Force Buildup in the South China Sea: The Myth of an Arms Race

This post is the first in a series reviewing recent arms expenditures by South China Sea claimants Vietnam, the Philippines and Malaysia. The series also appears on CogitAsia, the CSIS Asia policy blog.

Since the South China Sea reemerged around 2008 as a hot spot of simmering conflict, conventional wisdom has held that tension in the area is driving an arms race among its littoral countries. Experts, journalists, and commentators have talked about an arms race in this area as a fact, a trend, or an alarming threat. A recent report in the Voice of America observed, “As China expands its influence in the disputed South China Sea, an arms race has developed among other nations with claims in the area.” An op-ed in The National Interest stated, “As tensions in the South China Sea continue to escalate, this arms race poses a significant threat to the security in the region.” A headline in the blog Lawfare read, “Water Wars: South China Sea Arms Race Escalates”; another on CNBC was titled, “Asia Defense Spending: New Arms Race in South China Sea.”

A closer look at the facts and trends suggests otherwise. If an arms race is an attempt to equal or surpass one’s competitor, Malaysia, the Philippines, and Vietnam are not playing catch-up with China, nor with one another. These three major Southeast Asian claimants in the South China Sea have little intention of achieving military parity or superiority. Instead, their long-term ambition is what can be called “minimal deterrence.” They want to build just enough capability to make potential aggressors think twice before attacking them. And this goal of minimal deterrence is clearly a long-term objective, as all three countries have a long way to go before they achieve it.

Most of the recent buildup of forces, military and paramilitary alike, by Malaysia, the Philippines, and Vietnam in the last two decades was to narrow existing gaps in their defense capabilities. The lacunae have existed for years—in some cases even decades—but it took China’s assertive actions directly against them to catalyze serious effort to fill the gaps. Chinese aggression has ignited competition from Vietnam, and to a lesser extent, the Philippines, but this should be more accurately describe as a “minimalist competition,” not an arms race.

One way to see if there is an arms race underway is to look at military expenditure as a share of gross domestic product (GDP). Estimates by SIPRI suggest that in the last 15 years, none of the major contestants in the South China Sea dispute has significantly increased the proportion of military expenditure to GDP. Also, none of these countries spent more than 2.5 percent of their GDP on the military (the one exception being Malaysia in 2003, with 2.6 percent).

With a large and rapidly growing economy, China was able to maintain a very stable rate of expenditure on arms throughout the period. SIPRI estimates put China’s military spending at 1.9 percent for most of the decade 2007-2016, the period of increased Chinese assertiveness and a new wave of tensions in the South China Sea. China spent slightly more, about 2 and 2.1 percent of its GDP, in the four years 2003-2006, when tension was relatively lower in this region.

Contrary to common belief, both Malaysia and the Philippines have reduced their military outlay as a percentage of GDP during the last 15 years. The most dramatic decline occurred in Malaysia, where the ratio fell from 2.6 percent in 2003 to 1.4 percent in 2016. In the Philippines, military spending also decreased from 1.6 percent in 2003 to 1.3 percent in 2016. The outlier among these countries is Vietnam, whose rate grew slightly from 2.1 per cent in 2003 to 2.4 per cent in 2016. But the decade 2007-2016 witnessed no significant increase in the proportion to GDP of Vietnam’s military budget.

A more nuanced way to detect arms races is to compare the real growth in military expenditure of these countries. As tensions in the South China Sea started a new long wave in 2007-2009, let’s take the year 2007 as the starting point (See Figure 1). In constant 2015 US$ terms, China’s military spending grew 2.2 times between 2007 and 2016. During the same period, that of Vietnam increased 1.8 times and that of the Philippines 1.4 times, while Malaysia’s remained almost unchanged. These numbers hardly suggest an arms race.

Figure 1. Military spending growth in real terms since 2007

Source: Author’s calculation, data from SIPRI Military Expenditure Database 2017.

Moreover, an arms race often refers to the development of strategic weapons. Although increasingly aware of a threat from China, none of the Southeast Asian claimants is developing strategic weapons. There is no evidence of Malaysia, the Philippines, or Vietnam acquiring nuclear weapons or ballistic missiles. Vietnam, for example, is investing in coastal defense, air defense, and anti-ship missile systems, but not on missiles that can hold large Chinese cities hostage. The most formidable missiles currently possessed by Vietnam, the country nearest to China, are P-800 Yakhont cruise missiles, which have a maximum range of 186 miles (the distance from the Sino-Vietnamese border to Guangzhou, the nearest major Chinese city, is about 350 miles). Vietnam and Malaysia are eying the Indo-Russian BrahMos anti-ship cruise missile, which has a maximum range of 280 miles and can be mounted on their submarines. Vietnam, Malaysia, and the Philippines have no significant space warfare and cyberwarfare capabilities, and there is little evidence of their attempts to develop strategic weapons in these domains.

Figure 2. Military spending growth in real terms since 2007

The discourse of an arms race implies that the buildup of military force is destabilizing. The reverse is true with regard to the force modernization by Vietnam, the Philippines, and Malaysia. Only significantly increased growth of these countries’ defense capabilities can improve the imbalance of power favoring China that is threatening the stability of the region. If regional security hinges on preventing the dominance of the South China Sea by any one country, it is imperative to boost the defense capabilities of Vietnam, the Philippines, and Malaysia.

Header image courtesy of Wikimedia Commons user Outisnn.