China's military budget has been exploding and could soon pass the US military budget in just over two decades.
From a recent research note published by Societe Generale:
Growing dispute with China and its neighbours...
China’s military spending is expected to have increased from around $20 billion in 2002 to at least $120bn in 2011. According to the research institute SIPRI, the country could surpass the US in total military spending by 2035, raising concerns in the US and southeast Asian countries. Last year, conflict over disputed islands caused Japan’s exports to China to fall sharply (-14.5% in November), increasing Japan’s trade deficit. The election of a new government with a more nationalist position in Japan could put the Sino- Japanese relationship under further strain. With the US Pivot preventing any large military actions in the region, the conflicts could take the form of trade wars that would damage Japan’s weak economy.
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