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Lived in China (2015–2018)Nov 25
Why has China been able to introduce so many next-gen weapons systems, such as FOBS, two versions of 4th generation stealth fighters, stealth drones, three aircraft carriers when its annual defense budget is only 1/3 of the US's?
There are a few reasons.

-Adjusted for purchasing power parity, its military budget is 2/3rds of the USA. But even this doesn’t fully make justice to the buying power of the Chinese military budget. Personnel costs are the biggest cost drivers for modern militaries and the average wage is much less in China as its GDP per capita is just 1/6th of the USA’s.

-It has the world’s largest industrial base for many components, which drives the prices down even more because of the economy of scales. The most obvious example is perhaps shipbuilding. The US shipbuilding industry is practically non-existent so every US Navy ship is overpriced to keep the industry alive, for comparison China builds almost half of the world’s commercial ships.

-It hasn’t been waging wars against small nations all over the world. This left a lot more money to R&D than its military budget would suggest..

-It doesn’t have 800 bases on foreign soil which cost $100 billion a year.

-The system of military-civil fusion transfers a lot of technology from the commercial world to the PLA for very low prices. The Chinese defense industry uses civilian components wherever possible. This is called commercial-of-the-shelf in Western countries. China has been practicing it to a much larger extent for many years.

-It didn’t have a large military to maintain when China’s military modernization started. It left a lot of money to equipment acquisition and development. This effect will diminish fast as its military grows. The maintenance and manning budgets will start eating from equipment acquisition and development budgets, just like what's currently happening in the US military.

-The PLA’s equipment and training are very specific towards peer warfare. It doesn’t spend much on equipment or training that isn’t useful for it. For example, its airforce’s ground attack capabilities are heavily biased to long-range cruise missile strikes rather than guided bomb strikes. The procurement of counter-insurgency and asymmetric warfare hardware is rare. Its navy would never field a ship like the LCS for example. The USA of the 1980s had a similar behavior too.