Missing from Beijing's military spectacle: price tag

Massive parade puts top-grade weaponry on display at time of economic, financial pain in China

Jeremy Page, Wall Street Journal
3 September 2015
BEIJING – One glaring omission in China’s World War II Victory Day parade will be the price tag for all the weaponry sweeping through Beijing’s Tiananmen Square.
China’s government doesn’t say what it spends on developing and importing arms, let alone individual weapons such as the DF-26 ballistic missile and the J-15 aircraft-carrier-based fighter jet. Those are among the top-grade weapons systems state media have said are likely to roll and fly by Chinese leaders, visiting dignitaries and TV cameras at Thursday’s parade.
What’s clear, according to many military experts, is that a slowing economy, an anemic stock market, a weaker currency and rising labor costs are likely to alter the political and financial calculus of Chinese military spending over the coming years.
If China continues to ring-fence military spending, despite the economic slowdown, it could eat into outlays in other areas, such as health and education, presenting the leadership with tough choices it isn’t used to making, those experts said.
“In the last couple of decades, that ‘guns or butter’ dilemma hasn’t existed,” said Sam Perlo-Freeman, who leads research on military expenditure at the Stockholm International Peace Research Institute.
“If you have a significantly worse economic situation for more than just a year, you start to get those tough choices,” he said. “Are you going to be able to afford, and have the technological resources, to develop submarines, carriers and stealth aircraft all at the same time?”
Nearly a quarter-century of annual increases in military spending has transformed China’s military from an ill-equipped, land-based force to a modern one capable of operating as far afield as the Mediterranean – and increasingly challenging U.S. military dominance in Asia.
China’s military spending is likely to continue to grow faster than the economy in the next five years, especially given President Xi Jinping’s need for political support from the military and his ambitions to project power globally, some experts said.
IHS Janes, a defense information provider, said Wednesday that China’s annual military spending is projected to reach $260 billion by 2020, almost double that in 2010, with its combined military spending over this decade totaling almost $2 trillion.
Many defense experts say that China’s published defense budget doesn’t include costs for all research and development expenses and arms imports, and that real spending may be around 50% higher. The lack of transparency makes estimating costs of individual weapons programs difficult, and China likely faces the same problems of overruns and waste as many Western nations do, perhaps more so, given the lack of public oversight and competition.
China’s military has been a focus of Mr. Xi’s sweeping anticorruption campaign, with at least 30 generals detained, and its General Armaments Department said this year it was reforming its procurement system to combat graft and waste.
China’s government says its military spending is far lower than that of the U.S. and that increases are necessary to pay for rising personnel costs, as well as the weaponry needed to defend its expanding national interests.
“The growth of defense spending is in line with economic and social development as well as defense demands,” foreign ministry spokeswoman Hua Chunying said Wednesday.
In developing the People’s Liberation Army, or PLA, China first focused on acquiring relatively cheap weapons such as short-range missiles that enable asymmetric competition with the U.S., particularly over the island of Taiwan. Over the past decade, priorities have expanded to develop a broad range of sophisticated arms designed to challenge the U.S. more directly, from a growing fleet of nuclear attack submarines to stealth fighters.
“Today, and as shown by the parade, the PLA and defense industry is pursuing a wide array of defense programs, the most of any country today and comparable to what took place during the U.S.-Soviet Cold War,” said Tai Ming Cheung, an expert on China’s military at the University of California, San Diego.
The parade, according to state media, is likely to include attack helicopters, drones and a range of ballistic missiles, such as the DF-26, which has sufficient range to hit a U.S. naval base in Guam, just under 2,000 miles from China’s shores
Behind the display, China’s arms industry faces structural constraints, including a shortage of highly trained personnel and high-end manufacturing capabilities, limiting
the number of programs it can tackle at any one time, said Mr. Tai and other experts.
“The defense economy almost certainly suffers from enormous inefficiencies, although this is kept well-hidden,” he said.
China turned to develop many of its own weapons after the U.S. and European countries imposed an arms embargo after a military crackdown on pro-democracy protesters around Tiananmen Square in 1989. Beijing has also turned to Russia, which has sold China billions of dollars’ worth of arms since the Soviet collapse.
But Moscow has dragged its feet on providing much of the sophisticated technology Beijing now requires, partly due to concerns that it will be cloned in China. Russian officials say the J-11B fighter jets in the parade are a copy of the SU-27, which a cash-strapped Kremlin sold China in the 1990s. Chinese officials say the aircraft contains mostly Chinese technology.
If the economy slows further, state-run arms makers might get a short-term funding boost, as they did when the government unleashed a massive stimulus to stave off the global financial crisis in 2008. Over the medium term, the leadership is likely to press arms makers to improve efficiency and increase exports – an increasingly important engine of growth.
One goal of the parade is to promote defense exports, although the primary aim is to present an image of national strength to a domestic audience, some analysts and diplomats said. Dignitaries from Africa, South America and Central Asia – potential buyers – will be in the reviewing stand.
“It is a useful way to let the world know that all these systems are now Chinese,” said Jack Midgley, a director of Deloitte Consulting’s defense consulting practice. The prospective customers, he said, are countries which “for the most part want lower technology systems, and that is where the Chinese have the competitive advantage.”

Report: Russian arms sales give China better chance to compete with U.S. ships

John Grady, U.S. Naval Institute News
2 September 2015

“Improved maritime strike capability has given Chinese warships a much greater chance of competing against their U.S. counterparts” and improved naval air defenses allow its warships “the ability to operate at increasingly great distances from shore” – major advances in large part speeded by arms, vessels and technology sales from Russia since the end of the Cold War.
Those were two observations contained in a new report from the Washington, D.C.-based think tank, the Center for Strategic and International Studies, released Tuesday. Paul Schwartz, the author of Russia’s Contribution to China’s Surface Warfare Capabilities: Feeding the Dragon, said in discussing the report, “collectively [those factors] represent a great leap forward” and “these systems [from new surface warships to sea- and air-launched anti-ship missiles, etc.] are making a real difference.”
He expects sales of technology and arms from Russia to China to continue into the future, especially in radar systems. Already the improved Chinese naval air defenses capabilities “complicate the task of U.S. pilots,” reminiscent of the difficulties the Americans faced in the Vietnam War.
For Russia, the sales amounted to $32.1 billion for 1999 – 2014 and helped keep it afloat as the Soviet Union collapsed. For the Chinese, they provided an opening to military technology that had been shut off following the Tiananmen Square massacre.
The transfers are not simply going from Russia to China. Schwartz added China has tried to interest the Russians in buying its latest frigate because of Russia’s shipbuilding problems. Beijing also has advanced drones, better information technology and command and control systems that could be of interest to Moscow.
Jeffery Mankoff, director of the CSIS’s Russia and Eurasia program, noted that Russia has also been selling modernized naval and air systems to Vietnam and India, neighboring rivals of China.
In the discussion that followed Schwartz’s presentation, Thomas Karako, a senior fellow at CSIS said, in anti-access/area denial (A2/AD) “China is using mass to challenge us” – allowing it to target fleet, allies and bases. “The U.S. is going to have to invest more in standoff weapons and penetration weapons,” as well as maritime missile defense against new conventional threats.
While directed energy and rail guns offer promise for the future, Karako quoted Adm. Bill Gortney, Northern Command commander, as saying for the immediate future it will still be missiles shooting down other missiles.
The unanswered question is whether the relationship between China and Russia is really a long-term one, or a marriage of convenience, said Zach Cooper, a fellow at the CSIS.
“Both counties are dissatisfied with the status quo” – Russia in Eastern Europe and China in the islands off its coast. Both “are using a similar technique of hybrid warfare” to get their way, stopping short of provoking a wider conflict that would draw in the United States. He cited the Chinese sending its coast guard vessels, rather than warships, into disputed waters as an example of this.
But the two nations do not always see eye-to-eye on Russia’s role in the Far East, Chinese hard-bargaining on energy sales from Russia, or Beijing’s reverse-engineering of technology sold to it rather than buying more. The report said of the reverse engineering, “Insult was added to injury when China began to sell some of those systems on the arms export markets, thereby undercutting Russian exports of the original system.”
For now, because of economic sanctions against Russia for its actions in annexing Crimea and backing separatists in eastern Ukraine, Moscow is further and further removed from interacting with the West.
Schwartz said, “China is still very integrated with the West,” economically.
Even with all China’s investment in maritime capabilities, Cooper and Schwartz predicted, it would take a decade or two to field a capable force to counter the United States at sea. China is only now fielding an aircraft carrier, which will be primarily used for training, although it plans on building three in the future. It also does not have a recent maritime history comparable to the United States and Japan so that means developing an officer corps knowledgeable about blue-water operations, a professional noncommissioned officer corps and ending its reliance on the draft to meet manpower needs.
Right now, “Russia is selling China the rope to hang the U.S. Navy,” Karako said.
Other important future large sales could include Russia’s S-400 air defense system, Su-35 aircraft and LADA-class diesel-electric submarines.
The report concluded: “Prospects for increased arms sales from Russia to China seem greater now than they have been in many years, and not solely in the maritime domain.”

Taiwan to launch homegrown submarine plan with initial $92.55 million budget

Staff, Reuters
3 September 2015

Taiwan has allocated T$3 billion ($92.55 million) over four years, beginning next year, to launch a long-awaited program for the island to build its own diesel-electric submarines.
The expected allocation is the first for a plan that has been talked about since the early 2000s, when a deal with the United States for eight diesel-electric submarines got bogged down because of technical and political constraints.
The spending was set out in the defense ministry's budget for 2016 and seen by Reuters.
The plan come as other navies in the regional expand their submarine fleets in part to create a strategic deterrent against China's growing naval assertiveness in Asian waters.
Taiwan has four aging submarines, including two that date to World War Two, although its military is otherwise considered generally modern.
China has about 70 submarines, along with dozens of surface ships and a refurbished aircraft carrier.
China sees self-ruled Taiwan as a renegade province and has never renounced the use of force to take back the island.
Critical to Taiwan's indigenous submarine program is the transfer from the United States or other Western countries of submarine-manufacturing technology.
Support from U.S. companies or release of export technology controls would need a nod from the U.S. government.
China opposes any form of military technological transfers or weapons sales to Taiwan.
The spending plan, which is allotted through to 2019, covers only the contract design phase of what should be a decades-long program.
Taiwan's Ship and Ocean Industries R&D Center (SOIC), a government-backed ship designer and technical consultant, is expected to select a consortium to lead the contract design phase, according to military and industry sources in Taiwan.
Taiwan lacks submarine design skills, the ministry stated in its budget plan.
By carrying out this first phase, Taiwan will be able to deepen its vessel design capabilities, develop its industry and acquire intellectual property, it said.
The defense ministry is planning to spend T$321.7 billion in 2016, accounting for 16.1 percent - the biggest share - of the central government's overall expenditures, budget plans show.
The government's 2016 budget was delivered to lawmakers this week and will be reviewed when parliament begins a new session later this month.
The submarine plan has support in parliament which is expected to approve the overall budget.

Australia eager to join India, U.S., Japan in joint naval exercises

Tommy Wilkes, Reuters
3 September 2015
NEW DELHI -- Australia wants to join India, the United States and Japan in joint naval exercises in the Indian Ocean, widening participation in multilateral drills as China's influence in the region grows.
Australian Defense Minister Kevin Andrews said expanding the exercises to include more countries would help avoid military mistakes in a region where China and India are increasingly competing.
"Exercising together is one way to avoid some kind of miscalculation happening," he told reporters on the second day of a visit to New Delhi.
"India shares our interest in the wider free passage of international trade."
India and the United States hold the so-called Malabar exercises in the Indian Ocean every year.
This year, Japan will take part, the first time since 2007 the exercises have included a third country - and a sign of closer military ties between allies worried about Chinese activity in the region.
China's increasing assertiveness in the South China Sea has angered neighbors there as well as Japan and the United States, two of the major maritime powers in Asia.
China also shocked India last year with two Chinese submarine visits to Sri Lanka, India's island-nation neighbor to the south.
Andrews said on Wednesday Australia was concerned about escalating strategic rivalry in the South China Sea, saying it put Asia at the risk of a military blunder.
His visit to New Delhi comes as India and Australia prepare to hold their first bilateral naval maneuvers next month, where they will showcase their anti-submarine warfare capability.
Andrews said defense ties with India would deepen.
"Gradually we will expand the range of exercises. We are looking at air force to air force and army to army exercises over the next year or two," he said.
India last hosted a multilateral exercise in 2007 when it invited Japan, Australia and Singapore to join drills with the United States in the Bay of Bengal, prompting disquiet in Beijing.
India's Defense Minister Manohar Parrikar also expressed interest in Australia's "Bushmaster" armored infantry vehicle, Andrews said, although talks on any sales were at an early stage.

U.S., Ukraine kicks off annual Black Sea exercise

The U.S. Navy continues to wave its flag at Russia’s front door.

Lance M. Bacon, Navy Times
2 September 2015

The United States and Ukraine on Sept. 1 launched exercise Sea Breeze 2015 in the Black Sea. Officials tout the 14th annual multinational exercise as a way to strengthen regional security in a volatile riven by Russia's 2014 annexation of Crimea and the continuing civil war in Ukraine, which borders Russia.
The exercise’s at-sea phase will include maritime interdictions, anti-submarine warfare, air defense and self-defense against small boat attacks in the Black Sea – and will unfold under Russia’s watchful eye. A report from the Russian news agency Interfax said Russian intelligence is monitoring every move. For example, the Russian frigate Ladny was ordered to shadow destroyer Donald Cook when it entered the Black Sea in late August.
This came as no surprise to Vice Adm. James Foggo. In a Sept. 2 phone interview, the 6th Fleet boss said the U.S. Navy maintains a near-continuous presence in the Black Sea, and “nine times out of 10, a Russian warship [is] waiting for us.” This time, the Russian ship gave the added courtesy of hailing the Donald Cook, and the skipper by name, to welcome them into the Black Sea.
“While we are out there in close proximity, we keep an eye on them as they keep an eye on us,” said Foggo, a 1981 Naval Academy graduate and career submariner. “So far, it has been professional interaction. And I expect that.”
Flexing military muscles in the region is the new normal. U.S. forces entered the Black Sea for Exercise Breeze and Exercise Sea Shield in July, and Exercise Trident Poseidon in May. The destroyer Jason Dunham entered the Black Sea on April 3 in support of Operation Atlantic Resolve, a series of NATO drills launched in April 2014 to strengthen security in response to conflict in Ukraine.
Seventeen countries took part in Baltic Sea naval drills as part of exercise BALTOPS in June. Exercise Joint Warrior united 12,000 warfighters from 15 NATO countries in April. This included an armada of roughly 60 warships and submarines in the North Atlantic in what was touted as a show of strength to deter Russian aggression.
The Russians typically respond to a NATO exercise with a show of force Foggo calls a “Snap-Ex,” in which they send a large number of ships at sea for a few days.
“It is a message. Everything is strategic messaging,” the three-star said. “I am always impressed with that. It is not easy to get ships underway on short notice.”
Last year, for example, the Russians held a large-scale war game in the Black Sea at the same time as the U.S., Bulgaria and other nations conducted multinational training.
Foggo said he was unaware of any Russian plans to conduct a Snap-Ex during this exercise, but said partner nations would be ready to respond accordingly. If it does take place, he said, “I don’t have any problem with that.”
Joining the co-host nations are troops from Bulgaria, Germany, Greece, Italy, Moldova, Romania, Sweden, Turkey, Ukraine, and the United Kingdom. Participants include roughly 400 U.S. sailors aboard the Donald Cook and a P-3C Orion from Patrol Squadron 9.

Newest USS Iowa names at Iowa State University

Grayson Schmidt, Ames (IA) Tribune
3 September 2015

Seventy years after the second USS Iowa battleship was present at the Japanese surrender in Tokyo, the USS Iowa (SSN-797) submarine was officially named at the campus of Iowa State University.
There was not an empty seat in the Memorial Union’s Campanile Room Wednesday afternoon, as ISU President Steven Leath, Gov. Terry Branstad and U.S. Secretary of the Navy Ray Mabus spoke about the importance of the ceremony.
“It’s very meaningful and very significant that on this occasion, the 70th anniversary of the Japanese surrender, we would have a new ship named after the state of Iowa, and we’re proud of it,” Branstad said.
The newest USS Iowa will be a Virginia-class submarine, which has enhanced stealth, sophisticated surveillance capabilities and special warfare enhancements that enable it to meet the Navy’s multi-mission requirements. These submarines are also capable of attacking targets ashore with highly accurate Tomahawk cruise missiles and conducting covert, long-term surveillance of land areas, littoral waters or other sea-based forces.
Each one of these submarines is 7,800 tons and 377 feet in length, has a beam of 34 feet, and can operate at more than 25 knots submerged. They are designed with a reactor plant that does not require refueling during the planned life of the ship, reducing lifecycle costs while increasing underway time.
The original USS Iowa (BB-4) was a battleship during the Spanish-American War, which afterwards was renamed and sunk in 1923. The second USS Iowa – which is the most well-known – served in Word War II and the Korean War. According to Mabus, it was the ship that President Franklin D. Roosevelt sailed on to Europe. It is currently anchored in Port of Los Angeles and serves as a museum. And with the newest USS Iowa announced, Branstad said the state will have a new ship to be proud of.
“This is a great honor. The USS Iowa has a proud tradition in history,” Branstad said. “You don’t get a ship named after the state very often, and now we have a nuclear submarine named after the state of Iowa.”
ISU is the only school in the state with a Navy ROTC unit, which, coincidentally, is about to celebrate its 70th anniversary this weekend. And despite not being located on (or even close to) the coast, Mabus stressed the importance of connecting the U.S. Navy with states that are not on the sea.
“What you’re doing shows how important that connection is, and how important it is that states that aren’t on the sea are a part of the sea services,” Mabus said.
With Iowa being associated with one of the most famous battleships in U.S. history, naming a new ship after it just seemed appropriate.
“It’s been a long time since Iowa had a ship named for it in the fleet, and it’s particularly important for states not on the sea to make that connection,” Mabus said. “We did it here because of the NROTC unit that is here and because it’s their 70th anniversary.”
According to Mabus, the USS Iowa was purchased with nine other submarines at a total cost of $18 million. He said it was a “10-for-nine deal,” in which the U.S. Navy bought 10 submarines at $2 million apiece but was only charged for nine. And even though the newest USS Iowa will not come into the fleet until the early 2020s, Sec. Mabus said it will be in there for about 40 years and will hopefully fill those big shoes that are associated with the USS Iowa.
“One of the most iconic ships ever in the U.S. Navy was the USS Iowa, the battleship during World War II,” Mabus said. “I’m sure it will uphold the name of the state and the ships that preceded it.”

Another construction failure haunts U.S. submarines

James Dunnigan, Strategy Page
31 August 2015

The U.S. Navy continues having problems with quality control (QC), or, rather, the lack of it. The latest incident was revealed on August 5th when the navy ordered its three most recently built Virginia class subs to restrict their operations until ten suspect (of being substandard) sections of pipe can be inspected and, if necessary, replaced. There are another 40 of these components in subs under construction but taking care of those won’t delay submarine operations. The QC problem has been getting worse since the 1980s and one 2009 incident became widely known. In this instance a welder at the Quonset Point (Rhode Island) shipyard performed substandard welds that were not caught immediately by the quality control system. These welds were not in critical areas but at least one sub already in service was involved.
Earlier in 2009 a weld inspector at the Newport News shipyard was found to be falsifying the inspection of welding jobs on four Virginia class submarines and a Nimitz class carrier. Some 10,000 welds had to be re-inspected, as these are how many the now dismissed inspector handled in four years on the job. Each Virginia class sub has about 300,000 welds that have to be inspected. Normally, only a few will fail inspection and have to be redone. A few defective welds can cause the loss of a submarine, or serious damage aboard a carrier. Two methods are used to inspect welds, magnetism, or a special liquid. It's easy to fake the inspection, thus these quality control inspectors must be carefully selected. This turned out to be just one of many instances where the system failed.
Since the 1990s the navy has seemed unable to cope with persistent problems in its ship construction programs. These difficulties include poor quality, unexpected delays and inflated prices. All this made it difficult to maintain the size and effectiveness of the fleet. One of the major problems is the practice of "low balling." This is where the shipbuilder gives the navy a very low estimate of what a proposed ship is going to cost. Then, when construction is under way, costs creep up, often resulting in the ship costing more than twice the original estimate. When this practice began after World War II it was with the cooperation of the navy that wanted to have an easier time convincing Congress to allow construction of new ships.
Since 2000 the navy has been saying; "no more". The ship builders respond with; "OK" but nothing seems to change. The low balling and all the other problems continue. All current ship building projects are over budget. The worst case is the LCS (Littoral Combat Ship), which was to be the poster boy for doing it right. Didn't work out that way. In 2006, when building plans for the LCS were laid out, each one was to cost $223 million. By 2010 the estimated price was $460 million, and the navy admitted that the ultimate price would probably be higher and it was. Congress is outraged, as always, and demanded that the admirals do something. Nothing really changed.
The real problem is "sole source" procurement of the most expensive ships (carriers, subs and destroyers) plus the Navy's penchant for frequently changing design specifications without regard to impact on cost or the
schedule. The problem goes back to when the navy destroyed the Navy Yard system, which was the best check on corruption and carelessness in shipbuilding. By the 1990s all these yards were closed or just used for maintenance. Without the navy yards building ships how does one bring back quality production, or even prove it can be done better, if there are no government owned ship yards that enable the navy to find out how it can be done better?
The shipbuilding industry will sometimes blame the unions. However, Norway, Denmark, Japan, Korea, etc., maintain effective, efficient shipbuilding operations and have strong unions. But the basic notion of having navy-owned yards was so that the service (and the taxpayer) could have an independent "authority" on ship construction and repair.
Examples abound. Back in the '30s, with substantial construction contracts being issued again, the Navy placed orders for three very similar classes of destroyers, two to be built in private yards and one in navy yards. There were about a dozen ships all together. The end result was that the navy-built ships came in on time, on budget, and with few teething problems, while the privately built ones ran over in time and money and required some additional work after completion.
Post-World War II, the shipbuilding industry decided it needed the work more than the navy yards did. A series of interesting laws got passed that marginalized the navy yards. One good one was a law that came out of the Virginia congressional delegation that mandated that modernization, maintenance, and repair jobs be done at yards in proximity to where ships were based. This was very good for Newport News, but meant that navy yards in places like New York, where there were usually no ships based, became "uneconomical." We've only got a few navy-owned yards now, and none of them do construction.
The private shipbuilders and the shipping lines, plus their local members of Congress, have also contributed to the decline of the merchant marine, though they blame the unions, OSHA, EPA, "cheap foreign labor," etc., and so forth. Books have been written about this (like "The Abandoned Ocean: A History of United States Maritime Policy"), but not enough of the right people read them, or wanted to act on the evidence presented. The problem, as in so many areas of military procurement, is politics. The defense budget is seen as a source of votes, above all. No