The International Institute for Strategic Studies has launched the 2022 edition of The Military Balance in a year that is characterised by a significant risk of large-scale military conflict. It encompasses the latest military technological, economic and strategic trends. Norbert Neumann looks at the key points.

The International Institute for Strategic Studies (IISS) publishes The Military Balance every year. It is an annual assessment of the defence capabilities and defence economies of most countries in the world.

Two years in the Coronavirus pandemic, the economic distributions are still felt across the globe and they have real term effect in defence spending. China’s economic growth and military modernisation suffered less when compared to the US’s defence spending, and Beijing’s recent tests and exercises do little to abate the hypersonic capability race and tensions around the South China Sea.

In the meantime, Russian military capabilities and President Putin’s aggression displayed on the borders of Ukraine continuously fuels European defence speeding.

Inflation and defence

The year 2022 does not only begin with the largest military tension in Europe since the end of World War II, but it also witnesses a worldwide global inflation rate that some countries haven’t experienced in four decades.  

The IISS Military Balance 2022 has examined 171 countries and about three quarters of those experienced an increase in inflation, with the largest surges seen in 2021. These trends can seriously harm defence spending in the coming years even in the US which, in turn, will see the alteration of budgets in other countries.

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IISS senior fellow for defence economics Fenella McGerty said: “Large inflation is wiping out [defence] budget growth in real terms, but it’s also creating pressure within defence budgets if it persists for too long.”

A lasting inflation could see both an increase in cost-factor input and higher personnel wage demands. McGerty says if inflation does not abate in a year or so, it will start squeezing other areas of spending such as research and development and modernisation.

The global defence expenditure reached $1.92bn in 2021, which is 3.45% higher than in 2020. However, due to high inflations across all regions, this actually translated into a 1.8% reduction in real terms. This puts Latin America’s and sub-Saharan Africa’s defence spending in real terms at the same levels as in 2009 and 2012, respectively.

In Asia, however, defence spending has proved robust and while it is lower than before the Coronavirus pandemic, it still maintained a 2.8% growth in 2021. China accounted for 43% of the total $488bn in the region’s defence budget.

Europe performed the best in 2021 with its defence spending growing 4.8% in real terms. This not only puts the region at the top of the list but also concludes Europe’s seventh consecutive year of real-term growth.

Military Balance outlines key capabilities and trends
Russian S-300 anti-aircraft system missile. Credit: Shutterstock. ID1974

Long-range standoffs

Although Russia is infamous for over-hyping the successes and the pace of its military modernisation efforts and progress made in modernising army equipment in the past years were of less significance, the country’s long-range capabilities are not to be ignored.

Hypersonic glide vehicles and cruise missiles can strike from impressive ranges. The Russian-made 9M729 and the Kh-55 (NATO: AS-15 “Kent) cruise missiles can hit targets from over 2,000km.  

While US hypersonic tests keep failing, Beijing’s development and integration of such advanced capabilities are also progressing at pace.

“US government officials reportedly expressed surprise at the level of technological sophistication evident in the August test of a hypersonic glide vehicle,” says the ISS Military Balance 2022 referring to Chinese efforts.

“Beijing is attempting to build an overarching integrated strategic structure in which the civilian, defence and national-security sectors are closely aligned and coordinated.”

In the past years, China has conducted several hypersonic missile tests. The first DF-17 Chinese medium-range missile system equipped with a hypersonic glide vehicle was first reported in 2014 by US Intelligence. Since then, the People’s Liberation Army (PLA) has significantly improved the system and it can strike from up to 2,500km.

The latest evidence pointing at China’s superiority in the area was a test last July that involved a hypersonic glide vehicle that fired a separate missile mid-flight in the atmosphere over the South China Sea.

Talking on The David Rubenstein show at the time, chairman of the US Joint Chiefs of Staff General Mark Milley said: “What we saw was a very significant event of a test of a hypersonic weapon system, and it is very concerning.”

China and Taiwan

As China’s relationship with Taiwan is not very different from Russia’s with Ukraine, there is little doubt that Beijing is closely watching as President Putin continues to escalate in Ukraine.

During the Military Balance launch, IISS senior fellow for Chinese defence policy and military modernisation Meia Nouwens said: “In 2021 we saw a continued focus on PLA training and exercises aimed at a Taiwan contingency. During January and November 2021, we saw 230 air incursions into Taiwan’s airspace made by nearly 900 PLA aircraft.”

Nouwens observed that while earlier air incursions in 2021 only included PLA Air Force and PLA Navy aircraft, later in the year PLA ground forces and aircraft – including combat and transport helicopters – began partaking in such exercises too.

Incursions largely occurred over the Bashi Channel to the south of Taiwan’s main island and aircraft mainly flew upwards along the southeast coast.

“In addition to the heavy rotation of anti-submarine and special mission aircraft, this suggests that the PLA flights serve multiple purposes,” Nouwens added. “Firstly, to practice the PLA’s capabilities in areas such as anti-submarine warfare but also other skills such as operating a heavy rotation of aircraft both during daytime and at night.”

Many of these are areas the Chinese forces branches are still looking to improve.  

Frequent attempts to cross over Taiwanese airspace also aid Beijing in learning how swiftly The Republic of China Armed Forces (ROC or Taiwanese Armed Forces) can respond. Nouwens said such exercises also impose a heavy financial and maintenance burden on the ROC Air Force as they are bound to respond each time.

Lastly, these exercises also bear a political message signalling discontent to Taiwan, the US, Japan and President Xi’s domestic audience alike