure. But this year, we are back to the norm of a double-digit increase. The international community has long demanded that China be more transparent about its intentions behind the rapid defence spending. Now the Chinese military is making its strategic intent clear.

Divisions within China about the future course of the nation’s foreign policy are starker than ever before. It is now being suggested that much like young Japanese officers of the 1930s, young Chinese military officers are increasingly taking charge of strategy, with the result that concerns about rapid military growth are shaping the nation’s broader foreign policy objectives. Civil-military relations in China are under stress with the PLA asserting its pride more forcefully than even before and demanding respect from other States. Not surprisingly, China has been more aggressive in asserting its interests not only vis-à-vis India but also vis-à-vis the United States of America, the European Union, Japan and the Southeast Asian countries.

The increasing assertiveness of the Chinese military and the changing balance of power in the nation’s civil-military relations should be a real cause of concern for China’s neighbours. The pace of modernization of the Chinese military has already taken the world by surprise. A growing economic power, China is now concentrating on the accretion of military might so as to secure and enhance its strategic interests. China, which has the largest standing army in the world, with more than 2.3 million members, continues to make the most dramatic improvements in its nuclear force, and the improvements in its conventional military capabilities are even more impressive. What has been causing concern in Asia and beyond is the seeming opacity of China’s military set-up, with an emerging consensus that Beijing’s real military spending is at least double the announced figure. The official figures announced by the Chinese government do not include the cost of new weapon purchases, research or other big-ticket items for China’s highly secretive military. As a result, the real figures are much higher than the revealed amount. And in the past year, the Chinese military has surprised even the US with the speed of its weapons development.

But India’s own defence modernization programme is faltering. This year, the Indian government has allocated only 1.8 per cent of its gross domestic product to defence, although, ostensibly, military expenditure has gone up by 11.58 per cent. This is only the second time in over three decades that the defence to GDP ratio has fallen below 2 per cent of the GDP. This is happening at a time when India is expected to spend $112 billion on capital defence acquisitions over the next five years in what is being described as “one of the largest procurement cycles in the world”. Indian military planners are shifting their focus away from Pakistan as China takes centre-stage in future strategic planning.

Over the last two decades, the military expenditure of India has been around 2.75 per cent. But since India has been experiencing significantly higher rates of economic growth over the last decade compared to any other time in its history, the overall resources it has been able to allocate to its defence needs have grown significantly. The armed forces, for long, have been asking for an allocation of 3 per cent of the nation’s GDP to defence. This has received broad political support in recent years. The Indian prime minister has been explicit about this, suggesting that “if our economy grows at about 8 per cent per annum, it will not be difficult for [the Indian government] to allocate about 3 per cent of GDP for national defence”.

But greater defence expenditure alone will not solve the problems plaguing Indian defence policy. For several years, the defence ministry has been unable to spend its budgetary allocation, this year being an exception. The defence acquisition process remains mired in corruption and bureaucratic hassles. India’s indigenous defence production industry has made its inadequacy to meet the demands of the armed forces apparent time and again. The Indian armed forces keep waiting for arms and equipment while the finance ministry is left with unspent budgetary allocation year after year. Most large procurement programmes get delayed, resulting in cost escalation and technological or strategic obsolescence of the budgeted items.

The Indian government is yet to demonstrate the political will to tackle the defence policy paralysis, which seems to be rendering all the claims of India’s rise as a military power increasingly hollow. The capability differential between China and India is rising at an alarming rate. This will continue to constrain India’s rise to the position of a major regional and global player.