China’s defense spending is believed to be over $100 billion a year, and it has more than doubled in the last decade. This has triggered an arms race with its neighbors. Russia just announced a new military upgrade program that would increase defense spending by a third, and devote over half a trillion dollars in the next decade to buying new equipment. Japan, already possessing the most modern armed forces in the region, is increasing spending to expand it. A decade ago, China and Japan spent about the same on defense, but now China spends more than twice as much. Even India is alarmed. Spending only 30-40 percent as much as China does, the Indian generals and admirals are demanding more money to cope with China. India and China are actually devoting a lot of their additional spending to just bringing their troops up to date. Both nations have lots of gear that was new in the 1960s and 1970s. They don’t expect to be as up-to-date as the U.S., which spends over $500 million a year, but there’s plenty of newer, much better, and often quite inexpensive stuff to be had.
The perceived “Chinese threat” has persuaded neighbors to play down disputes and develop better military ties with neighbors. Such is the case with Russia and Japan, who still have a bitter dispute over ownership of the Kuril islands. Same with Japanese and South Korea, who have a lot of bad history to keep them apart, but a growing Chinese military threat to overcome all that. Same deal with Taiwan, Vietnam and India. China has only been able to buy friends in Myanmar (an impoverished police state), North Korea (a very impoverished police state) and Pakistan (a corrupt and impoverished occasional democracy). China would like to upgrade in the allies department, but communist police states remain scary neighbors.
So alarmed has Japan become that, two years ago, it quietly established a foreign intelligence service (similar to MI6 or the CIA), for the first time since World War II. The Chinese noticed, as this new spy agency was mainly aimed at China and North Korea.