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31 Oct 13. As the developing countries of the Far East continue to experience healthy levels of economic growth, the Asia-Pacific arena will increasingly serve as the go-to market for defense suppliers, according to a recent analysis by Forecast International. Percolating territorial tensions in the East and South China seas, regional rivalries, and military modernization programs propelled by growing economies are all serving to drive defense spending upward across the region. Yet another factor looms large over the regional military picture: the steady growth in China’s military spending over the past decade. The rise of Chinese defense investment comes as the People’s Liberation Army seeks to reach technological par with peer competitors in select areas while advancing asymmetrical capabilities capable of offsetting U.S. advantages in others. Between 2008 and 2013, the Chinese military budget doubled in nominal terms, and Forecast International projects that China’s defense earmark will be 41 percent higher by 2017. Of the 27 percent overall nominal spending increase across the Asia-Pacific military market projected by Forecast International between 2013 and 2017 from the previous five-year period, almost 60 percent of that differential is expected to stem from China. The natural byproduct of Chinese military modernization and its maritime expansion has been the reactive response on the part of many countries that either find themselves pitted against Beijing in regard to territorial claims or are alarmed by an increased Chinese naval power projection capability. The largest regional peer competitor of China in manpower terms is India, which, confronted by Pakistan on its northwest border and China on its northeast border – as well as a nascent Chinese maritime basing link running through the Indian Ocean – is expected to increase its level of defense spending over the next four years by 32 percent from its 2013 baseline.
Meanwhile, changes over the past year that have brought more pro-military governments into power in Japan and Australia indicate that defense allocations in those countries should be expected to rise over the near term as well. In the case of Australia, Forecast International projects steady increases in military spending over the coming five years totaling about $25bn above the 2013 earmark of $26bn, equal to $5bn in additional annual funding above the 2013 defense budget baseline. Pressures involving competing territorial and fisheries claims and energy exploratory rights, as well as concerns over piracy, have resulted in an increased emphasis on the naval domain among the nations of Southeast Asia. The Philippines, Malaysia and Indonesia have each formulated ambitious fleet modernization plans, while Thailand is in the midst of upgrading existing warships and purchasing new offshore patrol vessels designed by BAE Systems Surface Ships and two new frigates designed by South Korea’s naval warship builder, Daewoo Shipbuilding and Marine Engineering. Even Vietnam, which has traditionally emphasized investment in its land forces, is now shifting its attention to the air-sea domain and has turned to its principal supplier, Russia, for six Improved Kilo class submarines, Gepard class frigates optimized for anti-submarine warfare, and over 30 Su-30MK2 long-range maritime-strike combat aircraft. Buttressed by a growing economy, Indonesia has begun to invest more and more toward defense as it seeks to fashion a “minimal essential force” capable of performing a host of missions – ranging from conducting counterinsurgency operations to participating in international peacekeeping missions and performing natural disaster relief and offshore and exclusive economic zone (EEZ) protection tasks. After increases in Indonesia’s year-on-year defense allocation of 34 percent in 2011, 16 percen

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