Procurement: How China Lost Pakistan


July 24, 2009: One of China's major export customers, Pakistan, is being lost to the United States. Not because Pakistan is unhappy with Chinese equipment, but because Pakistan is broke (or more broke than usual), and the U.S. is supplying over a billion dollars a year in military aid. The catch here is that the U.S. always insists that as much of that aid, as possible, be used to buy American weapons and equipment. This is expected to hurt sales of Chinese J10A and JF-17 (co-developed with Pakistan) jet fighters. That's because Pakistan is getting more American F-16s, and upgrades for the F-16s it already has. The U.S. is supplying a lot of other gear, especially to the army, that competes with Chinese models.

It was only last year that, for the first time in over four decades, Pakistan released information on its defense spending. Last year's spending was $4.1 billion. That figure explains why this data has been kept secret for so long. That's because Pakistan's arch-enemy, and neighbor, India is increasing its defense budget by nearly 50 percent, to $39 billion, for this year. The difference should be no surprise. India has six times the population (at 1.1 billion) and 7.5 times the GDP ($1.1 trillion compared to $145 billion). India's economy has been booming for over a decade, while Pakistan's largely stagnates.

 This military spending disparity has long been suspected, even with the secrecy. The GPD differences were well known, as were the details of how the two forces were equipped. This, of course, is why Pakistan put so much effort into developing nuclear weapons. Only this would provide a credible defense against a militarily superior India. Pakistan has been spending about 2.8 percent of GDP on defense, while India was long spending two percent (the proposed increase will make it three percent). The global average is about 2.5 percent.



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