Analysis: Spending gulf to widen across Taiwan Strait

China's official defence spending has been on a steep and rapid trajectory for 15 years, with double-digit increases annually since the early 1990s. Expenditure has risen to meet the requirements of the 11th Five Year Plan (2006-10) and it is likely that the next Five Year Plan, to be finalised at the end of 2009, will continue with the modernisation plans.

Taiwan's defence budget is somewhat less clear cut and rather more volatile. It is apparently shaped by a combination of changes to Sino-US and cross-strait relations, in addition to internal wrangles.

It can be seen that, since 2001, changes in military spending are directly correlated between China and Taiwan. In six of the 12 years analysed, they were directly correlated (2001-02, 2003-04, 2004-05, 2008-09, 2009-10, 2011-12). Of the six others, although seeming to diverge, they can be explained by a one-year lag in the Taiwanese spending trend compared to the Chinese trend.

For instance, in 2007 Taiwan's defence spending grew by 17.7 per cent, compared to 2.37 per cent negative growth in 2006. In the same year, China's defence spending growth slowed from 20.19 per cent to 17.85 per cent, so defence spending trends between the two would seem to diverge. However, this large increase in Taiwan's defence budget is likely to have been in response to the jump in China's defence spending growth from 12.65 per cent in 2005 to 20.19 per cent in 2006.

Image: Taiwanese defence spending trends appear to have tracked China's throughout the current decade. (AP) 239 of 971 words